Real estate investment returns beat stocks, REITs: Fundrise CEO

Real estate investment returns beat stocks, REITs: Fundrise CEO

  • Fundrise’s real estate investment rate of return has outpaced stocks and REITs, its CEO said.
  • Fundrise’s portfolio includes investments in residential and industrial properties.
  • Real estate has performed well even during periods of high inflation, Miller said.

With US inflation rising at the fastest rate in more than four decades and economic uncertainty looming, some may think now is not a good time to invest.

But previous eras of inflation show that it could in fact be a Well time to invest in certain things.

The CEO of Fundrise, an online real estate investment platform that lets small investors back commercial and residential projects for as little as $10, said he had the stats to prove it.

In an April 5 letter to shareholders analyzing Fundrise’s first-quarter earnings, Ben Miller argued that real estate investing — particularly in residential and industrial properties — is a safe bet in these turbulent times.

He pointed to earnings showing that Fundrise, a 10-year-old company now valued at $1.7 billion, had its best year yet in 2021. Miller wrote in a separate year-end letter in January that Fundrise investors saw an average rate of return of 22.99% on their investments last year.

Miller said Fundrise has “invested in more than $4 billion in real estate across the country” and manages “more than $1 billion in equity on behalf of more than 260,000 individual investors.”

And it did even better in early 2022, according to its Q1 report: Fundrise posted a 3.96% rate of return in the first quarter, according to the letter. Miller also said in the letter that the rate of return is particularly impressive compared to the two publicly traded companies, which saw an overall decline in the rate of return of 4.6% over the same period, and real estate investments. listed on the stock exchange. trusts, or REITs, which saw their overall rate of return fall by 5.27%.

Miller also outlined some of the company’s picks for good investments.

The company strategically invests in industrial and residential assets in the Sun Belt. The geographic term refers to the 18 states that span the southern United States, where average apartment rents rose 16.8% in 2021, according to Chandan Economics, more than 10% more than the rest from the country. Other listed companies are also shifting their portfolio strategies to buy more properties in this region.

It’s an investment plan that Fundrise says will help them thrive even as inflation, high interest rates and uncertainty propel the United States into a


recession

– an outcome that some economists have recently predicted could happen this year.

Miller described real estate as an asset class that served investors well when inflation last peaked in the 1970s.

“Of course, while history never exactly repeats itself, it’s hard not to see the many similarities between what we are experiencing today and the inflationary decade of the 1970s,” Miller said in the letter. “And while most assets struggled during this period of high inflation and high interest rates, one asset class stood out…real estate.”

During this period, those who invested in the stock market lost around 40% of their investment after adjusting for inflation, according to Miller, but those who invested in real estate saw their investment triple during the same period. .

“It’s no exaggeration to say that we’ve built Fundrise in anticipation of economic times like this, ever since we started the company,” he said. “While time may prove that such preparation was ultimately unnecessary, we will, as usual, hope for the best but plan for the worst.”

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