Choosing between a publicly traded REIT and Fundrise comes down to how soon you might need your money back and how much you’re willing to pay in fees for a smoother ride. A publicly traded REIT is a stock-exchange-listed share you can sell any business day for whatever it’s currently worth. Fundrise is a private real estate fund platform where your capital sits in quarterly redemption windows and gets priced off appraisals rather than market sentiment. Both give you real estate exposure without owning property. They are not close substitutes.
What You Are Actually Buying
A publicly traded REIT is a company that owns income-producing property and trades on the NYSE or Nasdaq. To keep its favorable tax status it must pay out at least 90% of 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 Share prices move throughout the trading day like any other stock. You can buy a single share, or a broad REIT ETF, through any brokerage account for well under $100.
Fundrise is a proprietary platform. Most new money now goes into the Flagship Real Estate Interval Fund, which is registered under the Investment Company Act of 1940, prices daily at net asset value, and offers quarterly repurchase windows with no penalty.2Fundrise. Introducing the Fundrise Real Estate Interval Fund3Investor.gov. Regulation D Offerings4Fundrise. What Is the Minimum Initial Investment?5Fundrise. What Type of IRA Can I Open?
Because Fundrise doesn’t trade on an exchange, share values track appraised property values rather than what buyers and sellers are doing that morning. You avoid the daily swings of the public market. You also avoid the price discovery that comes with it.
Liquidity Is the Biggest Difference
If you own a publicly traded REIT and want out, you place a sell order and the cash settles in your brokerage account within one business day. That is the whole process.
With Fundrise, there is no secondary market. You submit a redemption request and wait for the fund to buy your shares back. The Flagship Fund and Income Fund process these in quarterly windows with no penalty.2Fundrise. Introducing the Fundrise Real Estate Interval Fund Legacy eREIT shares carry a 1% penalty if you liquidate before holding for five years, and no penalty after that.6Fundrise. Are There Any Costs Associated With Liquidating Shares?
Even the quarterly windows depend on the fund having enough cash to meet requests. If a lot of investors want out at once, management can limit or suspend repurchases. Real estate crowdfunding platforms across the industry have done this during periods of stress. Treat Fundrise as capital you won’t need for at least five years.
Fees Over Time
This is where public REITs have a clear structural edge. A broad REIT ETF like the Vanguard Real Estate ETF charges around 0.13% annually, and most major brokers charge zero commission on ETF trades. On a $10,000 investment, that’s roughly $13 a year. Buy individual REIT stocks and there’s no expense ratio at all beyond the (usually 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.7Fundrise. Fees With a Purpose On the same $10,000, that’s about $100 a year. Roughly an 87 basis point gap, compounded over a decade or more, is real money. Fundrise’s argument is that the fee buys access to private deals unavailable through public markets. Fair enough. The cost difference is still real, and Fundrise needs to outperform by roughly that spread just to break even against a cheap REIT ETF.
How Distributions Are Taxed
Most of the income from both vehicles is taxed at ordinary rates, but the reporting and available deductions differ.
Public REITs
Your broker reports distributions on Form 1099-DIV, which splits them into ordinary dividends (taxed at your marginal rate), capital gain distributions (long-term capital gains rate), and return-of-capital portions (not taxed immediately; they reduce your cost basis).8Internal Revenue Service. Form 1099-DIV – Dividends and Distributions
Public REIT investors can also claim the Section 199A qualified business income deduction, which lets you deduct 20% of qualified REIT dividends from taxable income.9eCFR. 26 CFR 1.199A-3 – Qualified Business Income, 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. To qualify, you need to hold the shares at least 46 days within the 91-day window around the ex-dividend date. It’s a meaningful benefit that often gets left out of these comparisons.
Fundrise
Income from legacy eREITs and eFunds is typically reported on a Schedule K-1 showing your share of the fund’s income, deductions, and credits. The Flagship Fund, structured as an interval fund intending to operate as a REIT for tax purposes, may issue a 1099-DIV instead.2Fundrise. Introducing the Fundrise Real Estate Interval Fund Either way, most of the income lands at your ordinary rate.
K-1s tend to arrive later in tax season than 1099s and can complicate filing, especially if the fund holds properties in multiple states. Holding Fundrise in a Roth IRA sidesteps the reporting friction, but you also give up the ability to claim the Section 199A deduction that a taxable public REIT would offer.
How Returns Have Compared
Fundrise publishes its client returns alongside public REIT performance, which makes side-by-side comparison unusually clean. The recent pattern: Fundrise holds up better in down markets and lags during strong public REIT rallies.10Fundrise. Client Returns
- 2022: Fundrise +1.50%, public REITs -25.10%.
- 2023: Fundrise -7.45%, public REITs +11.48%.
- 2024: Fundrise +5.75%, public REITs +4.33%.
- 2025: Fundrise +6.24%, public REITs +1.66%.
The volatility difference is the real story. Public REIT prices swing with the broader stock market because they trade all day alongside every other stock, and they drop in panics regardless of what the underlying buildings are worth. Fundrise’s NAV pricing insulates returns from that turbulence, though it can also mask real declines that haven’t shown up in appraisals yet. Smoother is not the same as safer.
Fundrise’s track record only goes back to 2017. A window that includes a pandemic and an aggressive rate-hiking cycle isn’t long enough to declare a winner on risk-adjusted returns.
Who Can Invest, and How Much
Public REITs have no investment limits. Anyone with a brokerage account can buy any amount.
Fundrise offerings sold under Regulation A+ Tier 2 cap non-accredited investors at 10% of the greater of their annual income or net worth. Accredited investors have no cap. You qualify as accredited if you earned over $200,000 individually or $300,000 jointly for two consecutive years with a reasonable expectation of the same going forward, or if your net worth exceeds $1 million excluding your primary residence. Certain professional license holders (Series 7, 65, or 82) also qualify.
Choosing Between Them
Ask a few questions honestly.
Will you need this money in the next few years? Then publicly traded REITs are the only reasonable choice. Fundrise’s liquidity gap isn’t a minor inconvenience. It’s a different relationship with your capital.
How much does cost matter to you? A 0.13% ETF versus a 1.0% platform fee compounds. Over 20 or 30 years the drag is substantial, and there is no consistent evidence that Fundrise’s returns clear the hurdle.
Are you investing in a taxable account? The Section 199A deduction gives public REIT dividends a measurable after-tax edge, and 1099s are simpler at tax time than K-1s that may pull in multiple states.
Do daily price swings cause you to sell at bad moments? Fundrise’s appraisal-based pricing genuinely smooths the ride, and for some investors that psychological benefit outweighs the fee. Others get the same effect at lower cost by just not checking their brokerage account.
Holding both is a legitimate approach. Public REITs give you liquid, sector-diverse exposure. A smaller Fundrise allocation adds private real estate that doesn’t trade in lockstep with the stock market. What doesn’t work is picking based on whichever had a better year recently. These are structurally different investments, and the right choice depends on your timeline, your tax situation, and how honestly you can answer whether you’ll leave the money alone.