There are quite a few businesses that have leveraged the Internet in order to create real estate investment opportunities that are worthwhile for their clients. One of the most popular sites for those who are trying to save for retirement is Fundrise. A crowd-funding site that offers private real estate investment opportunities, Fundrise was recently attacked competitively by Wealthfront, a publicly traded REIT regarding prices.
What Wealthfront decided to say was that it didn’t matter what the prices were because the cost of locking your money up in a private investment that isn’t that liquid is going to make a publicly traded REIT a better opportunity. The notion that you could remove your money any day of the year made investing in companies like Wealthfront a much better opportunity than choosing to get locked in and stuck with a firm that did private offerings like Fundrise. What do you think??
Fundrise, for their part, pointed out that if a share price of 6 is compared with a share price of 20, there are certainly going to be advantages to investing in the more expensive share, even if it isn’t as liquid as the share that is valued at less.
Here are some examples that support Fundrise’s arguments:
Liquidity is not that important:
If you are a day trader or you are working through an Internet stock brokerage, you may appreciate the ability to trade whenever you perceive that the market will peak. The idea that your investment is flexible enough to allow you to cash out is part of the reason that you make the investment. Real estate funds can be different. Have you ever seen a housing market go up by 15 percent in one week? Actually, it would be really rare to see a market go up by 15 percent in one quarter, which is how often you can pull your investments from real estate funds like Fundrise.
Most of the people that do Fundrise reviews can relate to this particular market not being as volatile as stocks that are traded daily. They merely plan ahead when they make their investments and don’t adjust them as often. Sometimes, not being able to withdraw your money at a whim can be a good thing because it can prevent you from acting on emotion.
Private investment gives you a greater sense of ownership:
Although there are advantages to using publicly traded companies to purchase real estate for a group of investors, private offerings provide people with the ability to create boutique investments that allow investors to maximize profits or emphasize safe investing, depending upon their outlook. In companies like Fundrise, there is therefore room for both types of investor- as well as several other kinds of investor.
That flexibility is different from public REITs that require that investors buy into a certain type of investment strategy, just like a mutual fund. If you don’t like your REIT investment, you’ll need to find another fund that does follow a strategy that you are interested in. When you invest in a company that is a private investment with many types of options in one fund, you can move your investment internally without having to make a large change in order to clear your investment.
Crowd-funding allows for greater participation:
There are a few efforts out there that create a lock-in opportunity where your investment will be available after a certain amount of time. Normally, the trade-off is that there will be some type of advantage provided. When you are in a crowdfunding marketplace, the advantages are more vehicles for investment and greater exposure to direct participation than you would find in a public REIT investment.
The bottom line is that companies like Fundrise need to be analyzed slightly differently than some firms that would like to be their competitor because they are operating on a different dynamic that brings in a different market segment interested in investing. And although the occasional pirate shot across the bows is an expected thing in the marketplace, you can expect that they will continue to bring the best selection of real estate goods to the marketplace online.