Generating Real Estate Passive Income During Volatile Times with Fundrise

Diversification between multiple asset classes, especially during difficult times in the equities market, is key to helping preserve wealth and generating passive income. Historically, these asset classes are used to hedge against the stock market. These asset classes include real estate, bonds/fixed income, private equity, hedge funds, and commodities.
Real estate is an extremely popular asset class and has been well known for decades. Traditional real estate investment requires buying and managing a property with the tenants paying rental income.
The drawbacks with traditional real estate is the sheer amount of effort it requires to manage these properties and keeping up with the tenants turn-over as well as repairs that have to be done periodically to up-keep the property. Traditional real estate also requires a high initial capital.
This brings us to a new way of investing in the real estate industry without the hassle of managing the properties. Fundrise, a company founded in year 2010, is a US-based financial technology company that have pioneered the idea of an “eREIT” or an online real estate investment fund.
During volatile times, rental income is an excellent way to balance the volatility in the equities market. A fund in Fundrise is typically invested in multiple properties with varying risk and return profiles. Some of the debt instruments are in apartments and commercial real estate. Personally, my portfolio consists of the Income eREIT, Growth eREIT, East Coast eREIT, Heartland eREIT, and so on with the allocation weighted towards the Income eREIT. Each eREIT consists of different projects across the country including home construction, apartment or commercial renovations and development as well as stabilized apartments which generate a passive rental income stream.

Historically, Fundrise has been able to generate very good returns as shown below. Between 2014-2017, they have averaged 11.2% annualized return. This is excellent in my books and most importantly, it pairs diversification with good returns.
Fundrise offers different investment plans of which I am currently on the “Supplemental Income Plan”. I would recommend the supplemental income plan or balanced investing plan because during market downturns, it makes more sense to “wait-it-out” instead of selling a property during a downturn and the beauty of having funds with steady rental income is that you can still generate good returns during a downturn since people will need to live somewhere regardless of market conditions.
The disadvantage with real estate investment including Fundrise is the illiquid nature as owning properties is a slow and steady form of investment when compared to the equities market. It can typically take up to 5 years before you can cash out your principal, however, you can choose to re-invest your dividends or cash it out every quarter.
Final Verdict
To diversify your portfolio and generate passive income, I recommend Fundrise due to the ease and low minimum needed to get started.
You can get started for as low as $500 and start generating passive income through multiple rental properties. After getting started, the fundrise platform allows an investor to select multiple funds for as low as $100 each time you contribute to the fund.

Comments

Recent Posts