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Alternative Investments

Fundrise eFund

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Fundrise eFund

It may be a bit of gallows humor, but the adage “when there’s blood in the streets, buy property” often rings true. This truism means that sharp investors can find opportunities even in bad situations. One such difficult situation is the housing affordability crisis that’s currently gripping the country. Specifically, the average price of single-family residences in Los Angeles, California, and Washington, D.C., is over $1,000,000. 

This situation has led to an abundance of would-be home buyers opting to rent while the market cools. The Fundrise eFund originally sought to capitalize on this trend by acquiring single-family rental residences in D.C. and Los Angeles. However, the fund has now shifted focus to acquiring industrial properties in these areas. This move will give eFund investors a great mix of residential and industrial assets to build wealth. 

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Beginner real estate investors

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1 Minute Review

Fundrise is an online real estate investing platform with two clear aims: to simplify and democratize real estate investing. While there is no shortage of real estate investing platforms, Fundrise is one of the few that is open to non-accredited investors. Traditional real estate investing, and by extension most real estate crowdfunding platforms, require investors to pledge large amounts of capital. As opposed to the $25,000 to $50,000 investment minimums on many competing platforms, Fundrise distinguishes itself from the crowd by accepting investor contributions as low as $10.

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The platform also has some of the highest quality real estate deals available. With a massive portfolio of institutional-quality properties, Fundrise investors can generate cash flow and long-term growth through a diverse portfolio of commercial real estate, multifamily properties, single-family rentals and ground-up developments.

Best For

  • New real estate investors looking to get their feet wet
  • Non-accredited investors
  • Real estate investors who want a “set-it and forget it”-oriented option
  • Investors looking for low-to-moderate cost buy-ins

Pros

  • Multiple offerings available to non-accredited investors
  • Simple menu of investment options
  • Can use for IRA contributions
  • Incredibly affordable buy-ins
  • Low, easy-to-understand investor fee schedule

Cons

  • Extended hold periods
  • Limited secondary market
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Historical Performance

The eFund’s original inception date was July 2017 with a net asset value (NAV) per share of $10. For roughly the first 18 months, the single-family assets in the fund were being renovated and rented, which resulted in relatively slow growth until December 2018. At that point, the NAV moved up to $10,324, and it has been trending steadily upwards ever since. 

In November of 2020, the NAV crossed $11,000 for the first time, and those gains have continued through August 2022, when NAV closed at $11,854.17. As the industrial assets that the fund is purchasing continue to stabilize, the expectation is that the NAV will continue to increase. 

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Portfolio

There are currently 89 assets in the eFund. As you might expect, a majority of those assets are single-family homes in Washington, D.C., and Los Angeles, California. The asset allocation and investment strategy break down as follows:

  • Opportunistic: 59.1%
  • Fixed income: 7.7%
  • Value-add: 33.2%

In keeping with its new focus on industrial properties, the eFund has recently acquired two new stabilized commercial properties. They are located in Atlanta, Georgia, and Alexandria, Virginia, respectively and both have a value-add strategy. 

Current Stats

Here are current stats for the Fundrise eFund:

  • Inception date: July 2017
  • Operating phase: Stabilizing
  • Objective: Appreciation
  • Geographic focus: National
  • Current NAV/Share: $11.94
  • Current Dividend: 0.0%
  • Tax reporting: Form K-1

Final Thoughts

The Fundrise eFund may have started out with an eye toward purchasing single-family homes as a long-term investment. It certainly acquired a large portfolio of them. However, when you add that to the fund’s newfound focus on industrial properties throughout the country, you end up with a large fund that is diversified across two different, but equally important, sectors of the real estate market. 

That’s what makes it such an appealing package to investors. You have the opportunity to buy into not one, but two sectors of the real estate market that are experiencing heavy demand.  You must proceed with caution because there is always a risk of loss, but the Fundrise eFund is certainly worth a kick of the tires if you’re looking for a diversified real estate investment. 

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Alternative Investments

Fundrise Growth eREIT VII

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Fundrise Growth eREIT VII

The Fundrise real estate investing platform has a clear mission to provide investors with a solid array of wealth-building options in the real estate sector. 

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    Beginner real estate investors

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One of its most popular offerings has been its eREIT (real estate investment trust) series. The eREIT offerings are hybrid REITs, and there are a number of different options to choose from in this subset. Each of them are tailored to offer investors a little something different. 

The Growth eREIT VII is designed to do exactly what its name indicates. This offering focuses on giving investors an ideal combination of assets with long term-growth potential while the real estate debt-backed securities portion of the REIT helps deliver the passive income they need in the meantime. If the past performance of Fundrise’s eREITs is anything to go by, eREIT VII investors will be very happy with their decision to pledge. 

Historical Performance

In many cases, REIT performance is slow out of the gates while the assets stabilize. This is often the case with growth-oriented REITs because it takes some time for the growth in asset value to occur. However, the eREIT VII’s assets have already seen a strong jump in value since the fund’s inception in January 2021. 

The original net asset value (NAV) was $10 per share, and the eREIT VII closed the year strongly at $11.20, based largely on 12% asset appreciation. So far in 2022, the eREIT VII has continued its upward trend with 11.7% asset value appreciation and a 0.6% dividend bringing the NAV up to $12.51. Long story short: The NAV of the growth REIT is up 25% in less than two years. That kind of growth is certainly nothing to sneeze at. 

Portfolio

The Growth eREIT VII’s impressive NAV is a testament to the quality of the assets in its portfolio. One thing in particular that makes the Growth eREIT VII unique is that instead of concentrating on commercial real estate assets, the fund has largely targeted single-family homes. The asset strategy for the portfolio is as follows: 67.5% core plus, 27.2% value add and 5.1% opportunistic. 

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The REIT also has a national focus, which means investors get the best of numerous growing markets. A brief sampling of the assets in the eREIT VII appears below.

  • 163 single-family home rentals in Humble, Texas, core plus
  • 120 new single-family home rentals in Foley, Alabama, core plus
  • 69 new single-family home rentals in Pensacola, Florida, core plus
  • 30 new single-family home rentals in St. Hedwig, Texas, value add
  • 66 new single-family home rentals in Dade City, Florida, value add

All told, there are 45 active projects in the portfolio. There are also several single-family home developments under construction. When completed, they should also deliver impressive returns and growth potential. 

Current Stats

A short breakdown of the current Growth eREIT VII’s current stats appears below:

  • Inception: January 2021
  • Phase: Ramping up
  • Geographic focus: National
  • Current NAV per share: $12.51
  • Current dividend yield: 0.4%
  • Tax reporting: 1099-Div

Final Thoughts

By all appearances, the Fundrise Growth eREIT VII will be another winner for investors. Even though it’s very young for a REIT and in the ramping-up stage, investors are already seeing impressive returns. Only time will tell whether that trend will continue, but considering that it’s already picked up 25% in value in spite of having a number of assets yet to come online, it has the look of a long-term winner. 

There is always the potential for market downturns or a default in the debt portion of the REIT leading to investor losses. Investors must also decide whether they can handle their $5,000 minimum investment becoming illiquid for the projected five- to seven-year hold period. However, if you’re comfortable with those risks and you like the underlying assets, the Growth eREIT VII could be a great addition to your portfolio.

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Alternative Investments

Fundrise Growth eREIT VI

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Fundrise Growth eREIT VI

Have you ever considered an investment offering and lost the chance to buy into it because it closed while you were still doing your due diligence? Every investor has a few deals that get away. 

If you had been considering the Fundrise Growth eREIT (real estate investment trust) VI, but it closed before you could jump in, you’re in luck. The Growth eREIT VI is ramping back up and accepting investor contributions again.

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    Beginner real estate investors

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The Growth eREIT VI is a growth-oriented fund that takes a different strategy than traditional private REITs. While most REITs focus on institutional-sized investments because of their earning potential, the Growth eREIT VI targets high-quality assets with growth potential that cost less than $10 million. 

This strategy allows the fund to pick assets in a far less competitive environment than most REITs operate in. Investors benefit from this strategy in two ways: 1. The assets  targeted by the fund fund are below the radar, which makes them cheaper. 2. The assets purchased by the fund still have solid upside and growth potential. Simply put, investors get a lot of bang for their buck with this strategy. 

Historical Performance

The Growth eREIT VI was created in December 2019 with an opening net asset value (NAV) per share of $10. For almost all of 2020, the assets in the fund were stabilizing themselves, and there was no increase in NAV value for the year. However, 2021 saw a solid gain of almost 20% resulting from strong property appreciation as the stabilized assets began performing. 

It closed that year with an NAV of $11.89. 2022 has seen continued gains, and the NAV has increased to $12.16. That means investors in the Growth eREIT VI have netted a return of 21% in just under three years. This track record is certainly strong, and as the fund ramps back up to seek new assets, investors may want to consider getting on the Growth eREIT VI train before it leaves the station again. 

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Portfolio

Currently, there are no assets in the Growth eREIT VI portfolio. However, the fund is ramping back up, which means the general partners are actively scouting for deals to purchase with investor capital. 

Current Stats

Some current stats for the Growth eREIT VI:

  • Inception date: December 2019
  • Phase: Ramping up
  • Objective: Growth
  • Geographic focus: National
  • Current NAV per share: $12.16
  • Current dividend yield: 0%
  • Tax reporting: 1099-Div

Final Thoughts

The Fundrise Growth eREIT VI has already shown its ability to accomplish its key mission of growing asset value and delivering returns for investors. As the fund begins ramping up again and looks for new assets, investors who missed out on the last go around have another opportunity to put their money in a REIT with a solid performance history. 

As always, investors should carefully consider the risks of investing and remember that the Growth eREIT VI’s past performance is not a guarantee of future profits. With that said, the Growth eREIT VI’s strategy of targeting noninstitutional assets with upside is still solid. When you combine that strategy with the existing track record, the Growth eREIT VI appears to be another solid offering that is worthy of strong consideration.

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Alternative Investments

Fundrise Heartland eREIT

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Fundrise Heartland eREIT

The old saying “the devil is in the details” is applicable in many situations, and real estate is definitely one of them. 

Many alternative investors would love to put a solid, diversified real estate portfolio together, but the price of acquiring multiple properties in different markets is prohibitive. That’s why real estate investment trusts (REITs) like the Heartland eREIT from Fundrise are so popular. 

  • Best For

    Beginner real estate investors

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The Heartland eREIT is a private REIT with a stated goal of giving investors reliable passive income while allowing them to reap the benefits of long-term asset appreciation. The Heartland eREIT executes that strategy by offering a diversified asset portfolio that was acquired with four main goals in mind:

  • Acquiring commercial properties in the value-add and lease-up stages 
  • Targeting assets that can be repositioned or redeveloped to increase revenue and value
  • Becoming equity shareholders in new and developing assets
  • Using investor capital to provide mezzanine debt or capital injections into current developments

The Heartland eREIT is concentrated on multifamily and commercial real estate assets in the Midwest and Texas. Specifically, the fund is looking at assets in the following cities:

  • Chicago and surrounding submarkets
  • Denver and surrounding submarkets
  • Houston
  • Dallas
  • Austin

Historical Performance

The Heartland eREIT opened to investors in October 2016. From 2017 to 2020, the Heartland eREIT posted solid annual returns ranging from 5.7% to 8.1%. However, in 2021 many of the portfolio’s assets had stabilized, and the increased rents allowed for major appreciation gains, which helped eREIT investors net 41.7% returns. So far this year, the eREIT is posting a 6.1% return. Based on these numbers, a $10,000 investment in 2016 is now worth $14,960.

Portfolio

The Heartland eREIT currently has seven assets in its portfolio. Almost two-thirds of the assets in the portfolio are in the core-plus category with a majority of the remaining one-third being in the value-add category. The portfolio is rounded out by fixed-income assets. Examples of the assets in the portfolio include:

  • Two multifamily  properties under renovation in Dallas, fixed income
  • New commercial property in Chicago, fixed income
  • Two stabilized multifamily properties Denver, value add

Current Stats

The Heartland eREIT looks to take a balanced approach to grow investor wealth. It is currently in its operating phase. The NAV per share is $14.96 and it’s paying a dividend of 2.67%. The eREIT is listed in Fundrise’s “Core” investor category, meaning the eREIT has a minimum investment of $5,000. Investors’ return tax reporting is 1099-DIV. 

Final Thoughts

The legendary strength of real estate markets on the East and West coasts means the Midwest doesn’t always get the attention it deserves. But that doesn’t mean there is no value in this market. The Midwest offers investors an ideal combination of stability, upside and affordability. The Heartland eREIT is a great way to invest in this lucrative real estate market.

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