Expert Interview Series: Jordan Sale of Fundrise on Investing in Commercial Real EstatePDH Staff
Jordan Sale is the director of marketing at Fundrise, the country’s first online platform for high-quality, low-fee real estate investment. We recently talked to her about the benefits of commercial real estate investment. Here’s what she had to say:
Tell us about Fundrise. How does it work?
Our mission at Fundrise is to offer a low-fee, low-minimum alternative to traditional private real estate investment. By using technology, we’re able to offer any resident in the U.S. the chance to invest in high-quality commercial real estate online.
Why did you and the team at Fundrise think it was time to change the way we invest in real estate?
Historically, commercial real estate has proven to be one of the best-performing investments. As real estate investors ourselves, our team spent our early careers building and owning properties in Washington, D.C.. We found that the investment structure often resulted in high fees and low transparency for individual investors, while the majority of profits from most projects ended up in the pockets of our institutional investment partners, who in reality were acting as middlemen standing between us and the actual people whose money was being invested.
So, we started Fundrise with a simple idea: give everyone the opportunity to invest directly in high quality real estate, without the middlemen.
Our idea definitely had its skeptics. Industry professionals told us that it was impossible. But, after nearly a year of working with the Securities and Exchange Commission, we launched our first online offering, ending up with 175 individual investors. Then we did it again and again. Today, there are more than 90,000 members of Fundrise and we’ve invested in nearly $3 billion worth of real estate.
What are the advantages of investing in real estate? Why is real estate such a great investment opportunity?
Research shows that portfolios that include real estate outperform those that don’t. Between 2007 and 2011, pension portfolios including real estate, saw higher returns of more than 1.4 percentage points compared with traditional stock-bond mixes.
Furthermore, with increasing uncertainty in the global economy, U.S. commercial real estate tends to be seen as a secure investment that will continue to hold its value as other assets around the world fall in price.
What considerations should we make when choosing investment opportunities?
Understanding the financial goals for your portfolio will help you determine the type of investment strategy you should pursue and, as a result, the right type of investment. An essential part of the investment process is objectively evaluating each opportunity as it arises and working hard to remove any pre-existing biases. Take your time to figure out which approach makes the most sense for you and your investment goals and remember that diversification into different asset classes is one of the most effective ways to build a profitable portfolio!
What are the biggest mistakes you see people making when it comes to real estate investment?
Many people make the mistake of investing based on emotion and the allure of upside, rather than logic and what makes the most sense for their portfolio and financial goals.
What do you believe the future of commercial real estate investment looks like?
Extremely promising! It’s been exciting to see technology enter the real estate space in such interesting, creative ways and we continue to be encouraged by the validation our low-fee, transparent model is seeing from industry leaders around the country.
What are your favorite resources (books, publications, blogs, etc.) for learning more about commercial real estate investment?
I personally find The Beginner’s Guide to Real Estate Investing by Gary Eldred particularly useful. We actually did a post on resources for new real estate investors a few months back: http://fundri.se/1OQNAFr.