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Four years ago, I put together a video and blog post explaining how Fundrise works.
Fundrise is a real estate crowdfunding platform, and as part of the tutorial, I decided to invest $1,000 of my own money with the company, so people could see exactly what it looks like.
Ever since then, I’ve been tracking the progress and returns from that investment by putting together an annual blog post and video that shows what the dividends have been and how much the money has grown.
If you want to get caught up on where this has been, you can see each of those annual reviews here.
- Original Investment: Fundrise Review (2017): Is This Really the Easiest Way to Invest in Real Estate?
- Year 1: My Fundrise Investment (2018): One Year Later
- Year 2: My Fundrise Investment (2019): Two Years Later
- Year 3: My $1K Fundrise Investment (2020): Three Years Later
It’s been a lot of fun seeing how much engagement and attention these videos have gotten on YouTube.
My goal with these annual reviews isn’t to make a case that you should be investing with Fundrise. My goal is to simply make you aware that this kind of investment strategy is an option (and you don’t need to be an accredited investor to participate) and to show how the website works.
And of course, it’s always fun to see the actual returns on a live investment. Not just a theoretical look at how it works, but what the results look like for a real investor.
Of course, the performance of my investment doesn’t necessarily dictate what YOUR returns may look like. Every eREIT performs differently, and the performance will almost certainly vary from one year to the next – but it does offer some insights on how Fundrise performs as a company – specifically in comparison with other investment options like the stock market, mutual funds, or some of the other real estate crowdfunding websites out there.
So – for what it’s worth, I just put together ANOTHER follow-up video to show what my returns have been, now that Fundrise has been working with my money for 48 months, which you can see below…
Disclaimer: The information contained herein neither constitutes an offer for nor a solicitation of interest in any securities offering; however, if an indication of interest is provided, it may be withdrawn or revoked, without obligation or commitment of any kind prior to being accepted following the qualification or effectiveness of the applicable offering document, and any offer, solicitation or sale of any securities will be made only by means of an offering circular, private placement memorandum, or prospectus. No money or other consideration is hereby being solicited, and will not be accepted without such potential investor having been provided the applicable offering document. Joining the Fundrise Platform neither constitutes an indication of interest in any offering nor involves any obligation or commitment of any kind. The publicly filed offering circulars of the issuers sponsored by Rise Companies Corp., not all of which may be currently qualified by the Securities and Exchange Commission, may be found at www.fundrise.com/oc.
Fundrise Performance Update for 2021
When I first set this up 4 years ago, I told Fundrise to automatically reinvest all of my dividends (rather than sending them to my bank account), which is why the portfolio value has grown like it has (rather than just staying at $1,000).
As you can see – my original $1,000 investment (with all dividends automatically reinvested) has earned a pretty decent return on average over the past year. 2019 was the best year at 12.2% and 2020 was the worst year at 9.7%.
This screenshot above was taken on April 14, 2021 – the same day my Q1 dividend for 2021 was automatically reinvested.
To be fair, April 14 isn’t even a full 4 months into the 12-month calendar, so the 2021 year-to-date earnings look disproportionately smaller compared to the previous years.
Here’s a quick snapshot of EVERY dividend I’ve received since I got started 4 years ago:
Now, even though 2020 showed the lowest returns I’ve seen to date, 9.7% is still a pretty decent return, given that this is a totally passive investment that requires literally nothing from me.
On the same coin, if I actually was willing to do some real, hands-on work, I could get a much better return on this money… but from what I can see, that’s not really the idea with this type of investment. People who invest with Fundrise generally aren’t motivated by getting a staggeringly high return, they’re motivated by the passive nature of it, and the fact that they can diversify into real estate.
The returns I’ve earned with Fundrise have required nothing from me, aside from the time I’ve spent each year putting together these annual reviews for readers like you. 🙂
Another important point worth noting is that my $1,000 principal investment with Fundrise is basically tied up for 5 years (give or take). Since this is year 4, I actually might have a shot at getting back my original $1,000 next year if I decide to do that.
However, seeing as how I haven’t needed this money since 2017, I might just leave it where it’s at so I can continue watching it grow.
The Impact of COVID-19
Last year, one of my biggest concerns was how the COVID-19 pandemic (which was very new at the time) would affect the real estate market as a whole.
While the growth of my investment did slow down a bit, it still came in at a respectable 9.7% at the end of 2020, considering what the world has gone through over the past 12 months, this isn’t a huge negative impact in my book.
Changes in Portfolio Reporting
One notable change I saw in my dashboard this year was how the portfolio positions are reported. In previous years, my investment had been reported in terms of what percentage was in “Debt” projects vs. “Equity” projects.
Debt projects are when the money is being borrowed by another investor or developer, and that borrower pays interest on the loan, which then contributes to the growth of my invested dollars.
Equity projects are when the money is being invested into the ownership of a property. As the property generates cash flow and appreciates in value until being sold, this money contributes to the growth of my invested dollars.
Starting in February 2021, the portfolio mix is now broken out by Fixed Income, Core Plus, Value Add, and Opportunistic. I wasn’t entirely sure what these terms meant, so I asked Fundrise to explain. Here’s what they told me:
- Value-Add most closely resembles a “rehab” strategy. This typically entails renovating an asset so that the value is increased, increasing rents, improving lease-up, increasing amenity fees, etc. Value-Add projects primarily generate long-term appreciation as opposed to dividend distribution.
- Opportunistic assets are expected to have the highest potential long-term return. An example of an opportunistic asset would be a ground-up construction project, where it may take years to begin generating returns.
- Fixed Income is a classification typically used when Fundrise provides a loan to an asset or similarly structured financing. These types of assets typically have the lowest overall risk and begin generating returns more immediately (although the upside is usually capped).
- Core Plus is when Fundrise expects to acquire a newly built and stabilized asset that can produce steady cash flow generated through rental income with some potential growth (such as renewals).
As you can see, the website is continuing to do its thing. My investment is still throwing off dividends, even in the midst of an incredibly bizarre year in 2020.
What impact with 2021 have on Fundrise and the real estate market as a whole? I’ll be sure to report back on this next year.