Fundrise vs Streitwise

Investing in real estate is one of the wishes of many investors. However, the typical real estate investments where you have to own a physical property tend to push many people out of the investment bandwagon. However, with eREITs and REITs, investors are able to invest in real estate properties by buying shares through a trust. Here, we look at two platforms that offer investment opportunities to investors – that’s Fundrise vs Streitwise.

The investors of Fundrise are able to own real estate without them having to find, manage, and direct the investment. Typically real estate investing is considered a difficult undertaking since investors have to put in a lot of money as capital to get started.

However, Fundrise tries to bridge that gap by offering a chance to inspiring investors to collectively pool their money together. They then use that money to invest in different portfolios of an estate. So the investment minimums are low.

Streitwise offers an opportunity for investors to invest in real estate without necessarily owning a property. It offers real estate investment trust that attracts low fees with low investment minimums.

The company invests in cash-flow or rental real estate meaning investors may have cash flow in the entire life of their investment. So, if you would want to invest in estate properties without having to own a rental property, you may want to try our Streitwise.

Summary

·         Fundrise open to accredited and non-accredited investors

·         Fundrise utilizes eREITs and eFunds

·         A minimum investment amount of $1000 with Fundrise

·         Quarterly dividend distributions with Fundrise

·         Low fees of 1 percent annually with Fundrise

·         Different Portfolio plans with Fundrise

·         Lower than average fees for private REITs with Streitwise

·         Open to an accredited and non-accredited type of investors with Streitwise

·         Streitwise private REIT focusing on cash-flows in real estate like rental offices or office buildings

·         Dividends redeemable on a quarterly basis for Streitwise investors

·         One year locking of principal investment with Streitwise

·         Streitwise available to US citizens as well as legal US residents in addition to non-US customers

Who is Streitwise

Streitwise is among the real-estate investment trusts we have around that people can use to invest. A REIT or real-estate investment trust is a company, owning and managing cash-flowing estates. A REIT passes along the profits it earns to its shareholders via dividends.

Typically, a REIT is an illiquid kind of investment meaning that it’s difficult to have your principal investment out, not until a set period of time. Streitwise manages real estate mainly office properties and is open to most investors.

The company has historically returned dividends of about 10 percent each year. The dividends are distributed to the investors on a quarterly basis.

When you invest with the company, your principal investment gets locked for a period of up to one year. It is after the lockout period when you are able to redeem shares every three months.

When investing with Streitwise, you purchase shares offered through the common stock of the trust. The price of the stock is $10.11 at the time of writing this piece and it is deemed to change after every three months.

If you have a minimum amount of $1000 to invest in the trust, you will have about 98.9 shares. REIT presently holds two commercial properties. The dividends, usually paid on a quarterly basis are net of fees.

Streitwise Features

·         Minimum Initial Investment

Streitwise has a minimum amount for your first investment which is $1000. After that, there are additional investments which are made in $500. So if you are not able to raise $1000, you may not be able to invest in the trust. This is not like other investment platforms that have fractional investments.

·         Account Types

If you are investing in Streitwise REIT, you find that there are different account types. The REIT can be held within corporations or individuals. It can also be held in trusts, LLCs, and 401(k)s, or even IRAs.

·         Streitwise Fees

There are two fee structures for Streitwise. One is the 3 percent upfront fees that are levied when you buy shares. There is also a 2 percent annual management fee. The dividends you receive are therefore net of the 2 percent annual fees.

·         Streitwise Investor Requirements

Accredited investor requirements need to have earned an income exceeding $200,000 or a combined husband-wife income of more than $300,000 within the last two years. They should also expect to earn the same or more the current year.

Alternatively, they should have a net worth of more than $1 million – excluding the value allocated to their primary residence.

·         Dividend Reinvestment

Investors can take advantage of the dividend reinvestment plan (DRIP) that Streitwise offers.

Here, you are able to elect to get the dividends you could redeem to be used to purchase additional shares within the REIT. This is one of the ways in which investors are able to multiply their share value within a given period.

·         Platform Security

The processing of investment documents is done through electronic methods via stock transfer agent services. Typically, the services are offered by Computershare and FundAmerica – these two are considered secure SEC complaint platforms.

So you are sure that your documents and the information or data contained therein are safely handled to prevent incidents of data loss or a breach in the protection of sensitive personal data. 

How Streitwise Works

When you want to invest in REIT through Streitwise, you will need to open an account. You will be asked to provide personal information including:

·         Email address

·         Full names

·         Stress address

·         The dollar amount to invest

·         Whether individual or business or group

·         Telephone number

·         Date of birth

·         Social security number

·         Indicate whether accredited or non-accredited investors. So you have to confirm your income as well as your net worth information.

After you feed in this information, you fill out ACH Authorization Form so that you link your bank account. Also, you will have to supply the account name and the routing number as well as the account number.

Also, you have to indicate the account type, for example, checking, personal, business, or savings.

You will have to signs the Subscription Agreement via electronic methods. When you complete the process, you submit the form.

A confirmation of your investment dollar amount is transferred from the bank account you linked. When purchasing actual Streitwise REIT shares, you can do it via the Computershare Investor Center.

Pros

·         REIT available for the accredited and non-accredited type of investors, but accredited status is made only for larger investments

·         REIT held in self-directed IRAs, but can also be held in self-directed 401(k)s. Because real estate offers a long term investment, it can be suited for those seeking retirement investments.

·         The present dividend yield reflects that of the long term yield of the S&P 500. So, Streitwise is considered as a good choice for investment diversification that you can add to your portfolio of bonds and stocks

·         The company uses sound investment strategies when selecting investment properties. For example, it purchases investment when the market costs are low to ensure high dividend yields.

·         Being an equity REIT, the company offers a great opportunity for investors to earn themselves high dividends in their investment while being able to participate in capital appreciation when they sell the investment holdings.

·         Also, the managing partners are involved in the investment – they put their dollar in the REIT and this is a great incentive in managing the trust profitably and responsibly

·         It has high liquidity in that the Streitwise Stockholder Redemption Plan provides you with a chance to redeem stock for 90 percent or so of its value when you have ended the lockout period of one year. Contrary to real estate crowdfunding companies that require investors to remain invested until the investment is disposed of, this does happen to Streitwise REIT.

Cons

·         Streitwise imposes an upfront fee of about 3 percent – the fee is allocated to operations. That being said, this fee is lower when compared to other real estate crowdfunding platforms

·         Presently, investors have an offering of a single estate investment trust – where they hold two investment real estate properties. So, there is limited diversification

·         The company was launched in 2017, so it’s a new platform that may not have a long-standing track record.

·         An investor has limited liquidity, which is typical of real estate investments. Nonetheless, with Streitwise, an investor is able to redeem a majority of their investment value say, after a period of one year. 

Who is Fundrise?

When it comes to investing in real estate through Fundrise, it’s quite unique compared to other platforms like Streitwise. Fundrise offers direct ownership to its investors in the sense that the company owns and runs the properties it invests in.

Fundrise says that they directly own and run each of their investments by using a hands-on approach to help maximize the investment’s value and levering their over 5.4 billion worth of transition experience. The company also sends 100 percent of the profit to the investors.

How Fundrise Works

When you want to invest with Fundrise, you sign up and open the account. You provide your personal information including date of birth, name, address, phone number, social security number, and other details.

Once you have signed up, you can proceed to invest in the low minimum. There are different portfolios you can choose from.

The Starter Portfolio is among the three Core Portfolio plans. Regardless of the portfolio, you select, your money goes to a collection of eREITs as well as eFunds that comprise private real estate property.

Fundrise Features

·         Fundrise Fees

An annual asset management fee of 0.85 percent is levied by Fundrise besides a 0.15 percent advisory fee.

So the total adds up to 1.0 percent annually. That being said, there may be other miscellaneous fees the company may charge which could add up to 2 percent. So you would expect to pay fees of as much as 3 percent annually.

·         Goal-based Investing

This new investment strategy is aimed at offering optimal performance for the investors’ money.

Fundrise offers goal-based investments that come in the form of supplemental income, balanced investing and long term growth. The allocation of your investment depends on whether you want income or growth or a combination of the two.

If an investor is in eREIT, they pay $0 for asset management fees, not unless they have earned at least 15 percent annual returns within the first two years of their investment.

With growth eREIT, Fundrise pays a penalty that could go up to $500,000 to the investors when it earns no more than 20 percent of non-compounded annual returns.

·         Fundrise iPO

This is a new feature that the company has introduced. With iPO, the company will sell shares within the company itself through internet Public Offering (iPO). An investor will need to have in their account an investment amount of $1000 or more. They also need to have selected at least one of the advanced plans. With this offering, an investor is able to invest up to 25 percent of their entire account balance.

Pros

·         Low minimum investment staring with $500

·         Only 0.85 percent charged as asset management fee yearly

·         There is no accreditation  - any investor can invest in the platform regardless of their net worth or income

·         Contrary to REITs, Fundrise’s eREITs tend to offer a pool of different properties that help smooth out returns

·         90-day money-back guarantees – unheard of in the real estate investment world.

·         Quarterly redemptions

Cons

·         eREITs not publicly traded

·         The distributions taxed just like ordinary income- this is opposed to a 15-percent tax rate imposed on qualified dividends

The Wrap Up

While both Streitwise and Fundrise are involved in online real estate investments, they have some unique set of features. Fundrise utilizes eREITs that tend to perform better than typical REITs utilized by Streitwise. Streitwise, being a relatively new kid on the block, it may not have a track record to show its long term investment performance.

Fundrise has been here since 2010 and has shown remarkable performance. Fundrise also offers different portfolio plans allowing the investors to choose their model of investment. This gives investors a broader strategy to invest. However, the investors should be aware of the risks of the investments and the costs involved.  Fundrise owns and operates its properties, unlike Streitwise. Streitwise also has a higher investment fee compared to Fundrise. With these features, you can be able to make an informed decision of the investment platform to go with.