It’s hard to believe almost a year has gone by since our initial investment with Fundrise. It also feels like we just posted our 6-month update on our Fundrise passive income experience last week. Life is moving quickly.

Today, we’ll cover our current progress with Fundrise. I also provide some updated observations and thoughts on our investment experience.

For those of you who haven’t read the our prior review, we’ll include a quick recap of some key elements of the Fundrise platform and service offering. Additionally, some intuitive changes and enhancements have been made to the platform. We’ll cover some of those, too.

Fundrise Overview

Fundrise is an online real estate crowd-funding service, which offers both accredited and non-accredited investors the opportunity to invest in various real estate assets. Investors access properties via the Fundrise platform. Investments are offered via two primary products:

(1) eREITs – composed of online Real Estate Investment Trusts (REITs) investments

(2) eFunds – composed of for-sale single family homes as investment properties

Overall, the mix of eREITs and eFunds offered tries to provide growth and/or income, as well as risk diversification, by offering properties or related assets across locations and different investment types. Both debt and equity investments are utilized.

Related: 5 Ways to Balance Account Types To Balance Life’s (Un)known Milestones

The Fundrise platform also aims to offer investors the opportunity to benefit from market inefficiencies. In particular, the platform enables “direct private market investing”, as Fundrise describes its key offering.

By offering traditionally inaccessible market opportunities to individual investors, users benefit from a combination of Fundrise’s technology, real estate expertise, and related investment knowledge. Visit the Fundrise website for further details.

Our Fundrise Investment Experience

Capital & Dividends

We initiated our position in Fundrise via their Starter Portfolio for only $500. In the 12 months since, we’ve added nearly $11,500 of new capital to our Fundrise holdings.

Unlike our 6-month update, we didn’t have any in-flight investments at the time of this snapshot. It is possible to have investments in-flight which may reflect differently within the principal invested and the estimated value columns. Here is a current reflection of our holdings recently.

Overall, after four quarters, we’ve received four dividend payments – $277.60 in total.  All our proceeds are currently reinvested automatically back into our Fundrise portfolio.

It’s key to note, however, we’ve added more than 60% of our Fundrise capital only within the last 5 months. As of January’s 6-month update, we had invested approximately $5,000.

Most importantly, you need to comprehend that Fundrise is a long-term investment.

Portfolio & Diversification

Of our current 115 projects that we’re invested in, the majority of projects are concentrated in the Los Angeles and Washington D.C. areas. We also have a scattering of holdings across the heartland of the US and some other coastal areas.

The map of the US showing the number of projects by location is very helpful. However, I’d suggest to Fundrise to somehow incorporate an allocation weighting in terms of capital by region. Unless I missed something (which is quite possible), I didn’t see a geographic representation of capital allocation – only the number of projects.

You’re at least able to view your capital allocations across the different eFunds and eREITs. And it’s fairly straight forward to determine your capital in the Los Angeles and Washington D.C. eFunds. But I don’t know what percentage of my capital within the Income eREIT is allocated toward a particular city or region.

It would be also interesting to see your respective capital allocated within each respective individual project (whether geographically or just in a basic table).

Key Fundrise Changes Since Last Review

A few user interface (UI) updates have been made to the platform. We’ll also highlight a few other items related to our use of Fundrise. Some of these might not be a new offering, but we recently learned of them and/or utilized a particular feature.

Create Your Investment Goal

Among other changes, Fundrise introduced a savings target or goal feature. Users can select a time horizon of 5, 10, 15, or 20 years. The tool then asks users to select their target account value. Perhaps a bit too enthusiastic (from my perspective), the pre-set drop-down menu has amounts ranging from $175,000 to $325,000.

Users can also enter their own amount, which must be at least $50,000 but not greater than $1,300,000. I’ll try to start with the $50,000 and go from there.

Ability to Switch Fundrise Investment Plans

To be clear, the savings target feature is different from the Fundrise portfolio strategy choices. The latter still exist:

• (1) Supplemental Income
• (2) Balanced Investing
• (3) Long-Term Growth

We originally started with the Long-Term Growth strategy but switched to the Balanced Investing strategy (how did we not start there in the first place with a name like Balanced Dividends?). It’s easy to switch. I don’t know though if there is a restriction on when or how often you can switch strategies.

But why would you? We did it because of our consideration for our investment horizon time frame. Then again, we only changed it once, and we don’t plan to do so again.

Refreshed ‘Recent Update’ Look

I’ve really enjoyed this aspect of the platform in the last 6 months. Users can continue to access high-quality videos, images, and background information on the various projects.

The “quick view” also provides key highlights of a specific project. Full market analysis and project descriptions are also made available.

I found the “capital stack” table to also be very informative. Users can see the actual amount and percentage of Fundrise’s respective investment (equity or debt), along with those of other lenders and/or project participants, for a specific project.

A timeline or history of the project is also available to review prior updates. Overall, a number of useful data sets are available in a clear, concise manner.

Other Considerations

Here are some other random things I’ve noticed or continue to realize with Fundrise so far.

Desktop / Online Only

There still isn’t an app. Not a must-have, but a nice-to-have.

Cumulative Earnings

As mentioned, each time you log in, you see your cumulative earnings and what you’ve earned since last logging in. It’s addicting (don’t log in too frequently). Also, remember: It’s your cumulative earnings.

Despite reminding myself this since highlighting it previously, I still need to refrain from checking this too often.

Timing of Investments

Withdrawals from your bank account take longer than I’d expect, but not too long.

I think the withdrawals might happen a bit sooner than I recall, but the time to allocate your capital to the underlying investments still takes a few business days.

Automatic Allocations

Based on the amount invested each time, the platform will automatically allocate across your various holdings.

Note: You’ll also see a separate debit in your bank account per allocation (e.g., if you invest $1,000 and gets allocated five ways, you’ll see five different withdrawals in your bank account).

More recently, I’ve realized I like this approach. It’s easier to account for where things are going. Additionally, it helps round-up additional savings transfers via another savings tool we utilize.

Fees / Expenses

Still a bit higher than what I’m used to from investing in index funds and other publicly traded securities, but Fundrise still seems like a great deal based on what you get as an investor. Visit the Fundrise site for further details.

However, I’ve recently referred another investor I know who signed up; we both received 90 days without the advisory fee. Good stuff.

Tax Implications

Most investors will receive 1099-DIV forms if invested in the eREITS. I’ve never dealt with the 1065 K-1 forms related to the eFunds. But guess what? I will next year for 2018 taxes. I actually waited until 2018 to invest in the eFunds for this reason.

This still brings a little uncertainty to next year. But who cares? We’ll deal with it when it comes; I look at it as a learning opportunity.

Related: 3 Lessons Why “Assumption Is The Mother of All F*ck Ups”

Lack of Individual Project or Property Selection

As far as I can tell via my profile view and log-in experience, users do NOT have the ability to select individual properties or projects to invest in. Users select their respective portfolio strategy as outlined above (or select eREITs or eFunds in some instances), but a specific project cannot be selected.

But this isn’t necessarily a bad thing. It enables users to benefit from diversification and prevent a user from potentially allocating 100% of her or his respective capital into a single property or project. For the undisciplined, like me, it enforces discipline.

Looking Back and — More Importantly — Ahead

I’ve still enjoyed utilizing Fundrise. The user interface remains terrific and the overall investment opportunities continue to meet our personal needs and investment objectives so far.

We’re continuing to evaluate next steps and monitor our exposure to real estate. Fundrise has given us diversification away from the traditional, publicly traded REITs that form the bulk of our real estate exposure. The opportunity for potential long-term passive income and capital appreciation is very appealing.

As soon as some new capital becomes available, we’ll likely add additional funds to our Fundrise portfolio. The balanced approach of Fundrise fits nicely as part of our overall portfolio and long-term investment strategy.

Readers, have you tried Fundrise or a related platform yet? What role does real estate play in your investment portfolio? How do you balance the need or desire for income vs. capital appreciation over the long-term?

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Related:

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