3 Best Fundrise Investment Strategies
Real estate investing offers some of the greatest returns for any investor. In our Fundrise review, we saw that this is one of the best crowdfunding investing platforms around. If you want to diversify into real estate, this is one of the simplest ways to do it.
Yet many investors are missing out on the real estate aspect of a balanced portfolio, with only 63% of Americans owning a piece of coveted bricks and mortar.
Obviously, you want to maximize your Fundrise returns, so here are three great investment strategies.
How Do I Know Which Strategy is Right for Me?
Your strategy depends on what you want you want to achieve. All investors should have a set goal in mind before determining which strategy they want to follow.
Ask some important questions, such as:
Do I need more money for my retirement?Am I looking to put down a deposit on my first house?Will I be sending my kids to college?
Investing is not solely about the dollar in your pocket but about an end goal relevant to your circumstances. Take the time to think about this.
You also need to consider your personal risk tolerance. As a general rule of thumb, the older you are the more conservative your investments should be. Younger investors can take greater risks because they have more time to recover if things go wrong.
Fundrise Investment Strategy #1 – Build a Supplemental Income
The supplemental income strategy focuses less on real estate appreciation and more on building a supplemental income. If you’re someone who wants to create a passive income stream for yourself, this is the strategy for you.
In other words, you’ll be focusing on Fundrise dividends. This plan focuses more on debt profiles than equity.
The Fundrise investment you’ll be investing in is the eREIT. The equity investments allow you to capture some appreciation, but this is a bonus rather than the goal.
When you invest this way, you’ll be concentrating on the large, regular dividend payments. At the end of the project, you may still receive a lump sum payment via appreciation but expect these to be smaller than with other strategies.
Fundrise Investment Strategy #2 – Long-Term Growth
For someone who’s saving for retirement or to buy that holiday home on Lake Tahoe, the long-term growth plan could be the best strategy. Real estate experiences fewer booms and busts than the stock market, but it’s always delivered incredible returns over the decades while being a relatively low-risk investment.
In most cases, real estate investors are looking for those long-term returns instead of regular dividend payments. These eREITs do focus on long-term real estate appreciation, but they also include debt, which means some small dividend payments are possible.
While this is a less ideal strategy for building a passive income and becoming financially independent, it also has the potential to capture the greatest appreciation returns.
Fundrise Investment Strategy #3 – Growth & Income
Sometimes, you want the best of both worlds. If you have no specific financial goal in mind, this balanced plan offers the ideal solution.
When taking into account historical Fundrise performance, you should consider this to be a higher risk option than building a supplemental income alone. For its returns, it’s relying on capital appreciation. If this doesn’t happen, your returns from this strategy will be minimal.
For this reason, if you opt for this more balanced strategy, make sure you have different end dates for the properties within your portfolio to help balance out some of the risks.
Remember, Fundrise is not a guarantee of profitability. Some real estate investments can and do lose money.
Is Debt Investing a Safe Strategy for Me?
You’ll notice that we’ve made mention of debt investing comprising various parts of these strategies. Debt investing may sound scary, but it’s not as risky as you might think.
In a nutshell, as an investor, you’re lending money to a developer. The developer will then repay that money with interest, which is where you make your money. With interest rates at near-zero, debt investing’s returns are lower.
Thankfully, when asking, “Is Fundrise legit?” in this scenario they pay special attention to their debt investments. Their team goes the extra mile to ensure that not only each investment offers good returns but also that they’re safeguarding against losses.
This is why in our Fundrise review we praised the platform so heavily. Its level of due diligence far surpasses its competitors and allows its users to invest with confidence.
The Bottom Line
Investing with Fundrise is one of the easiest ways to diversify your portfolio and gain exposure to the real estate sector.
Fundrise returns are reasonably high and come with little risk attached. It’s why hundreds of thousands of Americans now rely on the platform to deliver consistent profits.
If you want to get started with real estate investing, follow this Fundrise link.