So you want to get into real estate investing but don't have a lot of money? That's no problem! You can start with just $500 (or even less) and begin building your portfolio. In this blog post, we will discuss some tips for getting started as well as some of the best ways to invest in real estate with limited funds. We will also talk about a company called Fundrise that allows you to get started with just $10.
So read on for more information and get started today!
What is Fundrise?
Fundrise is a real estate crowdfunding platform that began in 2012. Now one of the most well-known players in the space, the company allows non-accredited investors to get into real estate with as little as $10.
The Fundrise app removes the need to physically manage properties as well as the need to have significant sums of money to pursue real estate investing.
This greatly expands the opportunities for people to invest.
Over the past decade, the platform has performed over $5 billion in transactions and has paid out over $100 million of dividends to investors.
How Does Fundrise Work?
When you open an account, you choose one of five options. In order of investment minimums, these include:
Starter
- Basic
- Core
- Advanced
- Premium
Regardless of your selection, your money is placed into a real estate investment trust (REIT).
This eREIT houses a variety of properties, similar to how an ETF holds different stocks.
Investment properties can include any of the following:
- Shopping centers
- Mixed-use properties (commercial and residential tenants in one property)
- Multi-family apartments
- Single-family housing
You don’t invest in individual properties. Instead, you have a diverse portfolio of different properties.
The eREIT isn’t publicly traded, though they do allow you to liquidate your holdings once a quarter provided you give a 30-day notice.
If you invest more in your account, additional properties become available in your investment portfolio.
YUP, that goo huh… keep reading!
How Much Does the Platform Cost?
Property management holds many people back from investing in real estate since they lack the skills to manage a property or the funds necessary to do so.
Fundrise manages that for investors, resulting in a cost to use the platform. They also provide a wealth of educational materials and incur expenses from purchasing properties.
There are two investment fees Fundrise charges for using their online real estate crowdfunding platform. These include an investment advisory fee and an asset management fee.
Investment Advisory Fee
It’s important to understand the fees with any investment opportunity. Luckily, Fundrise is transparent in what they charge investors to use their platform.
The investment advisory fee is a nominal 0.15 percent annual fee. For example, if you invest $1,000, you can expect to pay $15 in yearly fees.
Asset Management Fee
All account holders pay an asset management fee of up to 0.85 percent annually. If you invest $1,000, you should expect to pay $85 in fees a year.
Fundrise is competitive within the crowdfunding real estate space and is relatively low cost.
Fundrise Features
Each online investing platform operates a little differently. Here’s what sets Fundrise apart from its competitors.
Low Minimum Investment Requirements
Fundrise has the lowest minimum requirement to open an account in the industry. For just $10, you can open an account and get started in private real estate investing.
Many other investing platforms require at least $500. While that does lower the barrier to entry for people to invest in real estate, it may still hold some investors back.
You Can Invest in an IRA
Investing in residential real estate is a fantastic way to diversify your portfolio. However, gains can impact your taxable situation.
Fundrise alleviates that by allowing users to house investments in a Traditional IRA. This also helps you shelter gains from taxes until you withdraw them for retirement.
There is a $125 annual custodial fee to be aware of for IRAs, so keep that in mind as you consider your options.
They also allow trust accounts in addition to individual and joint accounts.
You Don’t Need to Be Accredited
Investing in residential or commercial real estate used to always require you to be an accredited investor.
An accredited investor is someone who meets one of the following three requirements:
- Earned at least $200,000 (or $300,000 if married) a year for the previous two years
- Has a net worth of at least $1 million
- Is Series 7, 65, or 82 licensed, in good standing
You don’t need to meet those requirements to open an account with Fundrise. They do offer opportunities for accredited investors in their Premium account level, but that’s not required to start investing.
So there you have it! The perfect way to get started at low risk too!
Have you tried Fundrise?
Let us know in the comments below!
P.S. Want to share some other platforms? email us at hi@mamasdinero.com
Financial Disclaimer:
This website (the “Blog”) is created and authored by Alicia Sanchez (the “Content Creators”) and is published and provided for informational and entertainment purposes only. The information in the Blog constitutes the Content Creator’s own opinions (and any guest bloggers posting from time to time). The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice. Read More