One of my constant interests and skills that I want to master is an investment in the stock and property market. They can be very rewarding techniques that will bring you a fortune. But, not many people win the battle due to complex reasons such as a lack of research and discipline, short-sightedness, emotions, and many more. But, these days, you don’t have to do it by yourself.
I am not talking about investment firms, stock brokers or companies that offer advice with a high price tag. These options often require you to pay high premium or have high minimum investment money. For property investment, a minimum requirement amount is way much higher than that of stock investment, which scares people away. An opportunity lies in that space. In this post, I will explore an online property investment platform called Fundrise to find out how the firm plays in the market, and what benefits you can have from them.
This section explains the background of Fundrise. You can judge if this firm is trustworthy.
Fundrise is a startup that launched its first service in 2012. In its website, it told me that the firm spent a year with the SEC or the U.S. Securities and Exchange Commissions, to pass through audits and many filings for the business. They claimed that the platform now serves more than 500,000 members and has around $2 billion invested in the real-estate in the U.S.
As I explained briefly above, they saw the inefficiencies of investments and started their firm. They know that real estate has been one of the best-performing investment options, and wanted to innovate the way of people investing in the market by cost reduction, quality improvement, and more access for the investors.
What does this tell you?
What does this tell us? They found the space where they thought they could improve, and since its first service in 2012, they have been able to not only survive but succeed in the industry by attracting more than 500,000 customers. When I conduct review research, the very basic question I have to answer is if we can TRUST a firm. That is especially true when you have to put your money in them.
My answer to this question is yes. You can trust this firm and can expect an actual return on your investment. In the next section, I will talk about their investment products.
In their website, they explained three different investment streams, Supplemental Income, Balanced Investing, and Long-Term Growth. This section will unravel each of the three plans to help you to discover valuable investment product that suits you.
This income stream is an interesting piece. The option allows you to realize returns regularly, which could be difficult if you do this on your own. To receive a regular return, you will have to buy a property and turn it into a rental property. You will have to renovate if needed, find right tenants, manage the property, and more. Plus, most importantly, you have to pick the right property that will appreciate its value.
You will have to do a lot of research that takes time and money. This is where service becomes useful. I am not only talking about Fundrise. If any paid service does all of these for you and charges you with a reasonable fee, it will definitely be worth the money. And, as I carried out my research on Fundrise and customer reviews, it was convincing to me that that is the case.
Their supplemental income option will be a good fit for those wanting to have regular returns every quarter (like dividends of stock). Instead of the regular return, your money will be allocated to properties with less appreciation. So, choose this option if your primary goal is regular return. Fundrise achieves this by assigning your money mostly to debt property assets. For your understanding, debt property (real-estate) assets mean that the firm lends your money to property developers. Of course, it will be Fundrise’ job to select right developers for security and for good return.
By lending money to developers, Fundrise collects interest and distribute the right amount back to its users. Also, Fundrise will invest your money into existing buildings that already have tenants and receive rents from them. With this approach, you can gain constant returns over time.
If the Supplemental Income stream mainly focuses on dividends instead of property appreciation, this Balanced Investing provides a mixture of dividends and appreciation. So, your money will be allocated both to debt and equity real estate with higher appreciation than that of Supplemental Income. To meet this goal, Fundrise acquires properties that have a high growth potential in value. This is where many people fail. That is because, to succeed, you should be able to predict which untapped areas would be developed and populated. You will need the help of experts in this domain.
Fundrise will use proven tactics to raise the sale price. The methods they use are not secret, but many real-estate investors have already been benefiting from those strategies such as zoning, building new housing, renovating old apartments, and renting buildings. These options also require a long time to start and manage. If someone does all these for me with the right price, I would love to use it.
Since you have read the first two streams, you would be able to guess what this Long-Term Growth option is about. Yes, this option puts the least weight onto dividends but gives the largest contribution to the growth potential. If you are on this track, you can still expect dividends, but it will be smaller compared to the two options. Choose this stream if you are a long-term investor and are keen to gain the largest return. I will cover the return comparison in a separate section.
Comparison of Three Streams
I’ve explained each investment option in a separate section. Here, I will put them together so that you can easily compare them and find what is right for you.
|Focus||Dividends||Dividends & |
|Avg. Investment |
|Popularity||24% Investors||44% Investors||33% Investors|
|Return||8.3% – 9.7%|
6.4% – 7.1%
1.9% – 2.6%
|8.8% – 10.1%|
4.2% – 4.7%
4.5% – 5.4%
|9.1% – 10.5%|
2.8% – 3.1%
6.3% – 7.3%
From this table, you can learn that:
- Balanced Investing is the most popular.
- Long-Term Growth is the highest yield.
- Long-Term Growth has the highest average investment.
You cannot have high dividends and high appreciation, which is similar to the stock market. You will have to consider your investment goal to choose the right option and plan investment amount into that option.
Now that we have studied all the investment streams, we need to talk about how to start. To start, you have to decide on your plan. You can join and start using Fundrise by selecting one of the two plans. The next section will cover what the two plans are and how they are different.
Starter Plan vs. Core Plan
The major differences between the two plans are the minimum investment amount and investment diversification. If you are a starter and new to real-estate investment, I recommend using the Starter plan. You can start with the minimum amount of only $500. In the traditional property investment, that amount is way too small to begin any property investment. The website says that the Starter plan is the most popular option among new investors.
If you want to jump right into a full-blown investment, you can start by choosing the Core plan that has the minimum investment of $1,000, which, I think, is still small. By investing with that amount, you can have more diversification and a broader portfolio. Even if you are a starter, I think that choosing the Core plan is not a bad idea.
I think that Fundrise grasped the needs of individual investors and designed their investment streams and plans considering them. But, it would be fruitless if the market does not appreciate it and accept it as Fundrise hoped. I will dedicate this section to share you my analysis result on customer reactions to Fundrise and their products and services. For this, I compiled more than 240 customer reviews from Trustpilot and used sentiment analysis techniques.
Word cloud is one of the great and fun ways to understand customer sentiments toward a product or a service. In a word cloud, you can see specific words in different sizes. The larger it is, the more people used that word to describe it. The 240+ reviews allowed me to generate an interesting word cloud that let me reach a positive conclusion.
To interpret the word cloud, just follow your eyes and see what you see. You will see that most of the big words are all positive. This means that customers have had a positive experience with the firm. People used words like “great”, “easy”, “great way”, “transparent”, “good”, “love”, and many more good terms to describe Fundrise. This high-level analysis would already give you a good impression on Fundrise. To add more detail to my analysis, I will also share the result of my sentiment analysis.
In the word cloud, we were able to observe what descriptive words people used to talk about Fundrise. In the customer sentiment analysis, we will see more specific types of feeling that people showed in their review. In the analysis, you can see 10 different sentiments such as positive, negative, trust, anticipation, joy, fear, sadness, anger, surprise, and disgust. My analysis on the positive reviews appears as below.
This chart is also not difficult to understand. You can see that the top 4 sentiments are all positive. The big four sentiments are followed by some negative sentiments such as negative, fear, and sadness. But, the positive emotions outnumber the negative sentiments. Thus, we can conclude that people have positive feelings toward the online investment firm.
The combination of research on Fundrise and analysis on customer sentiments supports the fact that you can trust Fundrise and you may want to actively use their services. If you are interested in real-estate investment as an individual, definitely check out the firm. When you start, however, don’t rush and start small. When you get used to is and start seeing actual return, you can scale out. Happy investing all!