Fundrise’s unique business model allowed small investors to buy into private real estate deals for as little as $10.
Traders are looking for ways to get in on its growth.
But where can you buy Fundrise stock? We checked it out, and you will be surprised by the answer.
Can You Buy Fundrise Stock?
Yes and no. Traders cannot buy Fundrise stock in the traditional way. However, shares in the firm can still be purchased by anyone, even if they are not accredited investors.
Fundrise is an innovative startup that shook the world of private investments in real estate.
It has also carried the same disruptive thinking into the world of capital funding.
When it needed to raise money, the firm chose not to hire a battery of investment banks and experts to launch an IPO. In short you would need to wait for the Fundrise IPO to add your name in its public shareholders list.
Instead, it went for something called an “internet public offering” (iPO), a tongue-in-cheek reference to the more traditional method.
But what is this new way of buying securities? And how can investors use it to own a part of the company?
We look at the details in this article.
About the Company
Fundrise is an online commercial real estate crowdfunding platform.
The current CEO, Ben Miller, and his brother, Dan Miller, are the firm’s founders.
Before this startup, both brothers worked for Western Development Corp. (their father’s business) and WestMill Capital Partners.
Both companies are real estate developers in the Washington, D.C., area.
The idea behind Fundrise was to allow residents in the city to invest in projects being built there.
At the time, this kind of direct investing in private real estate deals was impossible for retail traders.
Only accredited investors with more than $1 million in net worth or $200,000 in annual incomes could do it.
This made Fundrise the first company to bring commercial real estate investments to the general public.
After a successful initial project, they were approached by other firms in the field that wanted to use its platform to raise capital.
In 2015, the company also created the first eREIT, letting accredited and non-accredited traders buy its shares again.
Today, the Fundrise platform manages transactions worth $7 billion and counts 300,000 people among its active investors.
It has more than $3 billion worth of assets under management.
The plans offered by the company start with a minimum investment of just $10, suitable for anyone interested in alternative investments.
Fundrise Plans
Fundrise offers several options for its clients to choose from, which we have briefly summarized here.
Starter Portfolio
This is the most basic one and needs just $10 to begin.
It is meant for inexperienced investors who do not understand commercial real estate but would like a taste of it in their portfolios.
There is no account opening charge for this plan.
It offers a fairly diversified portfolio of properties, including single-family and commercial real estate.
Geographically as well, one can choose from properties all over the country.
Basic Plan
The next option is to choose a basic plan that requires a minimum initial outlay of $1,000.
It offers more features, including:
- Auto investment
- Dividend reinvestment
- Managing goals
The account is not free, but there is a three-month discount for new members that are brought in through referral.
Core Plan
For more advanced features like access to Fundrise’s eREIT fund and a customized trading strategy, one needs to opt for a Core Plan.
The minimum investment here is $5,000.
There are multiple fund types that can be chosen, such as:
- Long term growth
- Balanced investing
- Supplemental income
A particular path can be opted for depending on one’s earnings expectation.
Advanced & Premium Plan
These high-end plans offer all the features of the remaining ones with some added perks.
The advanced option requires a minimum deposit of $10,000, whereas the premium one needs at least $100,000.
Fundrise IPO
Just like its unique model of real estate investment, the firm has also pioneered a new way to raise capital.
It created the first “internet public offering” (iPO).
This allows existing customers to purchase a share of the Fundrise company itself (or its parent company, Rise Companies Corp.)
The idea was to democratize investing. Customers should benefit from the profits of the firm.
There are some caveats as to who can take part in an IPO.
For example, only Fundrise investors with $500 or more already put into its projects are eligible in their first year.
Moreover, the minimum initial investment the applicant needs to commit is $500.
On the other hand, the upper limit is decided by the extent of their engagement with Fundrise.
For example, suppose a customer has put $5,000 into the company’s real estate projects.
Then their maximum iPO investment in Fundrise shares is capped at that amount.
This process is unique because there are zero costs associated with it.
By using it, the firm avoids paying the money required for hiring investment industry professionals and the listing process.
It passes on those benefits to the iPO investors.
Of course, the value of these shares will only be unlocked when the firm decides to go for a traditional IPO.
In the following sections, we will discuss details regarding both the IPO process and what a possible public listing might look like.
Who Owns the Company?
Fundrise is owned by Rise Companies Corp., as mentioned earlier.
The parent company’s ownership includes customers (through the iPO route mentioned earlier), VCs, and the founders and management team.
So far, it has acquired $355.5 million in nine funding rounds. The latest of these came in 2021.
Its initital investors included Guggenheim Partners, James Ratner (Forest City Enterprises), and Justin Elghanayan (Rockrose Development Corporation).
It even has Goldman Sachs’ backing, as per a report from the Wall Street Journal.
In the various iPOs, Rise Companies has acquired nearly $170 million as part of its Regulation A+ offerings.
How Much is the Company Worth?
As of 2020, a Forbes report shows that Fundrise is worth $800 million.
However, there is little information aside from this available online.
The firm’s value is unclear since its funding has come through multiple routes, unlike traditional startups.
Revenue
The operating revenues of Fundrise for the year ending December 21 were $36 million, as per their Securities and Exchange Commission filing.
This was a 130% increase over the previous year’s reported figures of $15 million.
FY 2022 results have not yet been filed, so the latest information is unavailable.
Fundrise IPO Date
As of now, Fundrise does not seem to be heading for a traditional IPO any time soon.
It has used multiple avenues to raise money, and from the growth figures, it seems that they are doing well.
However, to unlock the value of their shareholdings, existing investors will eventually look to get the company listed at some point.
We cannot be sure when this might happen.
The easiest method to invest in Fundrise is to simply become a customer and apply for the internet public offering instead.
The first such offer came out in February 2017, when the company raised $14.6 million from its customers, with tremendous oversubscription.
Another such iPO came out in the second quarter of 2019 and the third in Q3 of 2020.
Right now, the company launched an iPO on its website in January 2023.
It is offering 1,298,000 shares of Class B common stock to investors.
However, considering the depressed investor sentiment, this issue did not see a lot of enthusiasm.
Fundrise Ticker Symbol
Currently, there is no clear indication of when the formal Fundrise IPO will happen. Until that happens, it does not have a ticker symbol.
In the future, a public listing is possible. At that time, some of the options the firm could consider include:
- FRISE
- FUNDR
- RISE
The internet public offerings do not require any ticker symbol since the trading does not happen on an exchange.
Fundrise IPO Price
There is no traditional public offering on the scene, but as noted earlier, the firm has an iPO live right now.
The price of each share is $15.15, and the minimum and maximum iPO investments are capped as per the guidelines that we shared earlier.
As to what the price would be when a traditional listing happens, it is difficult to say.
One rule of thumb that can be applied is to consider how much the firm’s competitors are trading at.
If we use this yardstick, we can compare it with some of the best REITs and what they trade for on the stock market.
Based on our analysis, a price of somewhere between $30 and $50 appears to be reasonable.
Of course, this is merely speculation.
If and when Fundrise decides to list itself, there will be investment bankers and other professionals brought in to evaluate the firm.
They would probably run several models and find the right value for the stock.
Fundrise Competitors to Invest in
A few other crowd-funded firms have emerged after Fundrise, but none of them are listed.
Instead, we checked out some of the comparable real estate funds that a trader might opt for to get access to the property market.
Vanguard Real Estate ETF (VNQ)
Vanguard is considered the gold standard in the American real estate industry. The fund was launched in 2004.
It currently has an asset under management of $39 billion compared to Fundrise, which has just $3 billion.
The fund has exposure across the property market and enjoys a steady cash flow.
It is based on the MSCI US IMI Real Estate 25/50 Index and has a very low tracking error.
This ETF is basically an umbrella fund for more than 160 real estate firms in the US, though the top 40% is based on just ten of those.
It is passively managed and highly diversified. Its expense ratio is 0.12%, which is quite low (although lower options are available).
Invesco Active U.S. Real Estate ETF (PSR)
Unlike Vanguard, this ETF is actively managed (as the name suggests).
The Invesco Active Fund comprises more than 80 companies.
These are involved in the construction, leasing, financing, and sales of real estate assets in the US.
Its holdings are tilted towards the small and mid-cap segments, which makes it a low-volatility, high-yield ETF.
They are selected based on a proprietary algorithm and also include several popular REITs.
Nearly 35% of the holdings in the firm come from the top 10 assets, so it is slightly better diversified than VNQ.
However, its active nature means that it has a much higher expense ratio of 0.35%.
Goldman Sachs Future Real Estate and Infrastructure Equity ETF (GREI)
This is, again, an actively managed real estate ETF.
Its objective is to seek out investment in sectors and companies doing work related to the environmental, social, and governance (ESG) sectors.
The fund is fairly new. It started in 2021 and has fewer assets under management than most others in its category.
That said, GREI has an experienced team of managers from the Goldman Sachs stable to propel it forward.
Its top 10 holdings account for 35% of the fund’s value, and it has an expense ratio of 0.75%.
Final Thoughts
Fundrise shares are on offer to anyone willing to invest in their plans.
They regularly offer internet public offerings, and interested traders can always buy the stock.
Only time can tell when it will go for the traditional method of public listing.
As of now, the management does not seem to have any inclination to do so.
However, to unlock the value of the iPO shares, a public offering will have to be made sooner or later.
We looked at the current process of acquiring stock in Fundrise and what its eventual IPO might look like as well.
For those not convinced with the internet public offer route, there are other real estate funds that can be traded directly on the stock market.
We have shared some of those as well.