Investors who diversify into real estate
outperform those who don’t.1

Portfolios With Real Estate vs. Traditional Portfolios, 1995-2014¹
+ 20% Real Estate
Yale Endowment
Stocks & Bonds Only
Traditional Endowments

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.¹

1. The information presented in this section and the above section represents the growth of a hypothetical $10,000 investment in the Yale Endowment (“Yale Endowment”) versus the same hypothetical investment made into an average endowment with at least $1 billion under management (“Traditional Endowments”). Return from 1996 and 1997 for “Traditional Endowments” represents endowments greater than $400 million. Individual investors may not invest in a university endowment - this information is for illustrative purposes only. Source: “Yale Endowment Model Thrives as Swensen, Proteges Post Top Gains” (Bloomberg). Show less
“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 ²

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.

2. 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. Show less
Real Estate vs. Inflation, 1965-2016 ³

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.

3. 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. Show less

An attractive investment class, now available directly to everyone online.

Although widely considered an attractive asset class, most commercial real estate investments have traditionally only been available to the wealthy because of the large minimum investment requirements.

REITs (real estate investment trusts) were created by Congress in 1960 as a way to allow the average American to invest in commercial real estate, but their performance has been bogged down by high fees and a lack of transparency.

Fundrise changes all that. We combined the benefits of investing through REITs with the efficiency and transparency of the Internet. The result is the revolutionary new eREIT – the first low-fee, diversified commercial real estate investment available directly to everyone online.