Overall Performance:

Publicly traded REITs are going to have fewer fees, with some charging less than 0.50% annually. However, public REITs have been highly correlated with stocks this decade, increasing volatility and reducing any diversification benefits.

While the fees are higher, Fundrise eREITs promise higher overall returns by focusing on smaller deals that fall below the radar of institutional REIT managers.

Liquidity:

Liquidity is the ability to turn an investment into cash. On average, investments that are highly liquid yield lower returns than investments that are non-liquid (to compensate investors for the additional risk).

Public REITs are highly liquid, and usually trade at a similar price to their underlying property values. They can be exchanged any time on a secondary market.

The Fundrise eREITs are privately-traded, making them much less liquid. Following a six-month initial holding period, Fundrise investors have the option to redeem their investment shares on a quarterly basis, but the redemption rate is less than face value for three years (after three years, it may be possible to redeem at full face value). As such, Fundrise is suitable for long-term investors who want to remain invested for several years.

Taxation:

In general, REITs are tax inefficient. By law, they must distribute more than 90% of all earnings to shareholders (through dividend payments).

As such, REITs belong in tax-sheltered accounts where all dividend earnings are accumulated tax-free until withdrawals are made. This is easily done for publicly traded REITs, but Fundrise does not allow tax-sheltered accounts at this time.

Investors through fundrise will receive dividends that are taxed as ordinary income.