Hey, how's it going? It's Seth Williams here from retipster.com
And in this video, I want to give you my annual update on my Fundrise investment.
So if you have no idea what I'm talking about four years ago now, back in March of 2017,
I took $1,000 of my own money and I invested it with a company called Fundrise.
Fundrise is a real estate crowdfunding platform that allows investors like you and me
to take relatively small amounts of money starting at about $500 or higher.
And you can invest this money into what they call it eREITs
which is not just one property, but a pool of property
So you, along with a lot of other investors can put in there, a small or large amounts and Fundraisers will then use this
money to either lend it out to other developers and then collect payments back with interest.
And then that's how these investments grow for individual investors.
Or they can literally go out and like buy up properties.
And as those properties produce cashflow and appreciate,
and then resold, that's another way that investors can make a return on this.
And Fundrise is not the only company that does this. There are several other ones out there.
But one thing that makes Fundrise unique is that it's one of a few out there, where you don't need to be
an accredited nvestor in order to play ball.
And being an accredited investoris kind of a hard thing for a lot of people to do
because you either have to have a million-dollar net worth not including your personal residence,
or you need to have an annual income of at least $200,000 for the past two years, individually,
or over $300,000 per year with your spouse.
So in other words, you have to be rich already in order to be an accredited investor and invest with
a lot of these other crowdfunding platforms.
But with Fundrise you don't have to be accredited.
So as long as you have at least $500, and as long as you're U.S. citizen, who is 18 years old or older
you can get in the game.
So back when I first put together that initial review of Fundrise
where I put my a thousand bucks in and just showed people how it worked,
I was really surprised at how much engagement in views and comments that video got on YouTube
for something that like I had never even talked about before.
So every single year I've been doing these updates where I get into my account
and I show people exactly what the returns have been over the past year,
really over the past several years, since I first put the money in.
So that's what I'm going to do right here in this video.
I have noticed a lot of questions that come in repeatedly on these videos when they go out there.
So I'm going to try to address a lot of those questions as I take you through the website.
And I'm also going to bookmark a lot of those questions and answers
with the little timestamp table of contents in the description beneath this video.
So if you want to sort of skip around to where I talk about
each of these different things, you are more than welcome to do that.
And also, I just want to make it very clear.
And I say this every year when I do this, my goal in this video is not to like convince you
or make a case for why you should invest with Fundrise.
We do have an affiliate relationship with Fundrise
And by the way, we have an affiliate link beneath this video.
However, I'm not saying you should or shouldn't invest with Fundrise.
I'm not even saying that I like Fundrise.
Honestly, there's a lot of other ways I could make more money if I put this money to work doing these other things,
like for example, flipping a property or buying a rental property at a very low discounted price.
All these things could get me a higher return than what I'm making with Fundrise here.
But I think what Fundrise brings to the table is that this is an incredibly passive investment.
I literally don't think about this at all.
The only time I do spend on it is when I do these annual updates.
So it's literally passive income. It takes nothing for me whatsoever.
There's not that many things out there that can make that kind of claim, but this can,
and this is a way to get involved in investing in real estate.
So if you're tired of messing around with the stock market or trying to understand
Bitcoin or cryptocurrency or precious metals or whatever else you've been doing, even if you have
been investing in real estate, but you want to continue doing that in a way that doesn't require
any additional hands-on work from you.
Fundrise could be a one-way to do that.
And of course, it's important to acknowledge that an investment like Fundrise is like any investment in that
there is no guarantee of a return.
You might have a very low return. You could lose all your money for that matter.
And I don't think it's very likely, and they've got a pretty decent track record
of paying up pretty good returns to their investors since they've been in existence,
but that doesn't guarantee anything in the future.
So if you're not okay with that kind of risk, which is present in any real investment, then don't invest your money here.
It's as simple as that.
So let's jump into the website. I'll show you what's happened over the past year.
Hopefully I can educate you a little bit about how this works and if you're interested
again, we've got an affiliate link beneath this video, so go check it out.
All right. So here we go. When I log into my dashboard, you can see just a quick snapshot
of the net returns to date and really the entire historical performance
since I first started investing back in the first quarter of 2017
see this timeline where you can see the growth going all the way up and what happened along the way,
but you can also see over here the 2021 performance year to date,
and this is broken down into dividends and also appreciation.
So the dividends are the quarterly amount that would be like paid to me normally as the investor.
And I'm actually telling Fundrise to automatically reinvest my dividends
and not pay it out to my account.
And then appreciation. So that's the value going up.
This actually looks substantially different from how it looked last year at this time.
Last year the dividends number was quite a bit higher and the appreciation amount was actually negative.
The performance just kind of switched a little bit in terms of dividends being lower and
appreciation being higher this year, compared to last year.
You can also see where it's at all time, all that contributing to my original $1,000 turning into $521,77
So if we dive a little bit deeper into this, we go up here and click on transactions.
So what this is showing me is every single dividend payment,
which was then subsequently reinvested over the past four years now.
And you can see, I originally took my $1,000 and invested into the East Coast eREIT.
And that was kind of an arbitrary decision back at the time.
I didn't really have any particular motivation for that. I was just like, yeah, sure. I like the East Coast.
So I put it into that and you can see those dividends getting reinvested each year.
You'll also notice how that dividend amount seems to be getting a bit lower in terms of why that is.
I would guess it probably has something to do with where the real estate market is now compared
to where it was in 2017, also the COVID-19 pandemic and just the way that has impacted
the U.S. real estate market over the past year.
Actually, I remember last year, at this time when I was recording this video
COVID-19 was like a brand new thing. People were kind of freaking out just in terms of like,
nobody knew what this was going to do to real estate values,
if it would create more opportunities or like squash opportunities.
So I guess the good news is it still is paying out dividends. If anything, real estate deals have been harder
to find over the past year, just because a lot of properties haven't been listed,
like they normally would have
some really weird things to property values in general.
And as the pandemic improves or gets better, which actually, I don't know what that's going
to look like over the next year, if it's going to get back to a normal in the next 12 months,
or if we're going to be looking at more weirdness for years to come. But, as things continue to evolve
it'll be interesting to see how this plays out.
Another change I noticed in this dashboard
from Hollis looked last year is this section right here, this little pie chart in how it reports
your portfolio and where your money is invested.
So in the previous years, this was broken out into just debt and equity deals.
Debt, meaning the money is being lent out to a borrower who is then paying the money back with interest.
And that's how the money is coming in.
And equity being okay, your money is actually being taken into use to purchase a property,
which they then will improve or increase rents
or something to appreciate the value and collect more cash flow and then possibly sell it in the future.
So that's kind of the difference between debt and equity deals, but now it doesn't say that anymore
It says fixed-income core plus value add and opportunistic.
And the fixed income. Basically what that means is
those are the deals where most likely the money is being lent out and it's being paid back with interest.
And then core plus is when fundraise expects to acquire a newly built
and stabilized asset that can produce steady cash flow.
And value add most closely resembles the whole rehab strategy,
which usually entails like renovating a property so that the value can be
increased by increasing rents and improving lease ups.
And then opportunistic assets are the ones
that are expected to have the highest potential long-term return
An example of one of these would be a ground-up construction project
where it might take years to begin generating actual returns.
So I was a little confused by that when I first saw these four, I was like, what does that mean?
But hopefully, that makes sense.
And this is kind of a cool interactive thing where you can hover over this
and see how many active projects actually live inside this.
You can click on it and see even more information about what that all means.
And then you can click it again.
You can actually see details about the project itself.
You can open this up, see a lot more information.
And the way these eREITs work is your money gets spread out among a lot of different projects.
So you could spend a ton of time just looking at each individual thing.
If anything, I think is just kind of interesting and fun to see where your money is at work.
So that's kind of a new, cool, different thing.
Now, if we go over here to the performance tab and check this out
here, you can see all the different eREITs that my money has been reinvested into.
And the interesting thing about this, again, like I mentioned,
when I first got into Fundrise, I just put my $1,000 in that East Coast eREIT and that was all I did.
And as I've told them to reinvest my dividends, it's gotten spread out among all these other eREITs.
that I never really told them to do that, they just did it.
And I actually asked Fundrise about this and they helped me understand why my money was put where it was.
And as they explained to me, they basically reinvest these dividends based on the current allocation
of my selected investment plan, taking into account my existing portfolio,
as well as weighing my investments toward funds, where I'm under-allocated.
So it looks like there is some logic to how that works, but again, it's not like I told them to divide it up this way.
They sort of took what information they had for me and did that on their own,
which honestly, I'm fine with, because I wouldn't have my money in here if I didn't trust Fundrise
to do the right thing with my money in the first place. That's kind of the deal when you sign up for this
is you inherently have to have trust in the people who are managing your money.
So if you don't trust them, then you probably shouldn't be doing this in the first place.
And you can also view this based on actual dollars or percentages. So it's kind of cool.
And as we scroll down here, we can also see the annual returns for each individual year.
And you can see in 2017, it was 8% and that actually wasn't a full year. So I think that's why that number is lower.
In 2018 that was a full year. That was 11.4%.
2019 was 12.2%. It was pretty good year. Last year was 9.7%.
And then this year, year to date again, this is only one-quarter reporting here.
It's at 1.7% so far. And again, we can view this as dollars by itself instead of percentages,
if we'd rather do it that way. So that's pretty helpful information.
If we go over here to portfolio it kind of gives us another view where we can see what our total position is
in each one of these different eREITs that my money is spread across.
Looks like I'm a high roller over here in the balanced eREITs too, with a whopping $4.75 put into that one.
And again, as we continue scrolling down here,
we can see all the individual projects that the money is invested in.
And we can also see where they're located throughout the country.
And we can just see different views of that. If you want to click on any one of these,
we can see the details of each individual investment. Now there's some other, just common questions
I've answered these in previous videos as well, but I'll just mention them here too,
because I know these are questions a lot of people have.
So one of the common questions is when do we actually get our money back?
Like how long should we plan on having this money tied up and just totally illiquid and unavailable?
The answer to that is approximately five years.
So back when I put the money in 2017, I was fully aware I can't touch this for at least five years.
And it actually is possible to request to withdraw money prior to that.
But you should expect that money to be subject to some kind of a penalty, which is explained right here.
If you want to take a look at that. And I also don't believe there's any guaranteed
that they will actually do it, but you can request it safe and get into some pickle
where you just need the cash now.
You're allowed to ask, but they don't have to do it. So there's that.
And also, I know another question that I had after a while, when I had been reinvesting these dividends, every quarter
was say, if I reinvest a dividend two years after my original $1,000 investment, do I get that back
within five years of the original investment? Or do I have to wait five years from the date that it was reinvested?
The answer to that is the latter. You have to wait five years until after that small chunk of money it was put in there.
So just keep that in mind, when you see this number right here
I'm not actually going to have access to all of that money because a sizeable chunk of
that was reinvested in these tiny incremental amounts just by reinvesting the dividends.
And I have to wait five years from then to get that back.
So if you do actually want a lot of this money-back sooner, rather than later,
don't do this automatic reinvestment thing,
just take it out and do whatever you want with it as the dividends are paid out.
But overall, just considering that this took no time for me
and I did literally nothing to make this money. It's not too bad.
And are there better ways to invest the money that would earn a higher return? Certainly.
Would they be as easy as this? I'm sure there are other alternatives that would be pretty similar
if you're into the stock market and that kind of thing.
And if you just happened to pick the right thing,
but again, this is sort of an opportunity to diversify a little bit and put some of your money into real estate.
And if you just like this kind of thing, if you think it's fun, like I do, it's a nice,
really easy way to get involved here.
There you go. That's pretty much it.
If you guys do have questions or comments or whatever, obviously, put them in the comments beneath this video
If you're watching this on YouTube and I will keep those questions and comments in mind
as I do my next annual review about this in 2022.
Thanks a lot for watching. And I hope you found this entertaining and enlightening.
Again, if you want to get involved with Fundrise, we do have an affiliate link to the Fundrise website.
We get a very teeny tiny commission for any person who goes to that link
and signs up at retipster.com/fundraise If you decide to do that.
Thanks a lot for the support.
I've also put together a detailed blog post that summarizes a lot of this information as well.
I'll include a link to that in the description below this video on YouTube as well.
So thanks again for watching and until we talk again,
I wish you all the best in your business and life and stay healthy. See you next time.