Fundrise, a direct-to-consumer real estate investment platform, is making it even easier for anyone to start investing in real estate. The platform recently relaunched its starter portfolio, reducing the investment minimum from $500 to $10. That ultra-low minimum will allow anyone to start investing in real estate on its platform.
Opening the door to even more investors
Fundrise is a trailblazer in the real estate crowdfunding sector. It was one of the first companies to use technology to make high-quality real estate investments available to anyone without the high fees traditionally found in the private real estate market. It has launched several innovative products, including eREITs (real estate investment trusts) and eFunds that allow anyone -- including non-accredited investors -- to access private real estate investments.
It has also had one of the lowest minimum investments, at $500 for its starter portfolio. However, it's now reducing that amount to $10, opening the door to private real estate to even more people. That way, new investors can start growing their real estate portfolio immediately instead of having to wait until they've saved up $500.
Fundrise's new starter portfolio will provide investors access to its flagship real estate investment fund, the Fundrise Real Estate Interval Fund. That fund currently owns more than $250 million of real estate assets. It focuses on investing in multifamily communities and single-family rental (SFR) properties in the red-hot Sun Belt region and last-mile logistics centers benefitting from the accelerated adoption of e-commerce.
Fundrise recently secured a $300 million credit facility with investment bank Goldman Sachs to help finance its expansion strategy. One of its stated goals is to scale its portfolio up to 2,800 rental homes in 12 markets over the next 21 months. It has been doing that by purchasing newly built vacant homes directly from national homebuilders.
That investment focus will enable the Interval Fund to generate steady rental income to support quarterly dividend payments to investors. It also allows investors to participate in the upside of price appreciation on the single-family homes, apartment communities, and distribution facilities it owns. That combination of income and price appreciation will help investors grow their wealth long term.
Investors in the starter portfolio will also have penalty-free quarterly liquidity. Private real estate investments have traditionally been illiquid investments, meaning investors couldn't easily sell.
Meanwhile, even if investors could sell, they usually paid a penalty. For example, Fundrise offers redemption plans for its other eREITs and eFunds that charge fees of between 1% and 3% of the net asset value (NAV) for those that hold shares less than five years. By eliminating the penalty and offering quarterly liquidity, investors have the flexibility to sell their investment if they unexpectedly need the cash.
Another benefit to investors in the starter portfolio is access to investor education. Fundrise is working with some of the top financial educators to develop programs that will help new investors understand the world of alternative investing. That will enable them to build their investment knowledge so that they can make better-informed decisions in the future.
Real estate investing for everyone
Fundrise has been breaking down barriers to increase access to the private real estate market to more people. It has now made it even easier for anyone to get started by relaunching its starter portfolio with an even lower minimum of $10. That move will open the door to real estate's wealth-creating potential to even more people.
Disclosure: Matthew DiLallo owns shares of the Fundrise Real Estate Interval Fund.