There are hundreds of crowd-funding websites around, making prospective investors confuse about which tent to pitch their capital because of fear of losing their hard earned money to scam or incompetent organisations. Stuffs like this have raised several eye brows in recent years leading many to ask questions like is fundrise legit? How competent is fundrise?
So many questions have been asked about Fundrise and in a bid to provide detailed answer and abate all fears about Fundrise, we have written a comprehensive review about fundrise including all you need to know about one of the best crowdfunding website.
Brief Introduction to Fundrise
Fundrise is one of the earliest companies in the business of real estate in the United States. The company currently deals in real estate crowdfunding. Initially, the fundrise allowed only accredited investors to invest in the company but in recent years, the company reinvented itself to allow the public; that is unaccredited investors to invest in the company. This reinvention has been lauded for the recent massive growth in the company.
The company offers various investment packages to possible investors with $500 the minimum investment amount allowed in the company and it works very similar to investing in a mutual fund.
You can expect a quarterly dividend payment from the Fundrise eREITs and whatever appreciation has accrued when the assets investment term has expired.
The company currently has nine different eREITs and some of them no longer welcome new investors due to some logistics. The company allows investors the chance of selecting from of any of the available investment plan and they help you spread your investment across the various eREITs in order to diversify your capital.
This strategy has helped the company to grow in recent years to become one of the best crowdfunding websites around. In spite of the success story many investors, prospective investors are still scared to commit their capital to the real estate firm. Many constantly ask the question, is fundrise legit? Well, keep reading to see details answer about the frequently asked question.
In order to know if Fundrise is legit or a scam, if you have to learn how a crowd-funding works. The following section contains useful information about workings of a crowd-funding organization.
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How Crowd-funding Work
Firstly, you should bear in mind that there are different types of crowd-funding and this article focuses on real estate crowd-funding. Real Estate crowdfunding is a simply an investment scheme that collects capitals (investment) from investors to purchase a real estate asset with the capital collected.
The investors then become shareholders of the purchased asset from which they receive earnings periodically throughout the duration of the investment and if the company decide to sell the asset, the investors also receive their share from the sale. This is a beautiful means of making money without stress.
This means of getting money from people to invest in properties is called syndication in real estate. Before the advent of the internet, this was done privately where only a handful of elite are invited to invest in real estate companies.
These offers are more or less securities which are no more different to stocks and as much, crowdfunding is regulated by the SEC.
What is Fundrise?
Fundrise is simply a real estate investment company that allows investors to invest in commercial real estate even when you not an accredited member of a real estate company.
The company is known to operate a transparent market and their goal is “make the process of investing in the highest quality commercial real estate from around the country simple, efficient, and transparent.”
In the past, investing in the lucrative business of real estate was only open to a few people with information about the potentials of real estate but thanks to organizations like fundrise, investment in real estate through crowdfunding is now available to people like you and me who are not accredited members of any real estate company.
The company does this by cutting out the middle-man overhead cost by acting as a bridge to connect you directly to investments.
The company currently has hundreds of thousands of investors who have invested massively in billions of dollars worth of real estate. The minimum amount of investment currently allowed in fundrise is $500.
Fundrise’s Accreditation Requirements
As earlier stated above, in the past, fundrise was open to only accredited member until a few years ago when things take a new turn due to the intervention of the stock regulatory body SEC. In 2016, SEC released Regulation A which paved way for unaccredited members to invest in stocks. This move by the SEC has been highly and lauded and it is the single reason why you and I can now invest in real estate without becoming accredited members.
However, the Regulation A became too complicated for some crowdfunding organizations many of whom ditched the new regulation to return to the conventional Regulation D which allowed on accredited members to invest in their company.
Fundrise is one of the companies that adopted the Regulation A offering opportunities to unsophisticated investors like you and I. To be invest in Fundrise, you don’t need to become an investor just log on to the company’s website to see the simple steps required to make investment with the company.
Redemption of shares with fundrise is a simple and straightforward though a bit technical. There are set minimum durations when investors may redeem their investment. Investors are only allowed to redeem only some amount of shares per quarter.
Also you are to note that fundrise get to calculate the value of the shares as it’s impossible for investors to determine the values.
The following are the period and amount of redemption allowed by the company;
- Less than 6 months – No Redemption Allowed
- 6 Months to 2 Years – 95%
- 2 to 3 Years – 96%
- 3+ Years – 97%
Is Fundrise Legit?
To answer the frequently asked question about the company, which is – Is Fundrise Legit? The answer is a simple YES.
Fundrise is a legit company that is under the regulation of SEC. The company has been around for years and hundreds of thousands of investors attest that have benefited from the company.
However, fundrise is for the following group of persons:
- Investors with a long-term outlook.
- Those seeking diversification outside of stocks and bonds.
- Investors willing to do their own due diligence.
If you had any fear about investing in fundrise, this article should be able to clear your doubt and abate any fear you have.
You can learn more about the company through the official website and join the growing list of fundrise members.