Fundrise investment experience

[Revelate]

One megafund per strategy; the portfolio managers make the investment decisions.

My annualized rate is just under 8% though on my small trial balloon (1.75 years); that is good enough for me compared to most bond holdings and I probably picked one of the worst funds (West Coast Balanced).

Investments are basically 5-7 years, though you can redeem early but there’s some penalty involved.

I still treat this as an alternative investment for me but as a non-accredited investor this seems to be the best of the crowd funded real estate platforms at least for my goals which is utterly passive investment for this money.

There is admittedly like 200 pages to read if you want the full gory details from their site.

[Anonymous]

Well, I got a balanced core account going this month.  I guess I will see how this next year goes...

[wasCB14]

I've skimmed the prospectus of one of the underlying Fundrise funds, as well as the website, and a few things stand out:

1. Fundrise spends a lot of time making flawed comparisons to other investment options and emphasizing the ease of investment. They spend relatively little time talking about what they're actually doing with investor capital (cap rates, development plans, etc.).

2. Fundrise sends a very mixed message about how they're investing. On one hand, they call their assets high-quality. On the other, they say they're earning high cash yields. These assets may do well in a booming economy, but I expect they could suffer a lot in a recession. Such a small company could easily disclose the cap rates they are using for each property, if transparency was truly the goal.

3. They compare their returns to one-year stock and REIT total returns, yet they offer almost no liquidity for early redemptions (0% to 5% of the investment per year) and use mark-to-model accounting. If they allowed their supposedly inferior competition the same accounting treatment, Fundrise wouldn't look so good. They talk about how they can buy supposedly illiquid assets cheaply, yet seem to assume they can sell them easily at a good value.

4. A lot of the distributions they have paid to early investors have come not from operations but from financing and new investor capital. They disclose this on pages A-4 to A-8 of the "Income III Offering Circular Feb 2019".

I'm definitely avoiding it.