Graham Stephan Says New Platform Fundrise Can Help You Invest in Real Estate. Should You Try It?
KEY POINTS
- Fundrise is a private real estate investment platform.
- The platform caters to long-term investors who believe in the real estate market.
Diversified real estate investments for the tech-savvy.
Everything from stocks to cryptocurrencies are crashing. Sirens are blaring as the recession fears herald a financial apocalypse. Stresses are high, and everyone's looking for a safe place to store their money. It's a good question, and one that no one can definitively answer.
Amid the chaos, real estate agent and investor Graham Stephan recently recommended Fundrise, a private real estate investing platform. On Twitter, he shared an infographic demonstrating how Fundrise has beaten the S&P 500 by 24% in the first half of 2022.
While this is good news for current Fundrise investors, new investors should take that statistic with a grain of salt and a hefty dose of caution. The housing market is roiling, and past performance doesn't guarantee future success -- especially over a short six-month period.
What is Fundrise?
Fundrise is a private real estate investment platform. It offers retail investors portfolios of properties to choose from. For a fee, investors can make diversified investments through the website. It's 100% virtual, and investors can track their investments through an in-app newsfeed.
Here's what makes Fundrise special, according to its website:
- Anyone 18+ can invest: No "accredited investor" status is required.
- Low fees: For every $1,000 invested, investors pay $1.50 to $10 in yearly costs.
- Low minimums: Investors can get started with as little as $10.
It's a tempting proposal for tech-savvy investors. It's also ideal for long-term investors -- the platform locks in investments for 5+ years. While investors can request to withdraw shares anytime, Fundrise can and may force investors to hold shares or pay early withdrawal fees.
In short, Fundrise is a private, crowdfunded eREIT (electronic Real Estate Investment Trust), which is different from a publicly-traded stock or typical REIT. Investing in Fundrise means placing your bets on the housing market and committing to long investment periods.
Should I invest?
Even if you're a die-hard fan of Graham Stephan, do be aware that his Twitter post is not unbiased. Fundrise sponsored it. Check out the site yourself before investing, and do your research before handing the platform your money.
If you're willing to bet long term on the private housing market, Fundrise might be worth considering. It's always risky to invest through new investment platforms like Fundrise, so keep that in mind when doing your due diligence (the platform launched in 2015).
You can also invest in real estate on the public market through REIT ETFs. They charge annual fees for managing funds. Investors can withdraw their funds like they can publicly-traded stocks. The best REIT ETFs give investors the most bang for their buck.
Our Research Expert
Cole Tretheway is a full-time personal finance writer whose articles have been featured on Motley Fool Money and The Motley Fool. He has a degree in English with a Certificate in Professional and Technical Communication from California Polytechnic University, SLO.
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