Ben Miller, the head of Fundrise, is bracing for an economic downturn triggered by increasing interest rates from the Federal Reserve. Yet, he maintains that there are opportunities for strategic investors who are adept at navigating the macroeconomic currents shaping the market. A crucial strategy, according to him, is to adopt a long-view perspective, particularly considering the ongoing evolution in remote work practices.
Miller refers to historical trends which suggest that economic downturns often follow approximately 18 months after interest rate hikes have reached their zenith. With the rates still on the rise, it appears the peak may not have been hit just yet. Additionally, the pandemic has had a lasting effect on real estate, notably in the residential and warehouse sectors, due to the rise of hybrid working environments.
In light of these developments, Fundrise maintains a bullish stance on investing in single-family rental properties, catering to the influx of remote workers migrating to the Sunbelt region. These “build-for-rent” properties are a significant part of their portfolio. Another savvy move by Fundrise is capitalizing on the burgeoning demand for warehouse spaces, which are pivotal for the growth of e-commerce.
The hike in interest rates has put a strain on borrowers within the real estate sector, which in turn has carved out niche opportunities for private lenders to offer bridge financing solutions. Fundrise’s Opportunistic Credit Fund has recently seen a return of 13% by financing these types of loans. However, Miller acknowledges that this window may close should the interest rates level out.
Miller’s overarching strategy focuses on the conservation of capital rather than chasing after immediate gains, with his philosophy being, “Protecting the downside is where my attention is fixed.” Despite the anticipated challenges, he is confident that diligent analysis of market trends can unearth viable opportunities during these unpredictable economic times.