Why Real Estate?

Investors who diversify into real estate outperform those who don't.

Earn better returns by investing in commercial real estate.

The “20% rule” states that an investor should have a minimum of 20% of their portfolio invested in alternatives like commercial real estate. This rule was made famous by the Yale endowment, which has outperformed traditional endowments made up of only stocks and bonds for the last 25+ years. In fact, an investor who invested using the 20% rule in 1995 would have earned about twice as much as an investor who used a more traditional allocation.

Fundrise Portfolio
Traditional Portfolio
Learn more about the assumptions in this section, or view our full disclosure.
“Buy land, they’re not making any more.”
Mark Twain

How does real estate investing work?

1. Investment

An investor obtains financing and buys or builds a commercial real estate property like an apartment complex, office building, retail center, or industrial warehouse.

2. Income

The investor leases space in the property to tenants (individuals or businesses), who pay rent. After expenses are paid, the remaining rental income is profit for the investor.

3. Appreciation

The property’s value may increase over time. If the investor sells the property, they may earn additional profits from the sale as a result of this appreciation.

What makes real estate such a strong investment?

Average Dividend Yield, 2008-2016

Consistent cash flow

Unlike most stocks, commercial real estate generates consistent cash flow (income) from rent. For investors in need of regular income from their portfolio, commercial real estate can provide an attractive alternative to bonds, which also generate regular cash flow, but generally at much lower rates.

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Real Estate vs. Inflation, 1965-2016

Intrinsic value

Real estate is a hard asset – it provides intrinsic value through its use as a home, office, factory, etc. Real estate is also scarce. There is only so much land in a given area. As cities grow, demand for real estate increases, while supply is limited by geography. This is why real estate assets have historically appreciated in value over time.

Learn more about the assumptions in this section, or view our full disclosure.
Goal-based investing for private real estate

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Fundrise Portfolio

“Fundrise Portfolio” is the hypothetical projected return of a portfolio of commercial real estate, based the weighted average projected annual return of (a) the Fundrise Growth eREIT, for Rise Companies Corp. sponsored appreciation-focused investment products (such as joint-venture equity), based on the analysis included in the the Growth eREIT Performance Analysis, and (b) the Fundrise Income eREIT, for Rise Companies Corp. sponsored income-focused investment products (such as senior loans), based on (i) the analysis included in the Income eREIT Performance Analysis, (ii) discounted by approximately 20 – 30% to take into account potential default risks over the long-term. Accordingly, the projected annual returns under such methodology is approximately 11.95% and 8.00% for Rise sponsored appreciation focused investments and income focused investments, respectively, inclusive of appreciation and dividend reinvestment, and net of fees.

Average annualized returns only include returns of investments sponsored by Rise Companies Corp. and does not include returns, if any, of investments directly in Rise Companies Corp. itself.

Traditional Portfolio

“Traditional Portfolio” is the hypothetical projected return of a portfolio of public equities (stocks), based on the California Public Employees Retirement System’s average annual return on public equities over the 20-year period from 1996 to 2016, which was 8.20%, inclusive of appreciation and dividend reinvestment, and net of fees.

Wall Street Journal, “Calpers Is Sick of Paying Too Much for Private Equity,” April 16, 2017

The information presented above represents the average annual dividend yield for the Vanguard 500 Index Fund (VFINX), the iShares Core Aggregate Bond ETF (AGG), and the iShares Mortgage Real Estate Capped ETF (REM), from 2008 to 2016. Source: Yahoo Finance Historical Prices.

The information above represents the growth in percentage of the Median Sales Price for New Houses Sold in the United States and the Consumer Price Index: All Items for the United States from 1965 to 2016. Source: Federal Reserve Bank of St. Louis Economic Data.