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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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.
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.
- 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
- 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
- Extended hold periods
- Limited secondary market
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.
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.
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
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.