Fundrise
Hey everyone, analyst in a BB looking for RE exposure and wanted some of your thoughts on Fundrise.
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Search “fundrise” in the RE forum, this has been discussed quite a bit already
With your background, you could do a lot better.
Are you looking to invest with Fundrise for real estate "exposure"? Or get a job with Fundrise?
Invest with them lol
“Analyst at a BB in a top group, went to Top Target btw, was also president of my schools finance club. Anyways, is fundrise a good platform to invest in?”
Eh, not sure if I would want to mess with those, rather be in the sponsor seat or co-invest with sponsor directly (in GP spot if I'm going to take the risk). That said, if you have enough liquidity that you just want to have some fun, maybe there are good deals, but you give up liquidity so you better be liquid AF before having fun in this space.
I interviewed with them last year, did not get the job but know a couple people there. Smart people and they were working on some interesting deals at the time. Haven't kept up with it since then tbh.
What was the interview like if you don't mind me asking? Anything like a typical REPE interview or no?
Yes it was very typical. Met with 3-4 different people (1-2 analysts, acquisitions head, and an associate I think). Interview itself was very basic, valuation methods for real estate (sales comp, income cap, cost buildup), investment recommendation (asset class + location iirc), and a couple accounting things. Rest was basic fit-based questions.
Might be a little unpopular, but my personal opinion is to stay away from online RE investment platforms like fundraise.
We’ve spoken to a number of similar platforms to syndicate our debt deals post-closing - they’re very fee driven, and their incentives are not aligned with yours. They make money based on deals closed/capital raised, and not based on project performance. As a result (at least from my experience) they’re less focused on deal merits/underwriting and more focused on the proforma returns they can show as a “headline figure”. If deals go south, you really don’t have any recourse.
To be clear, there are likely some solid deals on there that will do well, and I do know some real developers who’ve crowdsourced parts of their capital stack. For me, the lack of transparency and incentive alignment are deal killers, but you may have a different risk tolerance. If you do choose to invest, I’d recommend doing your homework on the sponsor/project beyond the provided documentation if at all possible.
Why not invest in a public RIET? Some of those are yielding like a 10% coupon still.
Can’t buy individual names (why I mentioned BB (extremely strict investment criteria).
I love the idea but see no reason to be a pioneering investor. If they’re around in 5 years I’ll be all in, but some of their competitors have gone belly up and I do not want my money invested in a fund where the advisor is going through all of that. You’re not getting compensated for the risk of some of the potential headaches that could occur with their relatively new and unproven business model
Fundrise basically has evolved into a hard-money lender. My buddy has invested with them for several years and gets consistent dividend payments and I think his annual returns are something like 10-11%. Fundrise started the real estate crowdfunding craze, but its business evolved. RE crowdfunding for individual deals is, more or less, a dead business model. The market moves so quickly that individual deals are hard to pull off in a highly regulated, online environment. So most of the remaining RE crowdfunding sites raise money for funds and from what I understand Fundrise basically raises money to lend out as hard money loans, which is how they can pay out regular dividends.
As an investment it is perfectly fine. For me, I'd rather be in growth stocks, but it's just a matter of personal taste.
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