Fundrise- Has anyone used it?

[Ryan Montes]

Hi All, 

I recently heard about a site called Fundrise. It looks to be a site where you give them money and they create a share in a real estate portfolio for you. Has anyone used anything like this before? Can this be an actual avenue of investment? It seems a little to easy as a way to hop into real estate investing. 

Looking for feedback. Thanks so much!! 

[Ian Ippolito]

@Ryan Montes, private real estate is not a liquid investment, so you are locked in. They allow you to change your mind and withdraw within the first 90 days without penalty. But after that until 3 years it's a 3% penalty for withdrawing. Then 2% penalty from 3 - 4 years. 1% from years 5-5. And then no fee afterwards.

They also charge a fee to deposit the money, and manage it.

I do like the fact that they do not charge a promote/profit sharing scheme like a few competitors do.

As a conservative investor, I feel Fundrise has a decent debt offering, but several of the others are way too aggressive. I also feel that they do a very bad job of explaining the risks to investors. They put everyone through a wizard which supposedly allocates you basically risk. However, they always put you into every one of their offerings no matter what you pick (and just tweak the percentage). That's great for them, because it fills their offerings. But in my opinion it does do the conservative investor an injustice, because they really shouldn't be in some of the riskier funds. If you are aggressive, you may not care about any of this, and it may be considered a plus to you.

In my opinion, another of their big weaknesses is that they have virtually no skin in the game. So they are not as aligned with investors as well as some other nonaccredited offerings. And if you are an accredited investor, you can find many many much better options in that regard.