Real Estate Agent · Houston & College Station, TX · Member since 2020 · 47 posts · 27 votes
Howdy Yall,
I just wanted to get the communities opinion on crowdsource investments like Fundrise or Groundfloor. For the pros, I understand that you get all the management experience and liquidity. While in the cons, your dont get the tax breaks and excess ROI. What else am I missing regarding pros and cons?
Rental Property Investor · Raleigh, NC · Member since 2016 · 396 posts · 995 votes
4y
I put a trivial amount of money into fundrise about 2.5 years ago just to check it out. As far as returns, initial investment was $1k in august 2019, and now is about $1350. Its essentially the exact same thing as buying into a stock REIT such as Avalon Bay with a few minor exceptions.
1. Illiquid. With fundrise you can only sell your shares at certain points, and if you haven't held those shares for a minimum of a 5 years you get accessed a 1% penalty when you try to sell them which is pretty small as far as penalties go, but something to keep in mind. With a REIT you can sell whenever you want with no penalty.
2. Since the shares are relatively illiquid, it also means you don't have mass panic selling during turbulent times so the price remains relatively stable. When the covid crash happened, most stocks including REITs took a massive hit to their price, often slashing 40-50% off the value. With Fundrise since the shares are illiquid, the price didn't drop at all.