Graham, you have no idea how appreciative I am that you took the time to put together such a thorough analysis. Clients ask me about this all the time. I see other “experts” recommending it and then linking to there referral link. Much appreciated, sir. I like your style.
Awesome, Nigel! Thanks for the follow up. I know you didn’t have to - it means a lot. Hope I’ll see you around my channel, as well! Or did you already comment over there?
Fundrise is completely fine for investing in if you have the extra cash to do it. I have seen nothing but positive dividend returns since starting with it this year. The advisory fee is low enough for me which you can see at your log in page with the balance on your account. Even if this is only short-term gain, so what? A return is a return. Good to place your eggs in several baskets.
Graham Stephan So, I guess my best investment should be in a shovel. If, that is what you are saying? Take the money dig a hole and bury the cash in the back yard.
Graham, you just saved me a full day of my time researching this. I was contemplating investing big, but the fact it's taxed as income, along with having no liquidity just kills it. Plus, it's so heavily invested into California, I'd be worried what's going to happen when the big one hits! For now, I'll stick to physical apartment buildings, and the grind that comes with it. You do a great job articulating the pro's and cons. I'm left with zero confusion about Fundrise.
A lot of people talk about real estate on RUclips. You are the only one actually read all the fine print and make it easy for people like me to understand.
Been investing for over a year now in Fundrise. Great returns thus far. Not a bad place to park extra money, but of course always keep in mind that you shouldn't put all your eggs in one basket. Don't invest what you might need in the near further because real estate is inherently a long term investment.
Liquidity isn't too big a deal because it teaches people patience. It does suck not to have it when you need it, but this also comes down to having an emergency fund before investing
I invested 200,000 into a private company similar to fundrise, but it's owned by people I know personally. Not having liquidity meant that when the returns were less than they stated because of them increasing their fees, I could not find a single buyer. Who do I go to now to sell my interest in a private llc? I'm stuck with a bad investment.
Liquidity is important , so when do you plan on pulling the fundrise money out or moving it over to another investment ? If the answer is NEVER, then I think fundrise is for you
A couple benefits of Fundrise i don't think were mentioned in the video: 1. Being a public non traded REIT company, they are not tied to the same bipolar mood swings of the stock market, or even public REIT stocks for that matter. Thus far they have endured and even weathered the covid pandemic, unlike alot of stocks and REITS. Extremely low correlation to the stock market makes this a investment worth considering. 2. They can reinvest dividends for you, but more importantly will pay them out as cash to your bank account if you so desire. This is a convenient feature alot of millenial investment services just do not offer (M1 Finance, Robinhood, Acorns, etc) so if your a cashflow investor, it is a perk.
Chris Caballero I see it as a long term investment with moderate to high risk. I’ll eventually get into the fundrise as real estate was never meant to be short term investment.
So. Fundrise actually did freeze the option to sell and every comment that I saw regarding it was positive. It prevented everyone from panic selling in march 2020 and my returns are doing alright so far.
GET OFF THE FENCE!! I invested $1000 a year ago and he's RIGHT. Your money is just tied up, going NOWHERE (at least for you). You may get $20 in gains, which I reinvested, (ha, ha). That's virtually USELESS. I don't know if I will EVER see that $1000 again. DON'T EVEN MAKE EYE CONTACT WITH FUNDRISE!!
Great video. Definitely led me to my decision not to get involved with this. The whole "we can hold your money indefinitely" was the red flag for me to run for the hills.
Fundraiser is for real estate, not stock equities. No point in comparing them. I'm buying a little more REITs including Fundrise because I think the stock market is going to tank. A lot of dividend stocks will stop paying dividends and the share prices will also drop. I've invested money and some of my mom's money in Fundrise funds for 5+ years and been very happy. They let you buy equity or loan funds and allow you to easily diversify geographically. You make money completely passively and you have no liability. Try doing that with physical properties.
I just downloaded the app and was about to select an option and decided to watch your video first before making any moves. I’m so glad I did. Thank you so much
Honestly the liquidity thing... What you need to realize is Fundrise is a way Into the big boys world of commercial real estate development. A world in which you would also not have the option to just pull out when you want.
Graham just want to say appreciate your channel and the work you put in. Most people don’t care to look through fine print and paperwork, which is ultimately important! Keep grinding! Thanks for all your videos overall! Looking forward to possible taking one of your real estate classes!
Thank you for the thorough and complete review! One correction - most dividends from NYSE stocks are qualified dividends, which are taxed at the capital gains rate
This was an amazing review. I had watched a positive review prior to yours who mentioned an affiliate link which I didnt think too much of and I was actually thinking about investing even with the high 1% fees. BUT I totally love the thoroughness of your review looking into the realtors, and the actual projects in the areas you are familiar with. That was helpful. It was also good to know about the tax rate of dividends. Thank you for the hours you spent preparing this video. I'm totally going to subscribe. Keep up the great work of saving people from wasting money on fees when there are better, cheaper options offering commensurate returns. A million thanks!!
I have been with Fundrise for a little over a year. I am by no means a large investor. My returns are currently just under 8% total. Overall I'm pretty happy with it and the updates they give on your personal portfolio are incredibly frequent. I'd be happy to show you what the dashboard with updates looks like. You are shown on the main dash board what the fees taken out look like. I appreciate you doing this review!
I just liked and subscribed after watching this video. Anyone who takes the time to read 225 pages to help answer questions for his followers is worth it in my opinion. Good job Graham!
Stick to publicly traded REIT's. The advantage of investing in a real estate company (reit) is that you gain the tax advantages of their pass-through status. A reit pays no corporate taxes at all (except property tax), and so all of the tax is paid by shareholders. This is at the higher marginal income tax rate, but that is reduced by the QBI 20% deduction. For someone in the 22% bracket, you will pay 17% on reit dividends. All normal corps pay 20% corporate taxes before distributing dividends or buying back stock. Then the shareholder pays the 15% tax on the distribution. You are always double taxed on corp dividends. Reit's have tax advantages out the wazoo. The other benefit is that there are hundreds of reits and even more etf's that track them. You can get ultimate diversification. I suggest just buying VNQ or NETL. NETL is all net lease reit's, which is an even cooler subsector.
This is the best review of Fundrise that I have seen. He is a little pessimistic towards the end because of the tax consequences (taxed at ordinary dividend rate), but Fundrise more than makes up for that with its convenience. Also, the Trump tax plan softens that tax burden for most dividend investors. I have been investing in Fundrise for almost 2 years and my returns have been a modest yet respectable 13%. I'll take that instead of being a landlord ANYDAY. I am all in with Fundrise as a hedge against a stock market crash.
Graham, appreciate the honest research and not throw in an affiliate link like most youtuber to make a buck. I invested 1k with them, but after watching this video I decided not to invest another 1k with them.
As I understand it...In regards to taxes, all REITs, even the publicly traded Vangaurd Real Estate (VNQ) dividend income is taxed as ordinary income. Same as if you owned property and rented it out, that rent income is ordinary income. So investing in Reits (VNQ or Fundrise etc) is just a way to diversify outside stocks/bonds. However, with the new tax plan, this dividend from REITs are now considered pass through business income and we can now take a 20% reduction on that dividend for taxes. So we only claim 80% of that dividend income as taxable. Owning physical property is difficult for most (owning a home to live in and a second to rent), so investing in REITs (doesn't need to be Fundrise) has it's benefits with diversification IMO. VNQ is publicly traded and thus will swing with the market where Fundrise has less volatility. Fundrise lack of liquidity and not being tested in a downed economy are the major risks.
Income from rented property is taxed but there are tax write-offs which are beneficial. You can also set up a business and transfer property ownership to the business for more tax breaks.
I am glad that you brought up the fact that all REITs are taxed as ordinary income. I keep seeing people say that they are investing in REITs rather than Fundrise because of the tax implications. Little do they know that those REITs are taxed the same unless sheltered in a ROTH IRA.
Wow... seriously you put some work into this. All those pages of fine print and the actual analysis and comparisions. You are literally they ONLY channel on RUclips that I choose let all of the ads play in full... I hope it helps out your channel, you earned it bro.
This is not like a REIT. Poor comparison. It's more like a PE offering. If you can't lock up cash for 5+ years then you probably shouldn't be investing that cash in the first place.
I invest with Fundrise- I am aware of the illiquidity and the fees. I read the fine prints too. I put little money for diversification- So far not complaining-
Dude how are things coming along?? no really :D i was just about to throw in 1k into it just for the fun of it. And figured i would watch some random reviews on youtube. Found this video, basically knew everything he covered. But really, how are things coming!!!
I'm always glad to see when people say "well., you could invest in this or you could invest in the S&P 500 as a whole and do better". The spirit of Bogle lives on!
@@RobsStraightJacket Hello! I never got around to investing with Fundrise. Busy buying at the dip in March (single stocks and ETFs) I am preparing for another dip, I surmise in Narch 2021. Putting Fundrise on freeze. With this pandemic, kind of glad I held off.
@@RobsStraightJacket thank you! Many business are closed, apt buildings...who can afford them while unemployed?? Glad I didn't parttake.....I'm sure they won't let investments liquidate easily.... Feel bad for folks that ventured in fu drive right before pandemic.... Who would of known???
Corporate dividends ARE taxed at the same rate as long term capital gains, as long as they are classified as a C-corp. Reit dividends are taxed at ordinary income tax rates because they don’t have to pay corporate taxes at all as long as they payout at least 90% of their profits in dividends.
Thanks for spending the time to read through all that research. There is something in the video you got incorrect however. In regards to the tax treatment of the investments you're right the dividends from the EREITS are treated as ordinary dividends, however in the Los Angeles E-fund, which is what you mostly referenced in your video, you receive a K-1 at year end giving you a much better tax situation. Maybe you didn't know that because you're not actually invested in the fund, but that does change a large part of your premise for not investing in Fundrise. The same is true for the Washington DC Fund and the National Rental Fund. As a side note, your idea about just investing in the S&P500 index because the historical return is historical bias. Additionally some of us like that our investment is having a really impact on creating housing. Personally it makes me feel excited to drive by a location and see real housing being built from the ground up and knowing that I helped make that happen. It's the same reason I invested in a syndication in single family homes with a similar purpose. I love seeing old beat up houses turned into something nice and new. It's the feel good factor. Liquidity is going to be an issue with any real estate investment, but any financial advisor will tell you not to invest money you might need in the next 5 years. You can't personally re-fi your money out of your portfolio, but you can also invest really small amounts of money which can be a great confidence boost for new investors.
Good counter to some of the cons. I liked his effort and he did a great job. I will add that diversification is why you don't put all your money in the S&P. Most people aren't getting savvy enough to maintain their own investments, which is why Fundrise is a good opportunity for some people , in a way to set it and forget it.
Great video about Fundrise and thanks for sharing the research you had. I’ve been with Fundrise for three years now and so far generating about 11% annually using their “balanced” portfolio. Most of them dividends (can be reinvested) and some appreciation. Lots of K-1s and 1099s each year. I’m still in my 20s and the money invested in Fundrise will stay for a long while so I’m not too concerned.
Really appreciate the thorough review. Didn’t that say the returns from that chart were NET of fees though? Pretty sure that the historical returns are not calculated before fees, as you are stating.
Graham, I don't know you or your channel and this is the 1st video of yours I have ever watched - but HOLY MOSES this was the most informative and easy-to-understand rundown of something, EVER! Thank you so much for the time you poured into the making of this video. It helped me out immensely.
I’ve been invested in Fundrise for years and really like it. Yes, I see your concerns, although I disagree with your assessment of them. I was also aware of certain concerns and risks before I got into Fundrise. If investors are aware of these risks before going into it and it fits their investment goals, I think it can be a great investment. Like most investments, it’s not for everyone.
I just invested with Fundrise on July 29, 2019 in the amount of $10,000. I am going to leave it in there for 5 years or even longer! I am making money everyday on my account! Any investment is a risk and I am willing to invest with Fundrise!
Thanks brother, you just saved me hours of reading and evaluation as well as potentially tens of thousands of dollars in inaccessible investment funds, much appreciated~
He made the video on 2018, it's 2022, guess what? Inflation made cash in bank account pointless, Fudnrise growth is still at record level, no real estate downturn yet and bidding wars for properties are at all times high. If you already own a home, Fundrise is a decent option for investment of second property if you don't want to play public REIT or stock market game.
Thank you so much for taking the time to do the research and the explanation on that matter, and digest it for us in such an understandable manner that even a total rookie like me would understand. Watching your every single update and getting a lot of knowledge from it. You’re the best. Keep it up!
Invested 10k in FundRise a couple days ago and just canceled/pulled every red cent out because of this video. Thanks. I'm going to try out the S & P 500 instead.
I wish I saw this before I invested in Fundrise. The 24% tax rate is rather high, but I still like Fundrise because it is a hedge against a precipitous stock market drop.
Also, while the growth of assets under management is not sustainable, the returns absolutely are (I’m not saying they will continue at the same level, I’m saying they can continue at the same level). There are plenty of real estate investment companies that have sustained returns even higher than Fundrise over a couple decades.
Graham is arguing FOR short-term liquidity, AGAINST most diversification outside of publically traded ETFs and equities, AGAINST long term annualized returns above 7% (the S&P's projected growth over the next decade is well below 5% for most analysts and negative for some), and AGAINST dividend income. The argument here is mostly general and didn't need fine print interpretation of a specific real estate trust like Fundrise. And from what Graham is arguing for/against, his argument is firmly situated in late-cycle expectations. Also, check that historical S&P 500 data. It started in the late 1950s and has annualized 6% with dividend reinvestment.
great analysis, I personally read some of the 225 in particular page 7. For your honest review you have earned my subscription to your channel. thank you
Same goes for a lot of private REIT's and other RE crowdfunding sites when it comes to the illiquidity factor. I learned the hard way. Your money is locked up and you can't liquidate your investment. The funds don't care because they keep on collecting their 1-2% management fee.
Great video Graham. I was doing similar research recently. I was trying to understand the difference between crowdfunding vs syndication. I agreed on your comment about the downside, but I would also say that is the nature of real estate. crowdfunding seems like a good alternative of ETF(haven’t done much comparison with REIT) cuz real estate market is not entirely correlated to the stock market. The downside I agreed on is the tax benefit. Comparing to some syndication or partnership deal, that’s prob the biggest reason I don’t want to invest in crowdfunding. I think the biggest reason crowdfunding exists is because the accredited investor barrier on syndication. Overall I think it’s good for ppl who wants to diversify their investment and being passive. Great video as usual! Love your work 👍🏻
I want to have the real estate portion of my portfolio at 10 - 20% (not counting my home). Decided to use Fundrise since I'm not wanting to go through the headaches of being a landlord. I'm going to miss out on the tax benefits though :/
What a refreshingly thorough dive into this topic. There are risks to every kind of investing, but it's not easy to find anybody talking about these crowdfunding deals with any kind of objective detail. It's very helpful - thanks!
I have finally subscribed, thank you Mr GRAHAM, this was after 2-4 years of being a non listed subscriber, I have multiple youtube consumer accounts, and I either have or will push the button for your algorithm. Thank you for entertaining me, and keeping me bullish, and healthy after a down market . I have 3 DUIS, and I’ve paid heavy hefty fines with lawyers, courts (of Las Vegas Nevada judition; I deserve to pay hefty fines I’m rude to the point I will do what I want. When it comes to intrest. But I’m very respectful, and fully appreciative. Pulling meth addicts out of poverty providing my illegitimate therapy, illegitimate financial assistance. I’m not asking for any thing just saying thanks, I love real estate, I’ve helped and saved lives, purely on a factoid of giving away what little wealth I have acuteness’ to my life.
I think you should say it like "fund rise" not "fun drise". On a different topic I've started watching RUclipsr Mark Ferguson investformore. He seems to know a lot about house flipping and renting. He's not a big channel like yours but he has a book on Amazon and has flipped dozens of homes and has a team of like 9 people under him. I just stumble on his channel.
I'm from Seattle and flipped a few houses there. Win some lose some! Since we cannot look behind the drywall before we buy, we found a ton of unknown problems that drove up the renovation costs. The first 3-4 houses were break even at best. One project ended up costing way too much and put break even over the listing price so it became a rental for 2 years. We just sold it. The rents were around a 7% ROI and the sale turned into a 10% gain. Not bad altogether but just a lot of hassle in the meantime. I'm very interested in Fundrise and have money I can forget about for 5+ years so if there are investors in Fundrise here, I'd like to hear about the pros and cons from your perspective.
I love Graham and think he makes fantastic videos. With that said, wish he hadn’t said the average return of stock market was 12%. While it’s a numerically true statement, it’s misleading. The real number that matters is the CAGR of 10%. If one invests $100, gets a 0% return year one and a 100% return year two, technically the “average return” is 50%, but the CAGR is 41.4%, and that’s the value that matters for long term portfolio growth predictions. Still, Graham is awesome.
Thanks for making a great and detailed video. I feel fundraise is a perfect platform for new real state investors , because fundraise let’s you invest as low as $500. Once they establish their portfolio they can go all in by purchasing whole properties and covert them into rental or flip. It’s just my opinion. I do like your content/Videos :)
Ahhh the good ol' days of wholesome honest Graham where he wasn't just talking about the latest flashy topic his agency told him to talk about and only speaking 'fluff' rather than painfully researched quality information.
Much appreciated, but certainly Fundrise deserves an update 1. Trump lowered the taxes on REITS 2. fundrise now allows roll-over 3. With the Pandemic, there has been a lock on selling off assets. An they are shifting to more conservative strategy
Fantastic job as always! One correction: not all dividends are taxed at ordinary income tax rate; qualified dividends are taxed the same as long cap gains. REIT dividend income is not qualified, so what you said was true for this topic. Just had to clarify for audience sake 🤓. Keep up the good work!
My mans really read a book of legal documents to educate us. Love you, Graham
thanks!!
Graham can we get an updated video on Fundrise during this pandemic?
Seconded
Yes I would appreciate that!!
My Q1 2020 dividends were $130.28. Q1 2019 it was $97.59. This is on a $10k portfolio.
Yes come on
@@invictusaeternum What about now? Q2 and Q3 are much more interesting
Graham, you have no idea how appreciative I am that you took the time to put together such a thorough analysis. Clients ask me about this all the time. I see other “experts” recommending it and then linking to there referral link.
Much appreciated, sir. I like your style.
Thanks so much for the kind words!! 🙌🏼
And I appreciated your rec for this video; great info, & Graham's analysis will def be heeded.
Awesome, Nigel! Thanks for the follow up. I know you didn’t have to - it means a lot. Hope I’ll see you around my channel, as well!
Or did you already comment over there?
Graham isn't a sellout like most others
kevhino260 - Agreed! I’m a fan.
Fundrise is completely fine for investing in if you have the extra cash to do it. I have seen nothing but positive dividend returns since starting with it this year. The advisory fee is low enough for me which you can see at your log in page with the balance on your account.
Even if this is only short-term gain, so what? A return is a return. Good to place your eggs in several baskets.
I was desperately hoping to see your referral link when I clicked "Read more". DISSAPOINTED.
Hit like as soon as you said 225 pages. Totally agree with what you said re: the downsides. Thanks, Graham!
Thanks so much!!
Graham Stephan So, I guess my best investment should be in a shovel. If, that is what you are saying? Take the money dig a hole and bury the cash in the back yard.
T Hyslop 😂
No bullshit anyone take the time to read 225 pages deserves a like funny u said that I did exactly when he said that
Graham Stephan 💯💯💯
Graham, you just saved me a full day of my time researching this. I was contemplating investing big, but the fact it's taxed as income, along with having no liquidity just kills it. Plus, it's so heavily invested into California, I'd be worried what's going to happen when the big one hits! For now, I'll stick to physical apartment buildings, and the grind that comes with it. You do a great job articulating the pro's and cons. I'm left with zero confusion about Fundrise.
Yessir! Physical real estate is where it’s at 💸
Super like for that 225 page torture session. 👍🏾
THANKS!!!
@@GrahamStephan Definitely dude. Much respect!!!👍
THAT is doing something epic!
@@GrahamStephan Bro, I need that dinosaur skull!
You read 225 pages and did all of that other research in four hours? Did you attend the Tai López School of Reading?
A lot of people talk about real estate on RUclips. You are the only one actually read all the fine print and make it easy for people like me to understand.
Thanks so much!!
Thumbs up! I like how you also talked about the cons, such as the lower liquidity, the likelihood of not being able to sell short term, etc.
Thanks so much Eric!
Thanks Graham for educating the masses, and reading the fine print :)
You got it!
Wish I watched this before I invested. Going to unload some Fundrise funds and get a Vanguard REIT setup. Thank you Graham for these videos. Love em!
Been investing for over a year now in Fundrise. Great returns thus far. Not a bad place to park extra money, but of course always keep in mind that you shouldn't put all your eggs in one basket. Don't invest what you might need in the near further because real estate is inherently a long term investment.
Bro question how's your investment in the fundrise platform going?
Graham, this is currently my favorite RUclips channel. You are worthy of the "likes".
Never liked or even disliked a RUclips video before😂 but that’s a hell of an effort, wish I could give you a million 👏🏽
Thank you!!!
Awesome News
Liquidity isn't too big a deal because it teaches people patience. It does suck not to have it when you need it, but this also comes down to having an emergency fund before investing
True. But in the event you need to reorganize, not having access would be a pretty big concern. Just in case.
I invested 200,000 into a private company similar to fundrise, but it's owned by people I know personally. Not having liquidity meant that when the returns were less than they stated because of them increasing their fees, I could not find a single buyer. Who do I go to now to sell my interest in a private llc? I'm stuck with a bad investment.
hey why dont you invest on it with your everything and then shout out what you did?
Lack of liquidity doesn't bother me, since I'm not going to invest too much. I wouldn't put more than 10% into it.
Liquidity is important , so when do you plan on pulling the fundrise money out or moving it over to another investment ? If the answer is NEVER, then I think fundrise is for you
A couple benefits of Fundrise i don't think were mentioned in the video:
1. Being a public non traded REIT company, they are not tied to the same bipolar mood swings of the stock market, or even public REIT stocks for that matter. Thus far they have endured and even weathered the covid pandemic, unlike alot of stocks and REITS. Extremely low correlation to the stock market makes this a investment worth considering.
2. They can reinvest dividends for you, but more importantly will pay them out as cash to your bank account if you so desire. This is a convenient feature alot of millenial investment services just do not offer (M1 Finance, Robinhood, Acorns, etc) so if your a cashflow investor, it is a perk.
Yes the option to cash payment of dividends is definitely a great feature that i don't believe was mentioned in this video.
Fundrise like many others requires, "patient equity". It's really designed with a "passive" type investor in mind.
Chris Caballero I see it as a long term investment with moderate to high risk. I’ll eventually get into the fundrise as real estate was never meant to be short term investment.
So. Fundrise actually did freeze the option to sell and every comment that I saw regarding it was positive. It prevented everyone from panic selling in march 2020 and my returns are doing alright so far.
This young man is so wise. I was seconds from investing in fundrise and thanks to this video, Im on fence now.
Same
Diversityfunds is better
GET OFF THE FENCE!! I invested $1000 a year ago and he's RIGHT. Your money is just tied up, going NOWHERE (at least for you). You may get $20 in gains, which I reinvested, (ha, ha). That's virtually USELESS. I don't know if I will EVER see that $1000 again. DON'T EVEN MAKE EYE CONTACT WITH FUNDRISE!!
😂 😂 😂 😂 😂 same here. Literally this morning
Great video. Definitely led me to my decision not to get involved with this. The whole "we can hold your money indefinitely" was the red flag for me to run for the hills.
Fundraiser is for real estate, not stock equities. No point in comparing them. I'm buying a little more REITs including Fundrise because I think the stock market is going to tank. A lot of dividend stocks will stop paying dividends and the share prices will also drop. I've invested money and some of my mom's money in Fundrise funds for 5+ years and been very happy. They let you buy equity or loan funds and allow you to easily diversify geographically. You make money completely passively and you have no liability. Try doing that with physical properties.
I just downloaded the app and was about to select an option and decided to watch your video first before making any moves. I’m so glad I did. Thank you so much
Honestly the liquidity thing... What you need to realize is Fundrise is a way Into the big boys world of commercial real estate development. A world in which you would also not have the option to just pull out when you want.
Graham just want to say appreciate your channel and the work you put in. Most people don’t care to look through fine print and paperwork, which is ultimately important! Keep grinding! Thanks for all your videos overall! Looking forward to possible taking one of your real estate classes!
Good work, young man!
BIG respect and HUGE praise for your due diligence! You are appreciated!
Thanks so much!!
Thank you for the thorough and complete review! One correction - most dividends from NYSE stocks are qualified dividends, which are taxed at the capital gains rate
This was an amazing review. I had watched a positive review prior to yours who mentioned an affiliate link which I didnt think too much of and I was actually thinking about investing even with the high 1% fees. BUT I totally love the thoroughness of your review looking into the realtors, and the actual projects in the areas you are familiar with. That was helpful. It was also good to know about the tax rate of dividends. Thank you for the hours you spent preparing this video. I'm totally going to subscribe. Keep up the great work of saving people from wasting money on fees when there are better, cheaper options offering commensurate returns. A million thanks!!
Thank you for this honest review. Bringing up the fees is a huge point, especially compared to something like the Vanguard RE fund.
I have been with Fundrise for a little over a year. I am by no means a large investor. My returns are currently just under 8% total. Overall I'm pretty happy with it and the updates they give on your personal portfolio are incredibly frequent. I'd be happy to show you what the dashboard with updates looks like. You are shown on the main dash board what the fees taken out look like. I appreciate you doing this review!
🙌🏼
I just liked and subscribed after watching this video. Anyone who takes the time to read 225 pages to help answer questions for his followers is worth it in my opinion. Good job Graham!
Thanks so much!!
You're a legend, thank you for that comprehensive and thorough walkthrough of Fundrise. That was incredibly helpful.
Stick to publicly traded REIT's. The advantage of investing in a real estate company (reit) is that you gain the tax advantages of their pass-through status. A reit pays no corporate taxes at all (except property tax), and so all of the tax is paid by shareholders. This is at the higher marginal income tax rate, but that is reduced by the QBI 20% deduction. For someone in the 22% bracket, you will pay 17% on reit dividends. All normal corps pay 20% corporate taxes before distributing dividends or buying back stock. Then the shareholder pays the 15% tax on the distribution. You are always double taxed on corp dividends. Reit's have tax advantages out the wazoo. The other benefit is that there are hundreds of reits and even more etf's that track them. You can get ultimate diversification.
I suggest just buying VNQ or NETL. NETL is all net lease reit's, which is an even cooler subsector.
This is the best review of Fundrise that I have seen. He is a little pessimistic towards the end because of the tax consequences (taxed at ordinary dividend rate), but Fundrise more than makes up for that with its convenience. Also, the Trump tax plan softens that tax burden for most dividend investors.
I have been investing in Fundrise for almost 2 years and my returns have been a modest yet respectable 13%. I'll take that instead of being a landlord ANYDAY.
I am all in with Fundrise as a hedge against a stock market crash.
thanks so much for watching!
Graham, appreciate the honest research and not throw in an affiliate link like most youtuber to make a buck. I invested 1k with them, but after watching this video I decided not to invest another 1k with them.
As I understand it...In regards to taxes, all REITs, even the publicly traded Vangaurd Real Estate (VNQ) dividend income is taxed as ordinary income. Same as if you owned property and rented it out, that rent income is ordinary income. So investing in Reits (VNQ or Fundrise etc) is just a way to diversify outside stocks/bonds. However, with the new tax plan, this dividend from REITs are now considered pass through business income and we can now take a 20% reduction on that dividend for taxes. So we only claim 80% of that dividend income as taxable. Owning physical property is difficult for most (owning a home to live in and a second to rent), so investing in REITs (doesn't need to be Fundrise) has it's benefits with diversification IMO. VNQ is publicly traded and thus will swing with the market where Fundrise has less volatility. Fundrise lack of liquidity and not being tested in a downed economy are the major risks.
can also place this REIT into an IRA and get that tax benefit.
Income from rented property is taxed but there are tax write-offs which are beneficial. You can also set up a business and transfer property ownership to the business for more tax breaks.
I am glad that you brought up the fact that all REITs are taxed as ordinary income. I keep seeing people say that they are investing in REITs rather than Fundrise because of the tax implications. Little do they know that those REITs are taxed the same unless sheltered in a ROTH IRA.
Thanks to everyone, I am learning even more about investing and diversifying my investments. Thanks guys.
Wow... seriously you put some work into this. All those pages of fine print and the actual analysis and comparisions. You are literally they ONLY channel on RUclips that I choose let all of the ads play in full... I hope it helps out your channel, you earned it bro.
Thank you so much!! Really means a lot!!
I rather have control of my own real estate investments.
Agreed!
Agreed!
That goes double for me!
Agreed
I'm a terrible landlord. I'd rather have someone else do it for me.
Possibly the most in-depth review of any investment vehicle on RUclips
Thanks!!
Damn... and here I was thinking you were just another "financial guru"
This indepth analysis is super appreciated, like button pressed
Graham, I really like your office aesthetic. Where did you find that industrial style desk?
This is not like a REIT. Poor comparison. It's more like a PE offering. If you can't lock up cash for 5+ years then you probably shouldn't be investing that cash in the first place.
I invest with Fundrise- I am aware of the illiquidity and the fees. I read the fine prints too. I put little money for diversification- So far not complaining-
How are things coming along now.
yes, how are thing coming along?
FOR THE LOVE OF GOD TELL US HOW THINGS ARE COMING ALONG NOW
Apparently since he is not responding, it doesn't look as promising as initially thought to avoid embarrassing himself via the silence.
Dude how are things coming along??
no really :D i was just about to throw in 1k into it just for the fun of it. And figured i would watch some random reviews on youtube. Found this video, basically knew everything he covered. But really, how are things coming!!!
Where my notification gang at? 🤔😂😂 either way liked the video before watching it 💪🏼
Thanks so much Oscar!!
Oscar Martinez - Stock Market Hustler One here 🖐
I'm always glad to see when people say "well., you could invest in this or you could invest in the S&P 500 as a whole and do better". The spirit of Bogle lives on!
I am for the LONG HAUL. Plan to invest $500-$1000 next year. This is just ONE of many investments I'll be making in 2020.
I noticed this comment was from 11 months ago. How has 2020 been for you?
@@RobsStraightJacket Hello!
I never got around to investing with Fundrise. Busy buying at the dip in March (single stocks and ETFs) I am preparing for another dip, I surmise in Narch 2021.
Putting Fundrise on freeze.
With this pandemic, kind of glad I held off.
@@Omonike88 smart moves I think! Good choices.
@@RobsStraightJacket thank you! Many business are closed, apt buildings...who can afford them while unemployed?? Glad I didn't parttake.....I'm sure they won't let investments liquidate easily....
Feel bad for folks that ventured in fu drive right before pandemic....
Who would of known???
@@Omonike88 it was very unforseen, very unfortunate.
Corporate dividends ARE taxed at the same rate as long term capital gains, as long as they are classified as a C-corp.
Reit dividends are taxed at ordinary income tax rates because they don’t have to pay corporate taxes at all as long as they payout at least 90% of their profits in dividends.
So REIT divident taxes are higher correct?
Sam Diab
It depends on your income tax bracket, but most likely you will be taxed more for REIT dividends than C-corp dividends.
Thanks for spending the time to read through all that research. There is something in the video you got incorrect however.
In regards to the tax treatment of the investments you're right the dividends from the EREITS are treated as ordinary dividends, however in the Los Angeles E-fund, which is what you mostly referenced in your video, you receive a K-1 at year end giving you a much better tax situation. Maybe you didn't know that because you're not actually invested in the fund, but that does change a large part of your premise for not investing in Fundrise. The same is true for the Washington DC Fund and the National Rental Fund.
As a side note, your idea about just investing in the S&P500 index because the historical return is historical bias. Additionally some of us like that our investment is having a really impact on creating housing. Personally it makes me feel excited to drive by a location and see real housing being built from the ground up and knowing that I helped make that happen. It's the same reason I invested in a syndication in single family homes with a similar purpose. I love seeing old beat up houses turned into something nice and new. It's the feel good factor.
Liquidity is going to be an issue with any real estate investment, but any financial advisor will tell you not to invest money you might need in the next 5 years. You can't personally re-fi your money out of your portfolio, but you can also invest really small amounts of money which can be a great confidence boost for new investors.
Good counter to some of the cons. I liked his effort and he did a great job. I will add that diversification is why you don't put all your money in the S&P. Most people aren't getting savvy enough to maintain their own investments, which is why Fundrise is a good opportunity for some people , in a way to set it and forget it.
Zachary Kurtz thanks !!
Well Put!
Great video about Fundrise and thanks for sharing the research you had. I’ve been with Fundrise for three years now and so far generating about 11% annually using their “balanced” portfolio. Most of them dividends (can be reinvested) and some appreciation. Lots of K-1s and 1099s each year. I’m still in my 20s and the money invested in Fundrise will stay for a long while so I’m not too concerned.
If I can't get my money back when I want, I'll put my money somewhere else. Great video.
🙌🏼
@Pho Lyfe Whatever you say but I don't know what my future holds so I need access to my money at all times.
Ever try buying and selling a home whenever you wanted?
225 pages. That's why I'm a subscriber! Thank you Graham!
Really appreciate the thorough review.
Didn’t that say the returns from that chart were NET of fees though? Pretty sure that the historical returns are not calculated before fees, as you are stating.
Graham, I don't know you or your channel and this is the 1st video of yours I have ever watched - but HOLY MOSES this was the most informative and easy-to-understand rundown of something, EVER! Thank you so much for the time you poured into the making of this video. It helped me out immensely.
Thanks so much!!
I’ve been invested in Fundrise for years and really like it. Yes, I see your concerns, although I disagree with your assessment of them. I was also aware of certain concerns and risks before I got into Fundrise. If investors are aware of these risks before going into it and it fits their investment goals, I think it can be a great investment. Like most investments, it’s not for everyone.
I just invested with Fundrise on July 29, 2019 in the amount of $10,000. I am going to leave it in there for 5 years or even longer! I am making money everyday on my account! Any investment is a risk and I am willing to invest with Fundrise!
@@saralee8459 how much can i start with them?
Maestro Steve you can start $500.
In fact I just got my interest paid. As of January 1,2020 my portfolio is $10,417. This is a long term investment !
@@saralee8459 how much did u start with them? And for how long is this long term invesments?
Maestro Steve I invested $10,000 on July 29,2019. Long term is 5 years or longer!
This video is three years old but still saved me sooooo much time on research. Thanks!
Thanks brother, you just saved me hours of reading and evaluation as well as potentially tens of thousands of dollars in inaccessible investment funds, much appreciated~
He made the video on 2018, it's 2022, guess what? Inflation made cash in bank account pointless, Fudnrise growth is still at record level, no real estate downturn yet and bidding wars for properties are at all times high. If you already own a home, Fundrise is a decent option for investment of second property if you don't want to play public REIT or stock market game.
Man, you just crushed my excitement to start investing in Real Estate. So, is it Vanguard REIT just as good as Fundrise promises?
Oh, how far you've come Graham, i love the improvements
Thank you so much for taking the time to do the research and the explanation on that matter, and digest it for us in such an understandable manner that even a total rookie like me would understand.
Watching your every single update and getting a lot of knowledge from it. You’re the best. Keep it up!
Invested 10k in FundRise a couple days ago and just canceled/pulled every red cent out because of this video. Thanks. I'm going to try out the S & P 500 instead.
Can't go wrong
Wow I almost put my money in here, thank you!
🙌🏼
Thank you so much for taking the time to give out this info. I won’t be investing in Fundrise
I wish I saw this before I invested in Fundrise. The 24% tax rate is rather high, but I still like Fundrise because it is a hedge against a precipitous stock market drop.
I have it also. I invest $200 per month. I will see where it takes me. So far so good.
@@Darltk Do you have to invest a certain amount each month?
@@myclassyadventures7537 I invest twice monthly on an automated basis but I don't think it is mandatory.
@@Darltk Hey Darrell, mind giving me an update on how the Fundrise investments have been going?
Also, while the growth of assets under management is not sustainable, the returns absolutely are (I’m not saying they will continue at the same level, I’m saying they can continue at the same level). There are plenty of real estate investment companies that have sustained returns even higher than Fundrise over a couple decades.
You did an awesome job!! I was about to buy into the hype and thank GOD I came across your video. You are a God send👍🏾
Thanks so much!
You add an exponential amount of value for the time I spend watching your videos. Good work!
Thanks!!
Can you do the same thing with Jay Morrison's Tulsa REIT
True dedicated YT'ers like Graham, really deserve not only my like, but my subscription!
this is an excellent and thorough review especially for us novice investors
I was on the edge of trusting you, but this video pushed me over it. Thank you
Graham is arguing FOR short-term liquidity, AGAINST most diversification outside of publically traded ETFs and equities, AGAINST long term annualized returns above 7% (the S&P's projected growth over the next decade is well below 5% for most analysts and negative for some), and AGAINST dividend income. The argument here is mostly general and didn't need fine print interpretation of a specific real estate trust like Fundrise. And from what Graham is arguing for/against, his argument is firmly situated in late-cycle expectations.
Also, check that historical S&P 500 data. It started in the late 1950s and has annualized 6% with dividend reinvestment.
This.
great analysis, I personally read some of the 225 in particular page 7. For your honest review you have earned my subscription to your channel. thank you
This was a incredibly informative! How does DiversyFund compare?
Same goes for a lot of private REIT's and other RE crowdfunding sites when it comes to the illiquidity factor. I learned the hard way. Your money is locked up and you can't liquidate your investment. The funds don't care because they keep on collecting their 1-2% management fee.
Great video Graham. I was doing similar research recently. I was trying to understand the difference between crowdfunding vs syndication. I agreed on your comment about the downside, but I would also say that is the nature of real estate. crowdfunding seems like a good alternative of ETF(haven’t done much comparison with REIT) cuz real estate market is not entirely correlated to the stock market. The downside I agreed on is the tax benefit. Comparing to some syndication or partnership deal, that’s prob the biggest reason I don’t want to invest in crowdfunding. I think the biggest reason crowdfunding exists is because the accredited investor barrier on syndication.
Overall I think it’s good for ppl who wants to diversify their investment and being passive.
Great video as usual! Love your work 👍🏻
Thanks for the comment Calvin!! 🙌🏼
I been with fundrise for 7 months now, started with $10,300 and it’s been ok, fees ain’t bad at all
What about investing in all of them lol
You saved me Graham. I almost invested into fundrise. Until I seen your video. Thank you.
I want to have the real estate portion of my portfolio at 10 - 20% (not counting my home). Decided to use Fundrise since I'm not wanting to go through the headaches of being a landlord. I'm going to miss out on the tax benefits though :/
It's OK though because when your money makes money, YOU aren't getting tired.
Thank you Graham I almost invested in fund rise. You’re a lifesaver a Thousand likes to you my friend !
Such a great video and explanation! Thanks for doing the research on this. I'm so glad you had a video on this!
What a refreshingly thorough dive into this topic. There are risks to every kind of investing, but it's not easy to find anybody talking about these crowdfunding deals with any kind of objective detail. It's very helpful - thanks!
17:19 good C.Y.A. 😂
I must say, you're the robin hood of real estate channels on RUclips. You don't just talk about feelings. Thanks!
🙏🏼
I have finally subscribed, thank you Mr GRAHAM, this was after 2-4 years of being a non listed subscriber, I have multiple youtube consumer accounts, and I either have or will push the button for your algorithm.
Thank you for entertaining me, and keeping me bullish, and healthy after a down market .
I have 3 DUIS, and I’ve paid heavy hefty fines with lawyers, courts (of Las Vegas Nevada judition; I deserve to pay hefty fines I’m rude to the point I will do what I want. When it comes to intrest.
But I’m very respectful, and fully appreciative.
Pulling meth addicts out of poverty providing my illegitimate therapy, illegitimate financial assistance.
I’m not asking for any thing just saying thanks,
I love real estate, I’ve helped and saved lives, purely on a factoid of giving away what little wealth I have acuteness’ to my life.
I thought he said “fun fries” at first. I must be hungry lol.
yup! you are hungry. lol
Kufufua I really was 🤦🏾♀️ my hearing also isn’t what used to be lol. These late twenties 😊
What an idiot.
@@JessicaHicks I'd watch a video of you just eating fries. Lol.
fan3002 haha. hmm... Well I do love fries! Subscribe and comment on one of my vidz and I’ll post a short video.
Vanguard’s REIT fund charges 0.26% ON TOP OF the fees charged by the REITs themselves, so you aren’t comparing apples to apples.
Thank you Graham - appreciate your information - I've learnt a lot from it.
Thanks for putting in those 4 hours! Appreciate your hard work. I smashed the like button
I think you should say it like "fund rise" not "fun drise".
On a different topic I've started watching RUclipsr Mark Ferguson investformore. He seems to know a lot about house flipping and renting. He's not a big channel like yours but he has a book on Amazon and has flipped dozens of homes and has a team of like 9 people under him. I just stumble on his channel.
Nice! I’ll check it out!
His channel is great! He has flipped over 100 homes and owns around 30 properties.
I'm from Seattle and flipped a few houses there. Win some lose some! Since we cannot look behind the drywall before we buy, we found a ton of unknown problems that drove up the renovation costs. The first 3-4 houses were break even at best. One project ended up costing way too much and put break even over the listing price so it became a rental for 2 years. We just sold it. The rents were around a 7% ROI and the sale turned into a 10% gain. Not bad altogether but just a lot of hassle in the meantime. I'm very interested in Fundrise and have money I can forget about for 5+ years so if there are investors in Fundrise here, I'd like to hear about the pros and cons from your perspective.
The last book I read didn't even have as many pages. You're the man, Graham!
"I spent 4 hours reading 225 pages"
Boii it would take 10 hours for me, I'm super slow at reading lmao
There’s a lot you can skim over because every topic is outlined!
I love Graham and think he makes fantastic videos. With that said, wish he hadn’t said the average return of stock market was 12%. While it’s a numerically true statement, it’s misleading. The real number that matters is the CAGR of 10%.
If one invests $100, gets a 0% return year one and a 100% return year two, technically the “average return” is 50%, but the CAGR is 41.4%, and that’s the value that matters for long term portfolio growth predictions.
Still, Graham is awesome.
Thanks for making a great and detailed video. I feel fundraise is a perfect platform for new real state investors , because fundraise let’s you invest as low as $500. Once they establish their portfolio they can go all in by purchasing whole properties and covert them into rental or flip.
It’s just my opinion. I do like your content/Videos :)
Thanks man!
Dividend Income isn't always taxed at your normal rate. Qualified Dividends are taxed at capital gains.
Thanks Graham for taking time out of your busy day to read 225 pages! I'd like this video a hundred times if I could! lol
Haha thank you! I partially enjoyed it though 😂
Ahhh the good ol' days of wholesome honest Graham where he wasn't just talking about the latest flashy topic his agency told him to talk about and only speaking 'fluff' rather than painfully researched quality information.
"Fun Dries." I Like that one it's probably more "Fund Dries" thanks for reading the ToS for us.
Much appreciated, but certainly Fundrise deserves an update
1. Trump lowered the taxes on REITS
2. fundrise now allows roll-over
3. With the Pandemic, there has been a lock on selling off assets. An they are shifting to more conservative strategy
Great pointers
Can you do one on the cannabis investment app Stash too?
Say what? Cannibus app??? What is that name of the app?
@@lilmamma807 Uhm... he said "investment app Stash"
@@jakejake7289 lol yep saw Cannibus and nothing after that. Stash, I got it now thanks. 🙂
@@lilmamma807 😆
Fantastic job as always! One correction: not all dividends are taxed at ordinary income tax rate; qualified dividends are taxed the same as long cap gains. REIT dividend income is not qualified, so what you said was true for this topic. Just had to clarify for audience sake 🤓. Keep up the good work!
YES! Very true that was a point I should have clarified!
Graham Stephan no worries, I knew what you meant. If I could give you a double like for all the research you did, I would! 👍👍