What makes a Fundrise investment stand out from other real estate investment options?
While our business strategy and products are unique and innovative in a variety of ways, for many of our investors the most obvious, important Fundrise feature is our exceptionally low and simple fee structure.
The easiest way to see the favorability of Fundrise’s fees is to compare them directly to the fee structures of (seemingly) similar products. In the charts below, we’ve presented Fundrise’s fees side-by-side with two comparable offerings, both launched within the past year, from finance titans Blackstone and Starwood.
By establishing their own investment products aimed at individual investors, Blackstone and Starwood have highlighted the potential of this investment category: there is significant potential in raising funds from this previously underappreciated capital source — individual, private investors. Founded in 1985, the Blackstone Group is the largest private equity alternative investment firm in the world, with over $100 billion AUM. The Blackstone portfolio includes a wide variety of asset types: retail, residential, industrial, office, and hotel. Similarly, the Starwood Capital Group was founded in 1991 and has been a major real estate player for over twenty-five years. Starwood has fifteen real estate funds available to investors, the largest totaling over $5.5 billion.
However, neither Blackstone nor Starwood has fewer or lower fees than Fundrise, largely thanks to the way our tech platform enables vertically-integrated transactions, without any reliance on third parties or brokerage firms. Though the products may appear similar at first, for most investors, the difference is clear.
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A Breakdown of Fees
Full breakdowns of the fees for Blackstone’s 2017 REIT, Starwood’s 2017 REIT, and Fundrise’s eREITs are below.
Unlike Fundrise, you’ll notice that Blackstone and Starwood include fee structures similar to traditional institutional fund fees: in a typical 2-and-20 structure, investors pay, roughly, a 2% fee on their assets under management per year, plus 20% of their upside, usually after a minimum hurdle rate. Both Blackstone and Starwood list 12.5% fees after 5% hurdles.
In comparison, Fundrise’s fees are anywhere from a quarter to a half of Blackstone’s and Starwood’s. At 1-2%, our origination fee is about two-thirds of theirs (2-3%). And while high sales commissions are the norm for REITs, Fundrise simply doesn’t charge them.
Full details about each offering are available on the following pages:
As always, if you have any questions about Fundrise, don’t hesitate to contact our team by email at email@example.com.