Publicly traded REITs and Fundrise both let you invest in real estate without buying property, but the comparison between a REIT vs Fundrise comes down to four things that behave very differently: liquidity, fees, taxes, and price volatility. A publicly traded REIT is a stock-exchange-listed share you can sell any business day for whatever the market will pay. Fundrise is a private real estate platform that prices your shares off appraised property values and only lets you cash out through quarterly repurchase windows. Neither is universally better. The right pick depends on how soon you might need the money and how much you’re willing to pay in fees for a smoother ride.
What You Actually Own
A Real Estate Investment Trust is a company that owns income-producing properties and, to keep its favorable tax treatment, must pay out at least 90% of its taxable income as dividends each year.1Office of the Law Revision Counsel. 26 U.S. Code 857 – Taxation of Real Estate Investment Trusts and Their Beneficiaries Most rental income and property gains flow straight through to shareholders. When people compare “REITs” to Fundrise, they usually mean publicly traded REITs, listed on the NYSE or Nasdaq, whose share prices move throughout the trading day.2U.S. Securities and Exchange Commission. Investor Bulletin Real Estate Investment Trusts REITs That’s the comparison here.
Fundrise runs a proprietary platform of private real estate funds. Most new investments now flow into its Flagship Real Estate Interval Fund, registered under the Investment Company Act of 1940, which offers daily net asset value pricing and quarterly repurchase windows with no penalty.3Fundrise. Introducing the Fundrise Real Estate Interval Fund Older accounts may still hold legacy eREIT and eFund positions, which were sold under exemptions like Regulation D.4Investor.gov. Regulation D Offerings The portfolio tilts toward residential and commercial properties across U.S. markets, with an emphasis on multifamily housing and single-family rentals. You don’t pick individual properties. Fundrise’s investment team makes those choices based on the strategy tied to your allocation.
The consequence: a public REIT lets you make targeted bets on specific property sectors, from data centers to healthcare facilities to self-storage, by buying a specialized REIT. Fundrise gives you a diversified private portfolio you don’t get to steer.
Liquidity: Cashing Out
This is the biggest practical difference and the one most likely to surprise a new investor.
Shares of a publicly traded REIT sell on an exchange during market hours. You place a sell order, it executes in seconds, and cash settles in your brokerage account within the standard one-business-day settlement window. If you need money on short notice, REIT shares are as liquid as any stock.
Fundrise works differently. There’s no secondary market where you can sell your shares to another investor. To get out, you submit a redemption request and wait for the fund to buy the shares back. The Flagship Fund and Income Fund offer quarterly repurchase windows with no penalty.3Fundrise. Introducing the Fundrise Real Estate Interval Fund Legacy eREIT shares carry a 1% penalty if you redeem before five years, and no penalty after.5Fundrise. Are There Any Costs Associated With Liquidating Shares?
Even with quarterly windows, redemptions depend on the fund having enough cash to fulfill requests. If a lot of investors want out at once, the fund can limit or suspend repurchases. Real estate crowdfunding platforms across the industry have paused redemptions during periods of market stress. Treat Fundrise as a long-term commitment where access to your capital is periodic, not immediate.
Fees on a Real Dollar Basis
Cost is where publicly traded REITs have a clear structural advantage. A broad REIT ETF like the Vanguard Real Estate ETF charges an expense ratio of 0.13% annually, and most major brokers charge zero commissions to trade ETFs. On a $10,000 investment, that’s about $13 a year. Buying individual REIT stocks costs even less, since there’s no expense ratio beyond the (typically zero) commission.
Fundrise charges a combined 1.0% annually on its real estate funds: a 0.85% asset management fee plus a 0.15% advisory fee.6Fundrise. Fees With a Purpose On that same $10,000, Fundrise runs roughly $100 a year. Over a decade the gap compounds. Fundrise would argue the fee buys access to private deals unavailable through public markets. That’s a fair point, but the cost difference is real, and Fundrise has to outperform by roughly that spread just to break even against a REIT ETF.
How the Returns Have Compared
Fundrise publishes its client returns alongside public REIT performance, which makes direct comparison unusually easy. The pattern over recent years: Fundrise holds up better in rough markets and trails during strong public REIT rallies.7Fundrise. Client Returns
- 2022: Fundrise returned 1.50% while public REITs lost 25.10%.
- 2023: Fundrise lost 7.45% while public REITs gained 11.48%.
- 2024: Fundrise returned 5.75%, public REITs 4.33%.
- 2025: Fundrise returned 6.24%, public REITs 1.66%.
The volatility gap is the headline. Public REIT prices swing with the stock market because they trade on exchanges alongside every other stock. When markets panic, REIT shares drop regardless of what the underlying properties are worth. Fundrise’s NAV-based pricing insulates reported returns from that daily turbulence. It can also mask real declines that simply haven’t been reflected in appraisals yet. Smoother returns are not the same thing as lower risk.
A caveat on longer-term data: Fundrise has a track record going back only to 2017. A handful of years covering a pandemic and an aggressive rate-hiking cycle isn’t enough to declare a permanent winner on risk-adjusted returns.
How Distributions Are Taxed
Both investments generate income taxed mostly at ordinary rates, but the details matter.
Public REIT Distributions
Your broker reports REIT dividends on Form 1099-DIV, which splits distributions into components taxed at different rates.8Internal Revenue Service. Form 1099-DIV – Dividends and Distributions Ordinary dividends are taxed at your marginal rate, capital gain distributions at long-term capital gains rates, and return-of-capital portions reduce your cost basis rather than triggering immediate tax.
Public REIT investors also benefit from the Section 199A qualified business income deduction, which allows a 20% deduction on qualified REIT dividends. The deduction was originally set to expire after 2025 but was made permanent in mid-2025, so it applies for 2026 and beyond.9eCFR. 26 CFR 1.199A-3 – Qualified Business Income, Qualified REIT Dividends To qualify, you have to hold the REIT shares for at least 46 days during the 91-day window around the ex-dividend date. This is a meaningful advantage that often gets overlooked.
Fundrise Distributions
Income from the legacy eREITs and eFunds is typically reported on a Schedule K-1, reflecting your share of the fund’s income, deductions, and credits. The Flagship Fund, which intends to operate as a REIT for tax purposes, may issue a 1099-DIV instead.3Fundrise. Introducing the Fundrise Real Estate Interval Fund Either way, the bulk of the income is taxed as ordinary income.
K-1s tend to arrive later in tax season than 1099s, which can delay your filing if you still hold legacy positions. K-1s can also introduce complexity through items like depreciation and state-level allocations tied to where the fund’s properties sit. Holding Fundrise in a Roth IRA sidesteps the reporting headache since distributions grow tax-free, though you give up the ability to claim the Section 199A deduction that a taxable public REIT position would provide.
Minimums and Investment Limits
Publicly traded REITs are available through any brokerage account. You can buy a single share for whatever it’s trading at, often well under $100. No application, no waiting period, no caps. If you already have a brokerage account, you can own REIT shares in minutes.
Fundrise requires opening an account on its platform. The taxable account minimum is $10.10Fundrise. What Is the Minimum Initial Investment? A Traditional or Roth IRA requires $1,000.11Fundrise. What Type of IRA Can I Open? Because Fundrise offerings are sold under regulatory exemptions rather than full SEC registration, non-accredited investors also face caps on how much they can put in. Under Regulation A+ Tier 2, which governs many Fundrise offerings, a non-accredited investor can invest no more than 10% of the greater of annual income or net worth. Accredited investors face no such cap. Publicly traded REITs have no investment limits at all.
Which One Fits Your Portfolio
Work backward from a few practical questions.
If you might need the money within the next few years, publicly traded REITs are the only reasonable choice. The liquidity gap is not a minor inconvenience. It’s a fundamentally different relationship with your capital.
If cost is the deciding factor, publicly traded REIT ETFs win. A 0.13% expense ratio versus 1.0% is a drag that compounds over decades, and the historical performance data doesn’t show a consistent enough edge for Fundrise to reliably close that gap.
If taxes drive the decision in a taxable account, the Section 199A deduction gives public REIT dividends a measurable edge. In a Roth IRA, that edge disappears and Fundrise’s reporting complications also go away.
If daily price swings genuinely cause you to panic-sell, Fundrise’s NAV-based pricing has real psychological value, even knowing that the smoothness is partly a reporting artifact.
Holding both is a legitimate strategy. Public REITs give you liquid, broad sector exposure. A smaller Fundrise allocation adds private real estate that doesn’t move in lockstep with the stock market. The worst approach is picking based on whichever had a better year recently. These are structurally different investments, and the right mix depends on your timeline, your tax situation, and your honest tolerance for not being able to touch your money.