Latest news with #Fundrise
Yahoo
25-04-2025
- Business
- Yahoo
Fundrise CFO Alison Staloch talks home affordability and Gen Z's investing trends
This story was originally published on To receive daily news and insights, subscribe to our free daily newsletter. As housing affordability challenges persist across the U.S., institutional investors are increasing their presence in the residential real estate market, a trend some see as validation of real estate ownership as a long-term investment vehicle. However, critics argue it risks sidelining individual buyers and has resulted in an affordability crisis. Recently, legislation has been put forth by lawmakers in New York, Virginia, New Mexico and Georgia to limit this growing trend. Fundrise CFO Alison Staloch, whose firm targets markets where housing demand outpaces supply, sees the momentum as reinforcing the case for real estate as an accessible investment. Her insights on the intersection of institutional capital and home affordability, along with the evolving expectations of Gen Z investors, reflect two trends with significant implications for her business. She also shares her views on cybersecurity as a finance function, reflects on her transition out of public accounting and weighs in on proposed changes to CPA licensure requirements. CFO, Fundrise First CFO Position: 2021 Notable previous employers: U.S. Securities and Exchange Commission KPMG US This interview has been edited for brevity and clarity. ALISON STALOCH: On affordability — more renters means more demand, which is our opportunity. The housing crisis is a supply issue. We invest where more housing is needed, which aligns impact with opportunity. That includes single-family rental communities, build-to-rent developments and multifamily housing. The U.S. is short millions of units — I've seen estimates between three and six million — and that shortage drives affordability issues while reinforcing long-term rental demand. We focus on markets with job growth and population inflows. This is where affordability challenges create sustained rental need. So when we invest, we're trying to address supply in a way that meets real demand and also makes financial sense. Maybe someone can't buy the house they want right now, but they can rent it and that's valuable too. As for the bigger institutional investors, we're seeing more of them enter the space, and it validates what we've long believed: residential real estate is durable, attractive and fundamentally strong. Their interest underscores the same drivers we've focused on. Supply shortages, rental demand and appreciation potential. Austin, Texas is a good example of this. But now, insurance costs and taxes are becoming challenges in places like Texas. We still believe the Sun Belt states are smart plays today, though climate change might shift that over time. Gen Z isn't anti-investing, they just want to do it differently. They want real assets, not just stocks, and they want early access. They're digital-first and self-directed. They don't want to talk to a traditional advisor. They want to do the research and allocate capital themselves. They're also drawn to transformative tech. A recent survey we ran showed 68% of retail investors believe AI has the highest growth potential, more than climate tech, e-commerce or crypto. And, two-thirds said they'd be more likely to invest in a product if they could access companies before they go public. That's something regulators are thinking about too, how to open private markets safely to retail investors. So it's all evolving quickly. Returns are king. If the returns aren't there, the experience doesn't matter. That said, Gen Z expects a smooth, transparent product experience. They want the information fast and accessible. But, without returns, none of that sticks. Our [chief technology officer] leads it, but legal, finance and IT collaborate closely on resource allocation and prioritization. Securing investor data and transactions is table stakes. Prevention costs less than a breach, so we invest heavily there. For other areas, we use risk assessments to phase in improvements. We also embed best practices across the organization. It's part of the culture. For example, our treasury team handles high-dollar wire transfers, so we run regular exercises, like Socratic seminars, to game out threats. One scenario we discuss is deepfakes: a fake CEO asking for a wire transfer. We ask, 'How would we know? How would we stop it?' It keeps everyone alert. It's a topic that comes up daily. It's woven into everything, even if we're not calling it 'cybersecurity.' It's just part of how we operate now. Honestly, I thought I'd be a lifer. I respected the career path and the role of auditors. But around that 10-year mark, I was looking for my next move. I thought maybe it would be a rotation to a national office. Then the opportunity came up to do a fellowship at the SEC. People often return to their firms after, but I loved the experience. I ended up staying on as chief accountant for the Division of Investment Management. Eventually, I met Ben Miller, Fundrise's CEO, and loved his vision. I saw it as a chance to build something new rather than just operate in an institutional system. Personally, I don't love bright-line rules. My practical experience was far more valuable than any specific class I took. A fun fact, I was pre-med, neuroscience minor, psych major. I took zero accounting classes as an undergrad. I took one accounting class after graduating and thought, 'This is easier for me than science.' So I did a master's in accounting and never looked back. That said, I think having a more diverse educational background has helped me in leadership. Experience matters more than just racking up 150 credit hours. The real question is whether that extra year is truly the barrier. I think awareness is a bigger issue, because people don't realize how dynamic accounting can be. It's like coming in through the back door of a business, you see everything. Recommended Reading Gen Z's financial approach includes salary transparency, sports gambling and average pay
Yahoo
22-04-2025
- Business
- Yahoo
How to invest in real estate without buying property
Real estate has a reputation for making people rich — and there's truth to that. Historically, real estate has delivered solid returns, outpaced inflation and offered a reliable stream of passive income. Home appreciation rates, for example, tend to grow 4.5 percent annually on average, according to data from the Federal Housing Finance Agency. But buying property carries risk. It can be expensive, and often comes with maintenance headaches that make the income you generate feel anything but passive. However, there are ways to tap into the potential upside of real estate without signing a mortgage, including buying REITs in your brokerage account or signing up for a crowdfunding platform. Whether you're priced out of the housing market or don't want the headache of tenants, these alternative real estate investments let you share in the profits without owning the asset. They all come with trade-offs though, and whether they make sense for you depends on how much work you're willing to put in and your ultimate goal with the investment. How it works: REITs are companies that own, operate or finance income-generating real estate. When you invest in a REIT, you're essentially buying shares in a company that makes money from properties — whether that's office buildings, apartments, shopping centers or even cell towers or manufactured homes. Publicly traded REITs are listed on stock exchanges and can be bought just like regular stocks. Why people invest: REITs are liquid, diversified and hands-off. They're known for paying high monthly dividends since U.S. law requires REITs to pay out at least 90 percent of their taxable income to shareholders. Expected returns: Historically, REITs offer average annual returns of about 11 percent, according to Nareit, but that can swing widely with the market. Risks: REITs have underperformed much of the U.S. stock market over the past five years, due in large part to a lull in the real estate market and high interest rates. Also, while REITs usually offer a high dividend, those dividends can quickly get cut if the real estate market stagnates. And dividends are taxed as ordinary income, not at the lower capital gains rate. How it works: Platforms such as Fundrise, YieldStreet and Crowd Street let you invest in real estate development or income-producing properties with as little as $10 (though some require as much as $25,000). You can pool your money with other investors through these real estate crowdfunding platforms to fund commercial or residential projects. Other apps, such as Groundfloor, let you buy into fractional real estate debt starting at $100. You make money by funding short-term real estate loans. Groundfloor connects you to borrowers who need quick cash to renovate and sell properties. You invest in a piece of that loan, and when the borrower sells or refinances the property, you get paid back — your principal plus interest. However, you need to carefully vet the loans you're making — it could take years to collect if the person defaults or the property goes into foreclosure. Why people invest: It's low-barrier, passive and gives you exposure to deals usually reserved for accredited investors. Expected returns: About 4.5 to 11 percent average annually, depending on the platform and risk level of the investment. Risks: These are long-term, illiquid investments. You can't pull your money out easily, and it's usually locked up for three to five years. Some platforms also come with higher fees than you'd pay to own REITs. How it works: These are exchange-traded funds that hold a basket of REITs or real estate-related stocks. They might include stocks of real estate developers and operators alongside REITs. You're buying into an entire sector with one click. Why people invest: Real estate ETFs are easy to buy, highly liquid and low cost. They're great for beginners or people who want to diversify their portfolios beyond stocks and bonds. They also tend to be an affordable option. Vanguard's Real Estate ETF (VNQ), for example, has an expense ratio of only 0.13 percent. Expected returns: About 6 to 10 percent average per year, depending on overall real estate market trends. Risks: Like any ETF, they're vulnerable to market volatility and interest rate increases. Similarly, returns depend heavily on macroeconomic factors like inflation and rate hikes. How it works: Real estate syndication and private equity real estate funds both pool money from multiple investors to fund real estate projects — but the barriers to entry are generally much higher than crowdsourcing platforms like Fundrise. Private equity real estate funds are mostly reserved for wealthier investors. The sponsor combines investor capital with borrowed funds to finance deals, aiming to generate returns for everyone involved. These deals are typically offered as whole funds, meaning you invest in a bundle of properties without much say over what's in the mix. Real estate syndication, on the other hand, can be slightly more accessible. Investors get a share of the ownership and profits but don't handle day-to-day decisions. Deals are offered one at a time, so you can pick exactly what you want to invest in. You'll see the projected numbers upfront and can choose the projects that align with your goals and risk tolerance. Why people invest: It's a way to earn steady, predictable income without owning property. Expected returns: About 6 to 8 percent annually, though it varies widely depending on the project, timeline and arrangement. Risks: These arrangements can go sideways fast if the operator or sponsor doesn't know what they're doing. With syndications, you'll need to assess the sponsor's track record and the deal's financial projections and risk factors. They also generally require a lot of capital (think $250,000 or more), and you may need to be an accredited investor to get in on the action. If you're interested in this type of real estate investing, it may pay off to consult a financial advisor first. Need an advisor? If you're looking for expert guidance when it comes to managing your investments or planning for retirement, Bankrate's AdvisorMatch can connect you to a CFP® professional to help you achieve your financial goals. How it works: This one breaks the rules a bit, since you're technically buying property. But instead of buying a home to live in, more people (especially millennials and Gen Zers) are buying investment properties first — then continuing to rent their own place. You might buy commercial property, a short-term rental in a tourist area, a duplex where you rent out both units or a small single-family home in a more affordable state than where you live. Many investors hire property managers to run day-to-day operations and maintenance in order to make it as passive as possible. Why people invest: To build wealth through rental income and property appreciation. The idea is to skip the down payment grind, rent where you live and let your investments pay for your future dream home. Expected returns: Varies depending on rent prices, property appreciation and property management costs. Risks: You're still a property owner, so you're on the hook for vacancies, maintenance and economic downturns. For many people, investing in real estate through REITs and real estate ETFs makes sense if you're trying to diversify your portfolio. Since the early 2000s, a portfolio with at least 5 percent holdings in real estate — such as REITs — showed better returns and lower risk than a traditional 60/40 equity/bond portfolio, according to an analysis by Morningstar. But don't treat these options like a shortcut to getting rich. When it comes to platforms like Groundfloor, Fundrise or other crowdfunding options like syndication, you'll need to pay attention to the details. Your outcomes depend heavily on your personal risk tolerance and how much time you're willing to spend doing the legwork. You'll need to pick individual deals, weigh risk grades, track timelines and deal with less liquidity. For people who don't want to be landlords or can't afford to buy into pricey markets like New York or San Francisco, these alternatives offer a way in. You get a slice of the action — some exposure to real estate, a potential income stream and a shot at upside growth — without going all-in on a mortgage or property management. But don't go in thinking these investments will make you rich overnight. Make sure to do your homework and ask questions. Dig into the numbers. Don't let slick marketing or the promise of outsized returns cloud your judgment. And remember: if it sounds too good to be true, it usually is. Lower entry costs: Some options start at $10, not $100,000. Diverse portfolio: Since real estate isn't closely correlated to equity or bond returns, it can help you diversify your investment portfolio. Passive income: Many of these options generate recurring cash flow. Liquidity (in some cases): REITs and ETFs can be sold on demand, unlike houses. Limited control: You can't pick the paint color or tenants. You also don't participate in the full upside, you only share in a portion of the income. Fees: Fund managers, platforms and sponsors take their cut. Sometimes a big cut. Illiquidity: Except for REITs and ETFs, you'll need to commit to locking your money up for the long haul, usually at least three to five years. Due diligence required: You need to research platforms, understand risks and vet opportunities. You don't need to own a house or collect rent checks to make money in real estate. REITs, ETFs, crowdfunding platforms and syndications offer a chance to put money into the sector with less startup capital. However, real estate without property is still real investing. Know the risks, set your expectations and pick the strategy that fits your long-term financial goals. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
Yahoo
01-03-2025
- Business
- Yahoo
5 Purchases That Will Help the Middle Class Build Wealth
If you're earning a middle class paycheck and actively trying to increase your wealth, you might find yourself stumped as to how to go about it. Learn More: Try This: While you may not grow your riches overnight, there are certain money moves you can make to help you reach your goals. Below are some of the top purchases that will help you build wealth if you're part of the middle class. According to James Francis, CEO of Paradigm Asset Management, one of the most valuable purchases middle-class families can make is financial education — whether through books, online courses or working with a financial coach. Understanding how to budget, invest and leverage tax advantages can create long-term financial security. 'Even a $200 investment in the right course can provide lifelong returns by teaching strategies to avoid debt, maximize retirement accounts and generate passive income,' Francis explained. Find Out: 'Owning real estate has always been a key path to wealth, but for many, the cost of homeownership is too high,' said Francis. 'Now, middle-class investors can buy into real estate through fractional ownership platforms like Fundrise or Roofstock, which allow them to invest in rental properties with as little as $100.' He said this offers access to property appreciation and passive income without the barriers of traditional real estate investing. Instead of just going with mutual funds that charge high fees, Francis said middle-class investors now have the option to buy direct indexing portfolios. This allows you to own a customized mix of stocks that follow an index, while also helping with tax savings and even aligning with your personal values. 'It's a strategy that used to be only for the ultra-wealthy, but now platforms like Wealthfront and Vanguard Personalized Indexing are making it way more accessible,' he said. 'One of the smartest investments isn't just in stocks or real estate — it's in yourself,' said Francis. He noted middle-class professionals can seriously level up their earning power with high-value certifications like PMP, coding bootcamps or even AI and cybersecurity training. 'These kinds of skills can lead to pretty big salary jumps — $10,000, sometimes even $50,000 more a year. And when you add that up over time, it can make a huge difference in building real wealth.' 'Getting the right tools, software or even just some basic inventory to kick off a side hustle can be a game-changer for building wealth,' Francis explained. Whether it's setting up a small online shop with Shopify, putting some money into a solid business course or just getting the right gear for a high-demand service, these kinds of small but smart purchases can open up extra income. 'And having that extra stream of cash can make a big difference instead of just depending on a paycheck,' Francis said. 'These are just a few smart purchases that can help middle-class families start building wealth over time.' More From GOBankingRates Here's the Minimum Salary Required To Be Considered Upper-Middle Class in 2025 The Money You Need To Save Monthly To Retire Comfortably in Every State 7 Tax Loopholes the Rich Use To Pay Less and Build More WealthThis article originally appeared on 5 Purchases That Will Help the Middle Class Build Wealth
