Realty Mogul is a real estate investing website that focuses on commercial real estate and allows you to invest in one of two ways.. In the past, these accredited investors were the only ones that had the ability to invest in these private real estate investments. We're choosing the Vanguard Real Estate ETF because we value low-cost investments, the reputation of Vanguard, and the ability to buy and sell shares quickly. Fundrise offers three additional account levels depending on your goals and how much money you want to invest. Because of the risks involved in investing, you should have a long-term view, but there is peace of mind in knowing that most publicly-traded REITs and real estate mutual funds can be liquidated at any time. In order to be classified as a REIT, at least 90% of the taxable income needs to be passed along to shareholders in the form of dividends. Choosing the right product and service is essential for your investing. Long-term investors who want a diversified real estate portfolio customized to their needs. You should only invest if you are comfortable with this liquidity and have a minimum time horizon of 5 years. With so many different investment options offered by Fundrise, investors can buy into different types of real estate in all kinds of locations. Some REITs do require investors to be accredited, however, the Vanguard Real Estate ETF does not. however, there are some important differences between the two investment vehicles. Becoming an accredited investor requires a lot more money than the average investor has. All products are presented without warranty. One of the main differences between Fundrise's eREIT and a traditional REIT is the level of liquidity. This eREIT is for asset appreciation and long term growth. The objective of this eREIT is cash flow generation. Whereas with a REIT, you are investing in a corporation that in turn invests your money into real estate. This eREIT invests primarily in real estate debt and equity investments, that will provide fixed rates of return as well as aiming for long term value creation. 1. By submitting this form you agree to receive emails from FinanceBuzz and to the privacy policy and terms. This eREIT also aims to buy properties below their replacement cost. That’s why I think comparing Fundrise to an actual REIT (one that is inside VNQ, no doubt) is the better comparison. Top 13 Robo Advisor's Fee Comparison 2021: Which Is Best? REITs have opened up real estate markets to common everyday investors, providing more liquidity and an explosion of investment into real estate. Fundrise does have support for private REITs, while RealtyShares does not. This allows the investment to avoid the double taxation that C Corporations face, however this will likely cause your gains to be taxed at your normal income tax rate instead of your capital gains rate. Lastly, if you are on the fence about investing in a REIT, their 90-day money-back guarantee is a great way to get your feet wet with no risk. Fundrise takes a venture capital approach where they are constantly purchasing and selling real estate assets and debt. What is Fundrise? Ryan Scribner is a personal finance YouTuber that is approaching 500,000 subscribers on his channel. Typically, a REIT will specialize in a certain niche depending upon its employees' expertise or opportunities in the real estate market. What Is The AcreTrader Minimum Investment? Fundrise claims in its marketing that it saves investors “0.37-5.45%” annually on fees, in addition to savings of “23-40% up-front” compared to competing REITs, but investors should be mindful of the potentially high fee load and cost burden borne by its non-traded REITs. Want to learn the ins and outs of crowdfunded real estate?Here's our free guide that covers the basics of getting started with this investment.We will show you how to get started with as little as $500 and explain the basics, like debt versus equity investments.Get The Guide. These investments change hands just like stocks, and as a result the performance of the asset is heavily correlated with the overall stock market. For tax purposes, a REIT must pass at least 90% of its taxable income to shareholders annually and meet other criteria. Unlike a large public REIT, Fundrise continuously originates new loans and acquires new properties for each eREIT. Fundrise eREITs offer a variety of features not typically seen in traditional non traded REITs. The income eREIT follows the strategy of acquiring smaller assets that fall out of the scope of larger investment banks. We have not included all available products or offers. To sign up with Fundrise, you'll need to provide some personal information for identification and tax purposes, select your investment objective, and fund your account. It’s a curious case where stocks tend to take the stairs up, but the elevator down. Real Estate Investment Trust (REIT) Definition A real estate investment trust (REIT) is a publicly traded company that owns, operates or finances income-producing properties. If you’re an accredited investor, you can invest in individual property offerings. In this article, we will be comparing the "new school" investment which is Fundrise to the "old school" investment which is Vanguard REITs. Here's our free guide that covers the basics of getting started with this investment. As mentioned above, REITs can take many different forms, so we will continue the comparison of Fundrise vs. REITs by using the Vanguard Real Estate ETF as our example. When comparing real estate investment options, DiversyFund’s approach is unique. FinanceBuzz is reader-supported. In fact, VNQ is one of the most popular REITs available on the market today! Non-traded or private REITs may require an investor to be accredited. Accreditation means the investor has at least $200,000 in income ($300,000 for married couples) or $1 million in net worth (excluding equity in a home). Fundrise is open to all U.S. residents who are 18 years or older. Before getting into more detail, here is a quick overview of Groundfloor and Fundrise. By leveraging technology, Fundrise has taken a new approach to the non traded REIT. There are many types of REITs to choose from. .12% annual expense ratio (as of Aug. 27, 2020), Stocks of REITs and companies that buy real estate, Self-directed brokerage accounts within company retirement accounts, Separate 1099-DIV and K-1 for each fund you invest in, 1099-B for sale of shares (if applicable). Fundrise vs Vanguard REIT (VNQ) 2021: Which Is Better? Keep reading to learn whether Fundrise vs. REITS is the better real estate investment for your situation, and whether investing is just a personal finance goal or you have a dream to become a realty mogul. So you might be wondering is Fundrise a REIT? FinanceBuzz is not a financial institution and does not provide credit cards or any other financial products. In other words, if you want to get money out before properties get sold or the fund closes, there are restrictions. You simply invest your money and let the experts lend their expertise. Fundrise is a unique real estate investment, where most traditional REITs contain real estate that has already been purchased. REIT. Investing Simple is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. REIT is an abbreviation for real estate investment trust. The ability to invest in a REIT depends on which REIT you are focused on. By qualifying as a REIT, it can deduct all shareholder dividends from its income to reduce its taxable income to zero. The growth eREIT looks for opportunities in affordable housing complexes. We strive to provide up-to-date information, but make no warranties regarding the accuracy of our information. Here are the returns from the Vanguard VNQ REIT over the last 5 years compared to the returns of Fundrise. For new real estate investors, Fundrise is a better option because it relies on the industry knowledge and expertise of its managers. This means you must have a buyer or seller willing to conduct a transaction to provide liquidity as there is no secondary market. For more information, please read our. Examples of REIT property specialties include: It depends upon the type of REIT you are investing in. Publicly traded REITs trade on a major exchange like the NYSE or the NASDAQ. For example, consider American Tower Corporation. The primary objective of this eREIT is cash flow generation from purchasing real estate debt on commercial properties. Groundfloor. While this platform is new, the concept of passively investing in real estate is not. Only if you want exposure to the real estate market, are looking for a means of diversifying away from traditional stocks and bonds, or both. Before this change in regulation, you had to be an accredited investor to invest in private real estate deals like this. I’ve personally invested in both Groundfloor and Fundrise, and have found they each have different benefits. However, in all other years, Fundrise has had significantly better performance than the Vanguard REIT.