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The TRUTH about Fundrise Real Estate Investing





Fundrise. Real Estate Investing with some pretty substantial returns. Is it worth it? Is it legit? Should you invest in it? Here’s what I discovered. Enjoy! Add me on Snapchat/Instagram: GPStephan

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Fundrise is a real estate investing service that allows you access to private market real estate deals that they say should “deliver superior risk-adjusted returns over time versus a portfolio of publicly traded stocks.” The biggest difference is that Fundrise is NOT publicly traded on a stock exchange, but they are publicly available. By being publicly available, this means that anyone can invest because they comply with the SEC disclosure regulations, and by doing so, they don’t limit themselves to accredited investors

So there’s gotta be a catch, RIGHT? So I read through all 225 pages of their fine print. Here’s what I found.

First concern is lack of liquidity. By investing through Fundrise, you’re pretty much tying up your money for 5 years. Even though they say that if you pull out your money prior to then at their redemption rate, which is 97% at its lowest – they still make it very clear there is no guaranteed return of your investment with no immediate plan to buy back your shares. As from their fine print: “If we do not successfully implement a liquidity transaction, you may have to hold your investment for an indefinite period.” It goes on to say “Fundrise Advisors, LLC, our wholly-owned subsidiary, has the authority, in its sole discretion, to limit redemptions by each shareholder during any quarter, including if the Manager deems such action to be in the best interest of the shareholders as a whole.”

Second concern I have is their fees…which they say are 1% annually. This seems a bit high compared to other lower cost options, namely a Vanguard REIT – which charges 0.26% annually as a fee, or 74% LESS than FundRise. But, in FundRise’s defense, they’re a smaller company which invests in riskier assets that should generate higher returns to compensate to the higher fee.

My third concern – and also a major reason I’d never invest in this – is that the dividends are taxes as ordinary income at your ordinary income rate. One of the many advantages of holding long term investments is capturing the long term capital gains tax rate – this is typically SIGNIFICANTLY lower than the tax rate for ordinary income.

My fourth concern is how this investment will hold up in a down market. While I agree with their market strategy and can’t find any faults with where they’re investing, at some point there will be a plateau in growth, while these returns are possible NOW, I’m unsure how sustainable these are long term – and again, if you want to re-balance your portfolio, you may be stuck with your investment. And they very much acknowledge this in their fine print: “The significant growth we have experienced, particularly with respect to assets under management and revenues, will be difficult to sustain.”

Fifth, I’m always a little hesitant about companies that give referral fees. While often it’s a nice gesture to give customers SOMETHING for referring business, and I totally agree with this business model, in the age of the internet, there will be people out there who will write falsely positive reviews just to get the referral bonus. When this happens, honest criticism becomes buried or harder to find.

For someone wanting exposure to real estate, I believe there are many other REIT options out there that offer the liquidity and tax treatment that put you in a much better position, even if they’ll give you slightly lower returns. I’d rather sacrifice a percent or two JUST to have access to my money when I need it. So overall, no it’s not a scam – and there are some positives about what they’re doing – but from what I see, the downsides just outweigh the upside, rendering other options as more attractive when put side by side.

For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com

Suggested reading:
The Millionaire Real Estate Agent:
Your money or your life:
The Millionaire Real Estate Investor:
How to Win Friends and Influence People:
Think and grow rich:
Awaken the giant within:
The Book on Rental Property Investing:

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37 comments

  1. Hey Mr. Stephen, can someone be successful in becoming a real-estate agent (via your course for example) while working full-time (i.e. 9-5)? Or do you think that would be too stressful and counter-productive?

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  2. thanks for clearing up this topic, great video man!

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  3. Would have been hilarious if you did a random Amazon referral link after making that fifth downside point. Other than thad nice video, I didn't know about Fundrise before hand, and am now glad you read that fine print for me, so thanks for that.

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  4. Can you research Morris Invest Home investment service? They find houses for you and repair them and then rent them. Please let me know it interests me!

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  5. A lot of people talk about real estate on YouTube. You are the only one actually read all the fine print and make it easy for people like me to understand.

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  6. Been waiting for a video on Fundrise from you since '89.

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  7. Looks like the Bitconnect of real estate to me, great work Graham 🙂

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  8. Check out my brand new channel for daily videos with amazing wealth and financial tips.

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  9. Thank you for your insight, I really enjoy your videos, you motivate me to be a better person. Please make more videos

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  10. Thanks for the vid graham! Appreciate reading them 200+ pages haha. Take my like 🙂

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  11. Thank you for this video, Graham!! I was considering fundrise for a while, so I really appreciate the time and effort you put into this!

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  12. Hey Gram for the Taxation portion of the video does that document cover the new tax laws? From what I understand the new laws discount tax charges for the first 20% of the income … bty looks like you have been hitting the weight room

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  13. how about realty mogul?

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  14. Smashed the like button with my s pen😂

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  15. Appreciate the effort. That is a lot of small print.

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  16. Thank you for this!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! …now to add some vanguard REIT's into the mix🤔🤔 (🔥thanks again super helpful 💯)

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  17. Hello Mr. Graham, Thank you for this video. I came across fundrise once before but I just didn´t feel it. Thank you for shedding some light on the situation. Keep up the good work.

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  18. can you make a video like this about peer to peer lending?

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  19. Can you do the same thing with Jay Morrison's Tulsa REIT

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  20. Hey Graham, I smashed it again ! Lol. Next time I will be careful not to drop my phone again. Great content, Thank you.

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  21. SALUTE

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  22. BITCONEEEEEEEEEEECT

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  23. how you read 225 pages in 4 hours? Next video title "HOW TO SPEED READ REAL NOT FAKE NOT SCAM"

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  24. Graham! Thank you for answering questions to everyone who saw FundRise adds and we’re curious!!! The 7 people who thumbs downed you are haters. 🙂

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  25. Real estate investments https://fundrise.com/r/p3nvq

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  26. Great video Graham. I was doing similar research recently. I was trying to understand the difference between crowdfunding vs syndication. I agreed on your comment about the downside, but I would also say that is the nature of real estate. crowdfunding seems like a good alternative of ETF(haven’t done much comparison with REIT) cuz real estate market is not entirely correlated to the stock market. The downside I agreed on is the tax benefit. Comparing to some syndication or partnership deal, that’s prob the biggest reason I don’t want to invest in crowdfunding. I think the biggest reason crowdfunding exists is because the accredited investor barrier on syndication.
    Overall I think it’s good for ppl who wants to diversify their investment and being passive.
    Great video as usual! Love your work 👍🏻

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  27. Thanks u save alot of us the headache of researching all those pages

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  28. I personally communicated with them because I am concerned about the exit strategy also. However, after some back and forth, I actually agreed with their strategy. They discourage short time investors. They made this quite clear. They have the option of opening IRA accounts for retirement investments. I believe this is the right way to go, meaning long term an buy and hold for ever.

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  29. This is for long term investment, not for short-term in&out game. Be patient and it will pay off dearly in the long term. I invest quite substantially with Fundrise and never regrets it. Be clear, the money I invested in Fundrise is not the money I will need in 5 or even 10 years. I use it to hedge against my stock portifolio. Better than bonds.

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  30. What is your advice for someone who has funds to invest in real estate, but lacks time to be actively manage it due to work and family commitments?

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  31. Good vid, Graham.

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  32. Thank you!

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  33. Never liked or even disliked a YouTube video before😂 but that’s a hell of an effort, wish I could give you a million 👏🏽

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  34. Thanks for putting so much effort into investigating this! Love the videos man, keep it up. Also loving the edits and the sound effects you add!

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  35. Hey Graham, I keep seeing that the US dollar might collapse soon? Is that true, should we prepare?

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  36. 17:19 good C.Y.A. 😂
    I must say, you're the robin hood of real estate channels on YouTube. You don't just talk about feelings. Thanks!

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  37. "I spent 4 hours reading 225 pages"
    Boii it would take 10 hours for me, I'm super slow at reading lmao

    Reply

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