Using online resources and an investment known as a Real Estate Investment Trust (REIT), you can make real estate investments without purchasing an actual property. This method allowed investors to purchase properties with the help of professionals without having to deal with the hassles of managing residents, collecting rent, or fixing toilets in the late hours of the night.
We will examine how Fundrise and REITs differ in this comparison guide. You must realize that Fundrise is merely one type of REIT when contrasting it with REITs. REITs are special purpose organizations that focus on putting cash investments in real estate, much like a mutual fund does with bonds and stocks.
How would you determine whether using Fundrise to make investments would be a wise move for you? If you want to know which real estate investment is better for your particular situation—Fundrise vs. REITS—or if you aspire to become a real estate tycoon, continue reading.
| Fundrise | REIT (Vanguard) | |
| Minimum investment | $10 | Single share. Some brokers also permit fractional shares. |
| Asset classes | Real estate | stocks of real estate investment trusts (REITs) and other companies |
| Account Types | JointIRAIndividualEntityTrust | JointIRAIndividualEntityTrustInternally managed brokerage accounts for company retirement plans |
| Visit Fundrise |
Fundrise Overview
Platforms for real estate crowdfunding like Fundrise let individual investors participate in bigger real estate deals that are generally only open to accredited investors. There is much more money needed than the average investor has to become an accredited investor. Instead of spending the time, money, and effort necessary to purchase numerous individual properties, Fundrise participants can invest in a less expensive, diverse portfolio of institutional-grade real estate.
Users of the Fundrise platform can open a Fundrise Starter account standard and invest as little as $10 in a diverse pool of real estate properties. Depending on your objectives and the amount of money you want to invest, Fundrise provides other account levels.
- Starter: $10
- Basic: $1,000
- Core: $5,000
- Advanced: $10,000
- Premium: $100,000
REITs Overview
A real estate investment trust is referred to as REIT. For the benefit of real estate investors, a REIT is a business that owns and manages properties that generate income. These REITs produce income that is given as dividends to investors.
A REIT must also fulfill other requirements, including passing at least 90% of its annual taxable income to shareholders. Due to its REIT status, it can eliminate its taxable income by deducting all shareholder returns from its income. Investors would be wise to purchase REITs with a tax-advantaged account, such as an IRA or 401(k), as dividends paid to shareholders are subject to ordinary income tax (k).
Difference Between Fundrise and REITs
- Investments: Through eREITS and eFunds, Fundrise invests in a diverse collection of private real estate properties. REITs and businesses that purchase real estate are investments in the Vanguard Real Estate ETF. In other words, Fundrise directly owns properties, whereas Vanguard Real Estate ETF directly owns real estate investment trusts.
- Investors only need a $10 minimum investment to start with Fundrise. However, if you use a brokerage account, you can begin with only one share within the Vanguard Real Estate ETF.
- Fees: There are no fees associated with investing with Fundrise or the Vanguard Real Estate ETF. However, when purchasing Vanguard Real Estate ETF shares, your brokerage may charge you fees.
Fundrise vs. Reits: Which Should You Choose?
Consider your real estate investing background and desired time horizon for your investment when deciding between Fundrise and REITs. These two real estate investments are not equivalent, although both Fundrise and conventional REITs offer diversity and a comparatively low initial investment.
Investors have a clear choice with Fundrise, which benefits from more than a century of industry expertise. When investors open an account, experienced managers instantly invest their funds in assets of real estate investments that are tailored to your objectives. The drawback of these investments is that you might have to wait years to get your money back without paying the penalty.
There are many different kinds of REITs available. A novice investor may find it difficult to choose where to start due to the abundance of options. You should have a long-term perspective when investing due to the risks involved, but you can rest easy knowing that most publicly listed REITs and mutual funds can be liquidated at any time.
Fundrise is a better choice for those new to real estate trading because it depends on the knowledge and experience of its managers in the field. Please remember that any funds you invest with Fundrise might not be available for a while until the fund makes distributions, sells a piece of real estate from its holdings, or accepts your withdrawal.
Fundrise vs. Reit: The Bottom Line
Investors who want to make money from rental properties should think about Fundrise or REITs as a good alternative regarding investing in real estate or even just how to make money. These investment strategies have many advantages, including diversification, professional management, and lower minimum investments.
