Investing Simple Logo
Menu
Get Started on Robinhood With 1 Free Stock!
Robinhood is offering new users 1 free stock worth between $3 and $225 when you open an account and fund it with any amount of money.
Written by Cari Scribner on December 18, 2020
Category: 
FTC Disclosure

What Happens If Fundrise Goes Out Of Business?

Your investments in Fundrise are unique compared to stocks in your brokerage account or deposits in an FDIC insured bank account.

Is Fundrise SIPC or FDIC Insured?

Fundrise is not a member of SIPC or the FDIC. Rather Fundrise offers non-traded REITs that are exempt from registration with the SEC. The Securities Investor Protection Corp. (SIPC) only insures federally registered securities. Fundrise investments are not considered registered securities and therefore offer no SIPC protection.

According to Fundrise, "While our goal is to identify and manage real estate assets that we believe have the potential to produce superior risk-adjusted returns, we do not have a guaranteed return, and it’s certainly possible that you could risk losing your total investment with Fundrise".

Crowdfunded Real Estate Free Training

We put together a free 30 minute video training that walks you through the entire process, step by step. This training will help you get up and running in no time at all.

GET THE GUIDE

What if Fundrise Goes Out of Business?

If Fundrise goes out of business, they could do a few things. Here is some context from Fundrise Help Center...
"In the event of a bankruptcy of Rise Companies (Fundrise's parent entity), the eREITs and eFunds should not be pulled into the bankruptcy estate, as they are not wholly-owned subsidiaries of Rise Companies. However, the Manager may be disrupted by any such bankruptcy. In such an event, assuming that the Manager was also deemed bankrupt or insolvent, the shareholders would have the opportunity to replace the Manager for cause under the terms of the Fundrise eREIT and eFund operating agreements."
Just like with a brokerage firm, if they go out of business it doesn't really matter, you still own your stocks and investments. What matters is what happens to the specific REITs and real estate you are invested in.

Fundrise eREIT with positive cashflow

About Fundrise

Founded in 2012 and headquartered in Washington, DC, Fundrise is one of the leading real estate investment platforms for crowdfunding.

Crowdfunding is an alternative way to pool money to fund a project or venture by raising small amounts of money from a large number of people. This is typically via social media platforms. Crowdsourcing worldwide raises billions of dollars each year, with the platform continuing to pick up speed as more people opt in.

You can sign up for the Fundrise core portfolio with a $1,000 minimum investment.

The function of Fundrise is to acquire assets with a high potential to grow in value. They look to:

  • Buy ahead of major demographic or cultural shifts
  • Understand emerging neighborhood growth
  • Uncover property potential that no one else has jumped on and bought

The platform uses all the investor’s money to make major improvements on the property. This will increase the sale price. Fundrise puts your investment to work on new projects as well as major improvements, including:

  • Building new urban housing in areas experiencing growth
  • Renovating run-down apartments to up their value
  • Renting out vacant buildings with potential to generate money

When the refurbished properties are sold, you can expect to see sizeable returns. There is far greater demand for completed real estate projects, especially when it is housing.

Invest With Fundrise For the Longer Term

Keep in mind that financial experts say this isn’t a quick way to double your money. Creators designed it to be a long-term investment. You should have a minimum time horizon of approximately five years to put into the deal in order to see your money grow.

Conclusion: Is Fundrise Safe?

Fundrise investments offer no SIPC or FDIC insurance, however, the investments themselves in real estate offer collateral in the case of significant financial issues.

what happens if fundrise goes out of business
Article written by Cari Scribner
Cari Scribner is a career journalist with 20 year’s experience writing for newspapers and magazines. Now a freelance writer, she is also a published fiction writer with more than 15 short stories in literary mags. She recently completed a novel that is on the desk for consideration at two publishing houses. She lives with her two small dogs, Miloh and Lucy, in Upstate NY.

Platform Reviews

Power Your Investing

Choosing the right product and service is essential for your investing. Here are some of the tools and services to help your portfolio grow.
Robinhood
Robinhood provides an easy-to-use free trading platform for beginner investors. Robinhood has $0 account minimums. Get a free stock when you open an account below.
Try Robinhood
M1 Finance
M1 Finance offers a free investing platform where users can build portfolios of stocks and ETFs. Users can also choose from a variety of pre-built portfolios offered for free.
Try M1 Finance
Fundrise
Passively invest in private real estate deals with as little as $10. Fundrise allows you to own residential and commercial real estate across the U.S. starting at a 1% annual fee.
Try Fundrise
© Copyright 2018 - 2020 Investing Simple LLC. All Rights Reserved. Investing Simple is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that investment markets have inherent risks, and past performance does not assure future results. Investing Simple has advertising relationships with some of the offers listed on this website. The information on Investing Simple could be different from what you find when visiting a third-party website. All products are presented without warranty. For more information, please read our full disclaimer.
Developed by Stallion Cognitive
magnifiermenucross-circlechevron-down-circle
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram
Copy link
Powered by Social Snap