Fundrise Launches First Ever eREIT

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Well Fundrise.com is leading the industry again with their highly anticipate “new product” which just launched today. Fundrise announced the newest investment vehicle which they have dubbed the eREIT.  Being that this investment is a REIT any investor is allowed to participate even if they are not accredited. The invest is basically a commercial real estate REIT which offers more liquidity (limited on a quarterly basis) , higher projected returns and lower fees than traded and non-traded REITs. The minimum investment is for $1000 and they plan to offer quarterly distributions.

Here are some of the highlights:

Investment Strategy

eREIT uses technology to reduce the costs of operating a traditional real estate investment fund by up to 90%. This increase in efficiency allows us to focus on a greater number of smaller transactions, a segment of the market underserved by large institutional investors. By capitalizing on this market inefficiency, the eREIT is able to seek superior risk-adjusted returns for investors.

What are the costs associated with investing?

You pay $0 in quarterly asset management fees unless you earn a 15% annualized return during the first two years (ending December 31, 2017). Once a 15% annualized return has been reached, investors pay a quarterly asset management fee of 1% per year. This description of the fees associated with the Fundrise eREIT is qualified in its entirety by the disclosure contained in the Management Compensation section of the Offering Circular.

So what is the catch? First of all in order to invest you need to have already signed up and been on the waiting list a few days before the launch. That means if you create and account now you won’t be able to invest yet. How long will it take until they will be able to allow more investors nobody really knows but I would assume not everyone that was on the list will actually invest which means within the month the investment could still be opened to other investors.

The question is what does this offer that a regular REIT doesn’t? Fundrise is projecting higher overall returns than any traditional REIT but that is just a projection and remains to be seen. Fundrise is a technology leader in the field and they hope to leverage this to cut operating costs and exploit inefficiencies that other traditional REITs may face.

Crowdtrader plans to test this with our own intial investment and we will share our results with all of our readers.

Find out more about Fundrise and write a review here. 

Guide to Crowdfunding Investing

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crowd-trade-logo3e-transparentCrowdfunding has exploded as a great way to raise money on the internet for many different causes and projects. It basically allows anyone to share their project or cause and appeal to the masses for financial backing. It has recently been adopted (thanks to the JOBS Act) by various businesses as a new an innovative way for them to raise capital by selling equity or debt  in their project or business venture. This has evolved to create a new asset class for investors allowing “the crowd” to participate in funding start-ups, real-estate developments, or large income producing properties in return for equity or interest payments. In general I would categorize the offers available in to three groups:

Start-Ups

Start-up businesses offer equity to investors and although this is highly speculative the returns can be huge as well. These companies may only be an innovated idea or a company with a prototype of a product. They have no revenue or past performance to base their projections on. More about funding start-ups here.

Growth Companies

Private early stage companies are small private companies which are already selling a product or service and have already generated revenue. These companies are looking for financing to increase production or expand their businesses. These investments are more stable as they have a business model which is already producing revenue although they may not yet be profitable. The returns can be forecasted with much better accuracy and the company value is easier to determine. Some of our favorite platforms offering these type of investments are Circleup.com, Seedinvest.com and crowdfunder.com. Make sure to read our full circleup reviews , seedinvest reviews and crowdfunder reviews as well for more info.

Real Estate

Real Estate companies offer a number of options as well. They may sell debt, offer equity or a combination of both. These offerings may range from development projects of high-rise apartment buildings or single family homes to income producing properties such as elderly care facilities, hotels or commercial real estate. Some of our favorite options for real estate investing are fundrise.com, realcrowd.com, realtyshares.com and realtymogul.com click to see our thoughts and reviews.