In this Review
How Does DiversyFund Work?
Crowdfunded real estate investment platforms are not uncommon, but DiversyFund does stand apart. This company owns and directly manages properties rather than acting as a broker pairing investor with projects. This means that there are no management fees.
Many crowdfunding real estate platforms charge 1% or more in management fees, but DiversyFund charges no annual fees, so you can save money.
DiversyFund also has a low minimum investment of just $500, which allows even modest investors access. Additionally, the service is open to nonaccredited investors. So, you don’t need to have over $1 million net worth or annual income of $200,000 or more. This makes DiversyFund open to all U.S residents who want to invest.
DiversyFund owns and operates investment properties with luxury homes and apartment complexes in Texas, California and North Carolina. The company purchases properties that can be improved and resold within five years.
However, you cannot pick and choose which projects you would like to fund. You’ll simply buy shares in a REIT. These are public non listed trusts that require registration and submission of an annual audit, which adds a level of transparency that you may not find if you invest in a private REIT.
On DiversyFund Secure Website
Who’s DiversyFund Best For?
DiversyFund is a great option for passive investors who want to get into the real estate market without being stuck paying high management fees or excessive account minimums. The company makes REITs available to everyone.
The minimum investment is a very reasonable $500, which is far less than many other real estate platforms, such as the $25,000 needed for CrowdStreet. However, the company only offers REITs, so you cannot access other asset types or accounts.
One major consideration about whether DiversyFund would be a good fit for you is that REITs are highly illiquid, so you can’t quickly turn your investment into cash if you need it. You won’t be able to withdraw your investment until the properties are sold. This is because DiversyFund reinvests the earnings and dividends until the real estate assets are sold.
So, DiversyFund is best for an investor who doesn’t mind waiting to see their investments grow. You can take a back seat and allow the company to manage everything for you.
However, if you’re a DIY investor who enjoys active trading, this is not the best option for you.
DiversyFund has a unique business structure allowing investors to enjoy a no fee platform. The platform is vertically integrated and they perform all actions in house. This eliminates the middlemen and the associated middlemen fees. So, there are no broker fees, no management fees and more.
The company even has its own internal real estate team that is responsible for finding and acquiring properties. DiversyFund owns all the real estate assets rather than just raising funds for third party projects. This also eliminates any third party fees.
So, DiversyFund is a platform with no fees, all fees are waived, passing on the benefits to the investors.
However, projects may incur a developer fee of up to 8%. Fortunately, DiversyFund is quite transparent about any expenses. This allows you to assess the costs before you invest.
How to Join DiversyFund
To join DiversyFund, you just need to click on the Start Investing button on the website. You’ll then need to specify your reason for investing.
The Robo Investor will then guide you through the necessary steps.
DiversyFund then requires an email address and password to set up your account. You can also use your Google, Facebook or LinkedIn account to log in.
Next, you will need to verify your name, zip code and phone number. After validation, you’ll be able to see your dashboard.
You can then explore the dashboard, access the learning center or click on Invest Now. At this stage, it is a good idea to access your profile settings and add your date of birth, social security number, and address.
These details are needed when you make any investments. So, if you want to act quickly when you decide to invest, why not take a moment during set up to add your details.
Before making an investment or funding your account, you should familiarize yourself with the dashboard and access the learning center. This will allow you to feel completely comfortable before you part with any money.
Pros and Cons of DiversyFund:
As with any investment platform, DiversyFund has both pros and cons. It is important to explore both sides before making an investment. The pros and cons of DiversyFund include:
- No Management Fees: Since DiversyFund performs all aspects of the transactions in house, there are no management or third party fees to consider. The only fee that applies to your investment is a 0 to 8% developer fee.
- Low Minimum Investment: DiversyFund has a minimum investment of just $500, which makes it far more accessible to less experienced investors or those with a limited investment fund.
- Accepts Non Accredited Investors: Investor accreditation can be a massive barrier to entry for many people. So, the fact that DiversyFund accepts non accredited investors is very appealing.
- Unable to Choose Specific Projects: When you invest with DiversyFund, you are simply investing in REIT shares. You cannot specify a particular project or property.
- Limited Investment Options: There are also limited choices for your investments.
- Highly Illiquid: You need to be prepared to have your money invested for five years or more. These investments are highly illiquid, so you will not be able to release your fund early.
DiversyFund – Can You Lose Money?
Any investment carries some degree of risk. This makes it crucial to do due diligence before you invest in any venture. However DiversyFund REITs provide a relatively safe investment in several ways.
Firstly, there is SEC regulation, which means that the company needs to follow the SEC rules and the company is monitored to ensure compliance.
DiversyFund also protects your investment by spreading the risk over several properties in different markets. So, while one property may not make a good return, it is virtually impossible all the properties will return as a loss.
Additionally, DiversyFund REITs are designed so that the company only makes money when the investors do. Since the team manages everything in house, they carry more risk than the investors, so are highly motivated to pick the best investment properties and ensure they are managed well.
Alternatives to DiversyFund
Of course, DiversyFund is not the only way to invest in real estate. There are a number of alternative platforms where you can invest in REITs. The alternatives include:
Fundrise is a crowdsource real estate investment app. This means that like DiversyFund, you can invest a small amount of money rather than needing hundreds of thousands of dollars. Fundrise has a longer history in this industry, it does charge fees for its services. These include:
- Investor Advisor Fees: 0.15%
- Acquisition Fees: 0-2%
- Asset Management Fees: 0.85%
2. Realty Mogul
Realty Mogul requires a bit more capital to invest, as you’ll need $1,000 or more to get started. However, this platform makes it easy for existing investors to reinvest their capital gains. You can just submit a 1031 Exchange form to reinvest the proceeds from the sale and defer your gains.
As with Fundrise, you will need to be prepared to pay some fees. But, these are lower at 0.30 to 0.50% per year.
As CrowdStreet has been operating since 2014, it is one of the most well established and popular real estate crowdfunding platforms. CrowdStreet vets all developers and performs reference and background checks. You can select individual properties and directly interact with project sponsors.
The minimum investment depends on the project, but most projects require a minimum investment of $25,000. So, it is best suited to more risk tolerant investors.