Login | November 15, 2018

Want to invest in real estate? There's an app for that

KEITH ARNOLD
Special to the Legal News

Published: November 8, 2018

Any adult with a smart phone, $500 and 90 days may dip his toes into the waters of real estate investment without the risk of losing his stake.

The smartphone app, Fundrise, offers a 90-day satisfaction guarantee, what its developers characterize as a "zero-stress way to see if (the app) is a good fit."

The guarantee promises buy back of the original investment amount for first-time investors who are dissatisfied with the experience.

App users invest in a diversified portfolio of real estate projects throughout the country, according to the description of the online tool.

An investment team identifies suitable projects, acquires them and manages them on behalf of users.

The approximate, current allocation is displayed in a portfolio, and users should expect it to grow and change over time as Fundrise acquires more projects, while others are sold or pay off.

Investors earn returns primarily in two ways - quarterly dividends and share appreciation, app operators explained.

The returns ultimately come from the individual real estate assets in an investor's portfolio, such as interest, collected rental income collected and property value appreciation.

"As a shareholder, you are entitled to your pro-rata portion of any returns," the app's companion website (fundrise.com) noted. "Actual results may vary and there can be no guarantee of enhanced returns due to investing on Fundrise or the use of Fundrise Advisors' services."

App users can expect quarterly dividend payouts typically in the middle of the month following the month in which the quarter ended.

Additionally, users may receive additional periodic cash distributions as certain underlying properties are sold.

Share values typically are recalculated on a quarterly or semi-annual basis.

Having recognized the long-term, illiquid nature of real-estate investment, the app is aimed at investors who have a minimum time horizon of approximately five years.

"However, we have adopted a redemption plan whereby an investor may obtain liquidity monthly, following a minimum 60-day waiting period after submitting their redemption request, subject to certain limitations," the website detailed.

Fees, which include a 0.85 percent annual asset management fee and a 0.15 percent annual investment advisory, are 40 percent more cost-efficient than publicly available investments, the site claimed.

Advanced plans, offering greater diversification and an app user's ability to customize a portfolio, are available as an no-cost upgrade once the user has invested $1,000 with Fundrise.

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