How to Invest in Real Estate With Little Money Using Fundrise
I have always dreamt of being a real estate investor, but it seemed nearly impossible with real estate prices in the NYC area. Luckily, about two years ago I came across this platform called Fundrise, which allows you to become a real estate investor with very little money.
When I started, it required a minimal investment of $500, but now you only need $10 to get started. Today, I want to share my experience with you and show you how to invest in real estate with little money.
As a disclaimer, I am not a professional financial advisor or financial planner. I am simply writing from my personal experience, so make sure to do your own research before you invest.
What is Fundrise?
Fundrise is a crowdfunding platform that allows you to invest a little bit of money into multiple real estate projects. Instead of doing all of the work associated with buying and managing a property, you just invest in real estate projects and eventually get returns.
How does Fundrise work?
Once you invest your money, Fundrise will take that money together with other investors’ money and start investing that money into residential or commercial properties.
So why do I like Fundrise?
First, it is a good way for you to enter the real estate market without having a lot of money, so it does make real estate investing accessible to more people.
Second, if you have been actively investing your money in the stock market or other investments, this could be a good way for you to diversify your portfolio.
Right now, with the inflation associated with Russia’s invasion of Ukraine, the stock market is not doing so well, so my stock portfolio has seen better days. Having my money allocated to other investments, such as my Fundrise portfolio, has been giving me peace of mind.
Another thing that I like about Fundrise is that it makes real estate investing very hands-off. As a property owner, I would have to do things like fix someone’s toilet in the middle of the night.
With Fundrise, you let them run with your money and grow your portfolio for you, which truly makes this a passive source of income for me.
Next is transparency. Unlike many other services, Fundrise is very transparent with its fees. You can always check what you have been charged for on the dashboard.
You can also look at every specific project that you have your money invested in. Every time a new property is added to your portfolio, you will get a notification in the app. I can see exactly what types of properties I am investing in, especially the locations, and I do see great growing markets.
What are the downsides of Fundrise?
The most important thing for you to keep in mind is that Fundrise is not a short-term investment. Unlike with the stock market where you can just sell your shares and withdraw money from your account, with real estate it obviously takes much longer for the company to buy those projects, finish building them and sell them.
This means that liquidating your assets may not be that easy, so go into this investment knowing that you would want to hold your money for around three to five years.
Withdrawing money is technically possible but comes with a bunch of penalties, which defeats the whole purpose. If you are saving for something and are planning to withdraw money at the end of the month, Fundrise is not the right fit for you.
My Fundrise returns
How much money have I made? I first opened my account around the end of March 2021. The graph shows that for a while, I was not really making a ton of money, but it was consistently going up.
I was making a few cents, sometimes a dollar per day. It was consistently going up throughout the year. And then you can see a big jump around September 2021, when I got a notification saying I was invited to invest in Fundrise IPO.
I was not sure if I should go for it, since I did not have a whole lot of information about it, but I did some research and found out that the opportunity to invest in Fundrise IPO does not come by that often (at least it did not then).
At the time, I was lucky enough to have extra cash laying around, so I decided to purchase the Fundrise IPO, and invested about $1,000.
To sum up, I invested about $1,000 when I first opened this account. I then also purchased $1,000 worth of Fundrise IPO. Then, a few months ago, I set up recurring weekly deposits of $20. All this comes up to roughly $2,400 of my personal investment.
From this, I made about $20.53 worth of dividends, and my appreciation was about $300.40. I did have to pay a little bit in advisory fees because Fundrise needs to pay the bills too, but it is obviously not that much money.
Therefore, all in all, I have made a total of $319 on Fundraise so far. This is clearly not a lot, but if you remember, I really did not invest a whole lot of money compared to what you would invest if you actually bought a property.
Obviously, the more money you invest, the more return you are going to make. I think this is actually a relatively good amount for very passive income, as I literally did not have to do anything in the past year to grow my portfolio, so I am really happy with the total Fundrise returns.
How to invest in real estate with Fundrise
Hopefully, my review of the Fundrise investment platform has been helpful on your journey toward becoming a real estate investor.
Have you had any experience dealing with Fundrise? Do you recommend any other platforms? Feel free to leave a comment below!