Do you think you can answer my question please. Hello, I don't understand how you can say that Fundrise pay your more, then your rental, fundrise payout every quarter, rent is suppose to be paid every month. How did fundrise quarterly payment out perform your monthly rent profit, did i miss something?, I sent email, and call to discuss this no answer.
lol i saw a video from someone named "Shittywebster" with tats on his face saying "you know" and "shit" for 60% of the words in his discussions on this and got scared away for a bit. Good to see folks discussing things with some detail.
Thank you so much-- I have been going back and forth between buying property to rent vs reit investing. I am an older person who doesn't want the hassle of tenants and repairs. You showed me "the light." Thank you again 🙏
I’m hoping I ask this question correctly but when you recieve the dividends do you have the choice to reinvest it or cash it out? Also how are you taxed when it comes to the dividends?
The Fundrise dividends are taxed at a much higher rate. The are considered ordinary dividends, not qualified dividends which are taxed at a lower rate.
I think dividends from fundrise are taxed like regular income. With a physical property, you can depreciate your investment property over 27.5 years. Deduct that with your property manager fees and other expenses, you could essential pay no income tax on the rental income and keep all your cash flow.
For some operational and accounting reasons, Fundrise dividends typically to not count as lower-taxed qualified dividends, although on occasion they could theoretically. They are typically taxed as the higher-taxed ordinary dividends which is an additional 6% higher in my case. Their website explains this further: fundrise.com/education/faq#item567
ContrarianExpatriate Yeah, the cost of not being wealthy. Most of us cant afford the 10s of thousands at any given time to invest in property personally. But as a start, it is still very good for people who only have $1000 to start investing. I just dont make enough money to get a home loan right now to buy anything. Though I am actually getting a promotion soon and need to pay off a medical loan, but I am setting myself up financially to build a house on some family owned land that has nothing on it currently. But until I am ready to do that, 1-2 years from now, I am looking for some low cost investments, so a pleb like me doesnt get to enjoy capital gains so easily. The best thing is, after 3 years, it is only like 2% to pull out if I want to reinvest that money into my own property. Considering the really good returns so far and expected going forward, it seems like a solid low cost investment, relative to typical real estate investments. I did see videos on some other options that were low cost but required you to be an accredited? investor, meaning making something like 200k a year, and groundfloor only works in 8 states, though I havent looked to see if that has changed in the last 6 months, but it isnt states I am in. Do you have any other idea for us little folk that gives returns over 6% with low risk and needing less than $2500 to start investing and is only taxed at 15%?
This is our second time watching the video. We have been thinking about investing in Fundrise since watching the video the first time. I think we may finally be ready. Thank you for all your wonderful articles.
A some people may have already mentioned, a few points to consider. Number one dividends are taxed at a higher rates as ordinary income. Funds are not liquid. And with the rental property you get the depreciation expense for the next 27 and a 1/2 years
Hey man! I've been looking a lot into Fundrise. I don't know if you're into investing in the stock market, but one common thing that I've been hearing from around the internet is that due to the taxes that come with Fundrise, people say that you're better off just buying an ETF stock from the stock market. What do you think about that?
Thank you for this short review and comparison. I'm looking at Fundrise right now. I've had a physical rental before. There are additional benefits, in taxes, that you might not get through fundrise that you do get through having a rental property.
Owning rental property has its moments and can certainly include unexpected phone calls,repairs, and vacancies. If you are ok with dealing with these things it can be a great way to eventually replace your job income and or retire before many do at age 65. My dad actually was fired from his job at the age of 54 years old. At that time he had aquired several properties over a 28 year period. He decided he did not want to go back to work and retired. He is now 84 years old and still enjoying the benefits of his investments.
@@ZachDavisForReals Zach, you are at a great age to start learning how money works. Don’t wait into you are in your 40s or 50s when it will be much more difficult to get started. (Family children Ect.) Wealthy people don’t trade time for dollars. They have learned how to create assets thru investing. Start small and develop the habit of becoming a life long learner. Reading and learning from others can help prepare you for a blessed life. Lastly, learn to live within your means. (stay away from credit card debt, car loans and the like) Many blessings!
The biggest drawback with Fundrise is liquidity. From what I understand, not only can't you cash-out instantly, but you may NEVER be able to. So what's the value of higher gains if it's only on paper? Plus, your investment stake can't be used as... say, collateral on a loan. Trust me, I'd like to know I'm wrong.
Yes liquidity is the downside. But from what I understand it isn't as strict as what you are saying. We got a letter from the CEO talking about it and basically he said that he wants long-term investors because that is what it takes for the business model to work (just like "normal" real estate investing), but while they are working with a long-term horizon, I have never gotten the impression that my money was frozen - if that helps
@@SeedTime I know you wrote this comment 2 years ago, but Fundrise did indeed suspend redemptions for a couple of months in 2020, in order to prevent any chance of being forced to sell at distressed prices. This freeze was short-lived, and I have no complaints about it whatsoever, because the last thing I'd have wanted would be for the assets supporting my dividends to be sold off at absurdly low prices.
Thanks for video! What about the tax implications of owning a property? How do you factor this in vs fundraise? Assume you pay property taxes but also get a shield from your expenses and mortgage payments?
Yeah definitely going to check this out to start off into real estate 🏡 I feel like there’s a lot of risk buying into physical real estate lol but great video
Depreciation as an additional tax advantage of your OWNED rental? Ability to defer taxes with a 1031 exchange when you sell. I also doubt that your income in FUNDRISE will go up as quickly as rents in your property, BUT it would be interesting to delve further. I have also looked into FUNDRISE as a future investment so thanks for this video. Of Note: I have owned multifamily for 17 years and they are now a HUGE Cash Cow :)
Is your principal very liquid? If there is some sort of emergency that comes up or there is a major market correction that you want to avoid, are you able to "cash out" quickly or does it take some time?
Fundrise is very illliquid i did my research and this is the only downside i found your money is locked up for the long term i would only do fundrise if you can invest 5+ years have a 3 month emergency funs before you invest and i would maybe start out with something like acorns or stash do your own research but this was a huge downside for me
After the first 90 days you cannot withdraw the money until Fundrise determines the investment has reached maturity. They are saying 5 years. However, I requested to be paid out in October and on DECEMBER 30th, 2018 they approved my request for redemption. They said they paid out my redemption on Friday, January 4th. It's January 6th (yes it's the weekend) and the money still hasn't reached my account nor has my bank indicated that the money has been received. When I requested redemption the dividends I'd "earned" became negative appreciation and the $9.08 in dividends became -$8.87 in Appreciation and -$0.20 in advisory fees and therefore Fundrise determined that I only had a balance of $0.01 on my account in addition to the principal I invested losing money during that time. My $1,000 initial investment was determined to be worth $991.13 after 3 months, yet the interface of the website said I had earned money. The truth is no one knows how fundrise will actually pay out after maturity because the company hasn't existed long enough for any investments to have actually reached maturity -- there is a promise of dividends being offered, but in my case when I requested my funds to be redeemed - they were redeemed for less than the initial investment and without the dividends Fundrise had claimed that I earned. -------------------------------------------------------------- January 14th 2019 Update -------------------------------------------------------------- I received the FundRise funds deposited into my bank account last week. Here are the final numbers as determined by FundRise: I invested $1000 telling FundRise I selected Income over Growth: I received my dividend in Q3 and Q4 of 2018 - $9.08 The account incurred (negative) Appreciation of -$8.87 My account incurred Advisory fees of -$0.19 Total Earnings of $0.02
Grant Cardone has a very similar Investment account called Cardone Capitol. He's been returning 15% on average in the past few years to his investors. You guys should check him out before you make a decision
Great video. Exactly what I was looking for. Thanks, Bob. I'm looking to invest $200k (Jan 2021 mid-pandemic) and think Fundrise seems like our best option for the next 5 years. My. question is: Is $200k too much to invest with a platform like Fundrise, in your opinion? I do realize the downside of low liquidity, but my wife and I are fine with that. Any guidance based on your experience would be great. Thanks again, Bob!
Glad it was helpful! I would think of it less of dollar amount and more of % of your portfolio. In order to have a well-balanced portfolio you don't want to have too high a % in any one particular asset class. Real estate is great, but you still don't want all your eggs in one basket. All that said, I have been very happy with fundrise the last few years - even through the pandemic with commercial real estate taking a hit they have performed a whole lot better than most REITs, so I still like it a lot for passive RE investing -
The simplicity of fundrise is a pro to buying RE directly, but there should be higher taxes on dividends (and I assume appreciation too) as a con. So it is wise to try to have at least one business going for tax benefits (whether it be rentals or something else). No expert but just going based on what I often hear.
Also, with a rental property your able to leverage 80 percent of the investment, so your returns are generally way way higher (assuming the market moves up with inflation at minumim). Don't forget with rental properties there are 4 ways to win (capital recapture, passive (market) appreciation, cash flow and active appreciation (renos/improvements)). Fundrise only has 2 ways to win (cash flow via dividends and passive appreciation) and these are generally much lower than the other 2 in rental properties.
Thanks for sharing. I’m trying to do hands on commercial retail investing traveling all over the country, accountants, LLC s, ugh. Maybe I’m spinning my wheels? Can I safely retire on 8m invested in this way if I need 200+ to support my family annually ? Is it a PPM format ?
Hi there! I am considering real estate as well. When you're considering the 5% return on a rental property, this is just construing the profit bring made monthly, and not the fact that you will have the home as an asset in the end, correct?
Yep just looking at the money I have invested in the property and what I am earning from it. That way I can have an apples to apples comparison with Fundrise, REITS, stocks, or anything else
Thanks for the reply. At 39, I am just now at a point where I can begin planning for the future financially and am trying to educate myself on options. My thought process was that even if I wasn't making much on it now, that if it pays for itself then I have an asset available long-term that would most likely increase in value. But I've heard some say that it's not worth it if you're not actually making a return on it now, being that the increase in value is not guaranteed.
Make sure fundrise is good for your state before giving your bank acct #. They screwed the pooch “oh we cant work in AZ yet.” A week later the pulled the $500 without telling us. Lots of avoidable fuss could have been avoided with simple communication. Fast fwd to the next installment: again, the dates of withdraw were jacked up, hassle could have been avoided with simple commo. Best fix is to open a seperate bank acct for findrise to withdraw from. That way when they screw up, it wont disrupt the rest of your life
I guess the big question is what investments are out there for the public besides of the stock market that would address these 3 main issues. only thing I can think of is directly owning real estate
That might be true, but our community knows that's not how I roll. Here is an example: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-7XHkHi2g0j0.html
Did you figure equity building into your 5.4% return on your rental house? You mentioned not including appreciation, but that is just the property value increases, not equity, right?
I assume you did not take into account the impact of the RE on your personal taxes, if you incurred a loss and the savings on taxes from that. As you mentioned the appreciation is not taken into account either, which can be substantial if you take a 10-15, 30 yr period. Fundrise, does look simple though... Good luck.
Yea I didn't take taxes into account, but like I mentioned in the video appreciation is likely to be far better with Fundrise than my own rental property I had. I assume as I get better as a real estate investor I will be able to find properties that might have the same appreciation potential, but for this property I am pretty confident Fundrise would win
On the RE the appreciation is yours, but Fundrise you are not an Equity Owner? Are you? You are getting dividends on the Cash flow the property receives, right? You are investing in a Fund for multiple RE Properties. Can you clarify.
Good to know about this company! My husband and I invest in similar companies on the West: Capella Mortgage and JRW Investments, but we do like to diversify with owning / renting multifamily properties too :)
Your missing the power of leverAge when it comes to actual rental property. I’m curious to know what your return on your actual out of pocket investment was.
If I sell my current property and invest it in Fundrise will it be considered a non-taxable transaction due to the fact that it is still a real estate investment?
It will probably not qualify as it's not a "like-same" investment in the eyes of the IRS. You would need to do a 1031 exchange. I believe Realty Mogul would be a better fit if you want to avoid taxes. Plus, speak with a tax advisor. They will give more details and suggestions.
I'd imagine that the majority of married couples with one rental property would be using the standard deduction on their taxes, but it could definitely be relevant if they have other sources of deductions or several rental properties to add to the mix.
With Fundrise (or similar companies) all that stuff is also deducted, it's just that you don't personally see the paperwork. I.e., the returns Fundrise generates are partly based on using the tax code, on their end.
Of course dude would lean towards fundrise since he’s getting an affiliate link kick back. If you do it properly buying a rental property is much more lucrative not to mention the tax benefits and monthly cash flow.
I don't disagree about a good rental property earning more than fundrise. I think I mentioned that in the vid. As far as affiliate links, our community who know me know that I talk about what I personally use and love regardless of any referral deals. But to take it to the next level we now give our earnings from referral links back to the community via giveaways.
In addition to the 5.4% from your rental, you are gaining equity in the property. You can sell it when you want and 1031 it into a bigger rental tax deferred. You don’t have that power with Fundrise. They decide when and what to buy with your money.
I have a fundrise but I just feel like I see much better returns on my real estate. I have 4 and combined they met me 3400 bucks a month and I have around 20k of my own money to get them started. I have 10k in fundrise right now and I see a could hundred bucks. I just don't understand how that's a better investment if it returns so much less money.
It might be better for you, but I would run the numbers and then calculate in the intangibles of it actually being 100% passive vs rental property even with a prop mgr isnt 100%. And in our case Fundrise made more sense, but I will definitely be buying another property in the future that will hopefully beat fundrise - we shall see!
Thanks for the video I’ve checked out some other ones but they don’t really make sense. I was thinking to start with 500 or $1000 can I actually make money from this?
hi bob i have a question what is the point of investigating a big amount and receive less that you’ve invested in one year ? 🤔 for exemple if I invest 500 il be receiving quarterly less that i’ve invested right?
If you get 10% annual return in any investment, you should be thrilled as most investors are. If you can manage to get returns that good for about 7 years you will have just about doubled your money. So that is a rough baseline to keep in mind when investing
1. Yes!! 2. I don't withdrawal them, they are all auto-reinvested so I assume no. But I honestly don't know much about the tax side of it all. I just take the forms they send me each year and give them to my accountant
Yes you get taxed on them (as normal income). They will send you a form at the end of the year. If you're in the income funds you'll get a 1099-div form, the other ones might trigger a k-1 form which I've hear is a bit more of a hassle to deal with. I've never received a K-1 since I'm only in the income funds. The 1099-Div form however is very simple to deal with and plugin to Turbotax or whatever you use.
It appears that you recieve a "kickback" from fundraise based on the link you have provided. You didn't explicitly state this in your video. This creates a huge conflict of interest and lowers trust.
it is disclosed right at the top of the video description. And you can read our affiliate disclaimer here (seedtime.com/affiliate-disclaimer/) for how we handle things - but the gist is this: I write and create videos about tools that I like and that our community would like regardless of whether there is an affiliate relationship. But when I am talking about a company that has an affiliate program that we can take part in, we always do - many times that actually allows us to negotiate better deals for viewers as well.
Hey Marie, it is tempting and i'd be lying if I said I have never tried to time the market, but I have never heard of anyone who could successfully buy when things are at the bottom and sell at the peak heights. There is no way of knowing if/when a correction will come, but as I always say you should never invest in anything that you don't understand and don't feel comfortable with. "Farmers who wait for perfect weather never plant. If they watch every cloud, they never harvest." -Ecclesiastes 11:4 NLT
I checked out the website and it seems full of fluff (aka Theranos and Nikola) with only one person shown as an employee (CEO/co-founder), so I am very skeptical. Plus the investment returns on the website CONVENIENTLY picks and chooses time frames and other investments to make it look like it is out-performing everything. Very VERY sketchy. AND the videos shown on the webpages looks like a bunch of young, novice investors that he is trying to peddle his strategy to. If investments start heading south, then I feel the founder will start altering numbers and convert this to a ponzi in order to stay afloat. If this company is honest and legit, then my wish is that he/they not try to oversell the product on the website, I feel that most people nowadays can see through over-exaggerations.
You'll receive very little because it's percentage based returns just like most investments. Be prepared to not get that money back until the 5 years is up though.
@@goodguyjustin1082 I've just checked since you asked. Keep in mind that I've chosen the "Supplemental Income" option, which is a more conservative mix of 74% bonds and 26% equity, meaning I have less risk but less share in the upside than if I went more fully in the equity direction. That said... it looks like Q2 dividends (for the period ending 30 June and paid around mid-July) are right in line with where they have been. So, yeah, in that 7% range, something like that. (I know because they update the accrued dividend info daily). I would guess they'll lower the NAV when the quarter ends. And along those lines: they have suspended withdrawals until further notice. That is, of course, their stated policy which every investor knew going in: during distressed periods, they may suspend withdrawals in order to prevent having to sell assets at distressed prices, which hurts the investors who DON'T wish to sell. I'm on board with this policy (which, again, I knew going in). My actual hope is that I NEVER have to take the cash out. On a related note: I also have money in Realty Mogul, the Mogul Reit 1 option (i.e., the more heavily debt one): they have recent written down their NAV AND reduced the (monthly) dividend from an 8% annual yield (on the previous NAV) to a 6% annual yield (on the new NAV). I think my Realty Mogul position is slightly more equity heavy than my Fundrise position, and this is not surprising given what is happening in the US real estate market right now.
Still with them Drew. 2020 hasn't been a great year with everything that has gone on, but still looks like it will probably end up at about 3-4% return for 2020 from what I can estimate.
The worst investment I made so far. Investing in AHP has been a nightmare. I requested a full refund in June 2020. And they are still struggling to pay me back. Never ever put your money in AHP.
