Fundrise vs REIT – The Most Important Key Difference

You’ll find no “matter of opinion” in this Fundrise vs REIT article. Unlike what you may read on SeekingAlpha or other financial blogs, the single most important different is stabilization.

We’re going to dive in on the fact that stabilization is the key difference when comparing Fundrise to REITs that you would see in the stock market.

First, What Are the Products Differences in Fundrise vs REIT?

What is Fundrise?

Fundrise combines state-of-the-art technology with in-house expertise to reduce fees and maximize your long-term return potential in a passive income sort of way.

Basically, look at it like this: Real estate has traditionally been one of the most sought-after asset classes for professional investors and now it is available to you in an easy to use service. – Source: Fundrise Investment Review on Passive Income’d

What are REITs?

Real Estate Investment Trusts, or REITs for short, are companies that own or finance income-producing real estate across.

This ownership is typically across a wide-range of property types and sectors. In order to meet the requirements to qualify as REIT there is a large list of checklist items that must be realized.

A REIT trades on the NASDAQ and major stock exchanges, offering a number of investor benefits.

Fundrise vs REIT Performance

Performance wise, comparing Fundrise vs REIT is going to have a few small differences. But overall, the performance is going to be very similar over the long term. It will all really depend on the location of the properties you invest in and the types. Fees typically balance out also.

With the performance issue being out of the way, that one real key difference is all that is left. And that difference will come down to your preference of investing style. Let’s discuss stability vs liquidity.

The Most Important Key Difference: Stabilization

Covering the important key difference is the intent of this article and what helps most investors decided between Fundrise vs REIT stock exposure.

That key difference is one product offers more stability and less volatility. The other product offers more liquidity, but less stability. The investing stabilization decision will be yours to make.

Fundrise is King of Stability

REITs are stocks, and stocks are more volatile in nature. Think about the 2008 financial crisis and the 2020 COVID related stock market crash. And of course all the bear and bull cycles between those events.

REIT stock values are more or less tied to overall stock market performance. Experiencing a “sell off” even if your REIT holding companies are doing well in revenue can be a real thing. Your REIT stock will fluctuate in value more often than your Fundrise holdings will.

You see, Fundrise is not tied to the stock market like REITs are. It is a private operating company with funds setup specifically for investors. Your investments in Fundrise are really ownership of properties, not just ownership of stocks of companies who own properties.

In the case of Fundrise, stability is king because your real estate investments are real and not tied to stocks. While that is a pro when it comes to volatility, it also means your investments are not as easy to sell – aka “liquidity”.

The REIT is King of Liquidity

Liquidity is basically being able to push the “sell” button and get your money back very easily. Fundrise is a great investment if your horizon is for the long term.

However if your horizon is shorter or you want to be able to quickly get your capital back out of the real estate market, then REITs win here.

In the opposite way described above, your REIT stock can be easily sold with the click of a button or sell order to your broker. Not the case with Fundrise, it takes a bit longer to retrieve your funds back.

And because REITs can be quickly bought and sold is the very reason you will see more volatility in owning REIT stocks instead of owning actual real estate through your Fundrise investment.

Pick Which Method Suits Your Real Estate Investing Style

To summarize the most important key difference between Fundrise vs REIT, go with the stability of Fundrise if you don’t want to watch your real estate portfolio take swings up and down.

Go with REITs if you don’t mind volatility and want to quickly be able sell your investments in companies that own real estate. It is as simple as that.

Fundrise vs REIT

Fundrise vs REIT – The Most Important Key Difference
Fundrise vs REIT
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