Fund Manager Who Dodged 2022 Crash Predicts New Opportunities Amid Real Estate Market Distress
2022 was a tough year for investors. With the Fed implementing aggressive rate hikes to tame rampant inflation, many market participants learned the hard way that stocks don’t always go up.
But Ben Miller, co-founder and CEO of real estate crowdfunding platform Fundrise, was able to steer clear of the market’s downward spiral.
In 2022, Fundrise clients earned a total return of 1.5%. To put that in perspective, investors of publicly traded stocks saw a total return of negative 18.1%, while those of publicly traded real estate investment trusts (REITs) suffered an even worse total return of negative 25.1% during the same period.
This is not the first time for Fundrise to sidestep a market tumble.
Since 2017, the weakest quarterly return for Fundrise was negative 3.3%, compared to negative 19.6% for public stocks and negative 25.4% for public REITs.
With the Fed slowing its pace of rate hikes in 2023, some say that the worst could be over. But Miller still sees turbulence ahead.
The Proverbial Ring Of Fire
In the latest investor update, Miller wrote, “Before the next upswing begins, markets (along with all investors) must first pass through this final stage of financial turmoil, a crucible reforging of markets — akin to the proverbial ring of fire — where nerves will be tested and the ill-prepared left wanting.”
He explained that the U.S. has enjoyed a long period of near-zero interest rates and a record amount of quantitative easing. And now that the easy money is gone and rates are up, the outlook is bleak for an economy that relies heavily on borrowing.
The upheaval could arrive soon.
“We expect that sometime this summer (or early fall) the continued buildup of pressure in the system will boil over, causing widespread breakages in financial markets (The Great Cascading of The Great Deleveraging) with the debt-ceiling crisis as the likely tipping point,” Miller said.
But this is not doom and gloom — far from it.
How To Be Greedy When Others Are Fearful
Warren Buffett has a famous saying about investing: “Be fearful when others are greedy and greedy when others are fearful.”
He expects worry and fear to lead to sell-offs and potentially “steep market declines.”
And that is where opportunities would arise.
“The good news is that these signals indicate that we are nearing the bottom and portend the arrival of what could potentially become an extremely favorable period for new investments,” he said, adding that “the time to move into aggressive deployment mode is nearing” for investors who can afford it.
The best part? You don’t need to be an ultra-high net worth individual to afford this.
While traditional real estate investing — and by extension most real estate crowdfunding platforms — requires investors to pledge large amounts of capital to get in the game, Fundrise distinguishes itself from the crowd by having a minimum investment of $10.
In fact, Fundrise was created with two clear aims: to simplify and democratize real estate investing.
The platform also has some of the highest quality real estate deals available, providing regular investors access to institutional-grade assets like multifamily properties, single-family rental communities and various types of commercial real estate.
Don’t forget, real estate investing isn’t solely about “buy low, sell high”; High quality properties can also offer investors a consistent flow of rental income.
In the case of Fundrise’s Income Fund, it had an average annualized dividend of 8.4% in Q1 of 2023. In contrast, the average dividend yield of S&P 500 companies stands at just 1.7% at the moment.
If you want to capitalize on what is shaping up to be “an extremely favorable period for new investments” in real estate, visit the Fundrise website today to get started on your journey towards financial success.