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:
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.