Real estate is one asset that can be a great addition if you're looking for diversification in your investment portfolio. It could prove to be a valuable alternative investment alongside stocks and bonds. But unfortunately, it can be difficult to invest in real estate projects because it often requires a lot of money to purchase properties. With DiversyFund, however, that's no longer the case.
This real estate crowdfunding platform's goal is to enable the everyday investor to take advantage of the same investment opportunities available to the wealthy — namely, the chance to invest in private market real estate and achieve your personal finance goals.
Here’s how the platform works, who it’s right for, and how prospective investors can get started.
What is DiversyFund?
|Management fees||No platform or management fees|
|Asset classes||Real estate in the form of REITs (real estate investment trust)|
|Account types available||Personal investment accounts, joint accounts, trusts, and certain entity accounts|
|Features||Open to non-accredited investors|
|Distributions||No early withdrawals allowed|
|Best for...||People who want to invest in real estate, but who also may have a small amount of money to start with|
DiversyFund does this by offering real estate crowdfunding. Investors can buy into real estate investment trusts, which pool capital and use the money to purchase or finance the purchase of commercial real estate. Specifically, the DiversyFund growth REIT invests in apartment buildings that generate cash flow and that have a high potential to appreciate or see their value rise.
After its founding, DiversyFund became SEC qualified. That means its fund undergoes annual audits to ensure it is compliant with regulations set by the U.S. Securities and Exchange Commission. To maintain its SEC qualifications, DiversyFund must also regularly file financial documents. These documents help investors better understand what DiversyFund does with investor money.
DiversyFund, which is headquartered in San Diego, California, has more than 10,000 investors and more than 100,000 accounts. It purchased four multifamily properties in 2020 and has another two apartment complexes in escrow. It also has plans to expand and grow, opening the door to more investors interested in how to invest in real estate with limited capital.
How does DiversyFund work?
DiversyFund is one of the best investment apps for individuals looking to invest in commercial real estate because it doesn't require a large minimum investment. In fact, with just $500, you can buy into its crowdfunded REITs and invest in multifamily commercial property.
When you invest with DiversyFund:
- The money you contribute is pooled with contributions from other investors so DiversyFund can raise capital to buy commercial properties.
- DiversyFund uses pooled money to buy properties that meet strict criteria and have the potential to gain value before they are resold. They only buy apartment buildings that are 100 units or larger, and it aims to buy properties that can be resold for a profit in about five years. The goal is to generate between a 10% and 20% return for each property.
- After purchasing properties, they are renovated in order to increase both the amount of rent that can be collected and to help ensure the property value rises quickly. After properties are renovated, time is allotted for them to increase in value.
- Properties are then sold, and any profits made from their sale are distributed to investors. This is when you get back your money, and ideally, a generous return on your investment.
DiversyFund provides investors with a 7% preferred return. That means that when investments make a profit, 100% of the gains go to investors up to the first 7% before DiversyFund receives a share of the profit.
Who can use DiversyFund?
To be eligible to invest in real estate with DiversyFund:
- You must be a U.S. resident
- You must be over the age of 18
- You must be willing to make an investment of at least $500
Because Diversyfund is not a private REIT it is available to more people than just institutional investors. You don't need a high net worth to invest with DiversyFund. However, because real estate is not a liquid asset that can be quickly and easily bought and sold. In fact, these investments are considered to be illiquid and you must be willing to leave your money invested for around five years.
DiversyFund does collect rent on the properties your money is invested in and will make distributions to investors — however, your dividends are automatically reinvested to finance renovations and purchase new assets. In other words, you won’t get your money back (or your share of any profits) until the end of the fund's term when the assets in the REITs are sold.
How much can you earn with DiversyFund?
With DiversyFund, you earn money only if the properties that your fund invested in appreciate in value and can be sold at a profit.
DiversyFund has indicated that the goal is to generate between a 10% and 20% return for any of the properties it buys — which can be a fairly generous return on your investment considering the S&P 500 (an index of the 500 largest financial companies that's widely considered to be a barometer of the U.S. stock market) earns around a 9% to 10% average annual return.
Remember, though, you will not get your return on investment until the end of the fund’s term. You're essentially locking up your cash for around five years and can't get out of your investment as you could if you invested in the stock market.
Maximizing your earnings with DiversyFund
The best way to potentially maximize your earnings with DiversyFund is to make a larger investment. Although you can get started with as little as $500, the average investment is $2,500.
You can set up automatic recurring investments and regularly transfer money to DiversyFund and allow your money to grow on autopilot. You also have the option to roll over old employer-sponsored 401(k) accounts or traditional IRAs into a self-directed IRA that you can invest with DiversyFund. It will connect you with a custodian to manage your account, and a member of the investment team can walk you through the process.
Is DiversyFund legit?
Investments carry risk, including the REITs that DiversyFund allows you to invest in. The best way to minimize your risk of losing money is to ensure you're as educated as possible about what you're investing in.
Take the time to consider the risks and rewards of buying into a REIT that invests in multifamily commercial real estate before you invest. And make sure your investment with DiversyFund is part of a well-balanced portfolio that gives you exposure to other asset classes, such as stocks and bonds.
Common questions about DiversyFund
Is DiversyFund a good investment?
DiversyFund is SEC qualified, which means it needs to make its financial information public and it complies with SEC regulations. It also offers the opportunity to invest in commercial real estate, which can help you diversify your portfolio.
The best way to tell whether the funds DiversyFund offers could be a good investment is to review their past performance and see if DiversyFund delivers on the 10% to 20% returns its funds are targeting. If it consistently achieves this rate of return, it may be a good investment, even if it requires you to tie up your money for five years. Always do your due diligence when choosing investment options.
How does DiversyFund make money?
DiversyFund covers operational costs as a developer, and it receives some of the profits when a REIT is liquidated.
Which is better, DiversyFund or Fundrise?
DiversyFund and Fundrise are both real estate platforms, and they both have pros and cons. Fundrise charges an investment advisory fee, whereas DiversyFund doesn't charge platform fees. However, FundRise offers a wider selection of investment choices. Fundrise also offers the option to redeem shares early (albeit with some costs), but DiversyFund doesn't.
Ultimately, whether one is better for you depends on your financial goals and needs. If you prefer more flexibility but with added platform fees, Fundrise could be a better choice. If you like DiversyFund's model of investing, renovating, and re-selling properties, it could be the right option.
You can compare DiversyFund vs. Fundrise directly, feature by feature, and see which is the better fit for your investment goals.
Does DiversyFund pay dividends?
Dividends are generated monthly with DiversyFund, but they are automatically reinvested on your behalf.
How to sign up for DiversyFund
If you're interested in using DiversyFund to help you build wealth, you'll begin the signup process by visiting DiversyFund.com and clicking "Get Started."
You'll be able to create an account for free, either by completing the form on the website or by using your LinkedIn, Facebook, or Google profile. If you're not linking an existing account, you'll need to provide information including:
- Your full name
- Your phone number
- Your zip code
- Your email address
- A referral code (if someone referred you)
You’ll receive a verification email that you need to click on in order to complete the signup process. After you've received it and confirmed, click "Invest Now."
You'll then need to provide your full address, your date of birth, your Social Security number, and funding information for your bank account. You'll also need to sign the site's disclosures and agreements.
Once you do that and specify the amount you want to invest, you gain access to fully-vetted investment opportunities in DiversyFund's growth REITs.
If you need help, you'll also have access to a team of investment professionals.
Other real estate investment platforms to consider
Learning how to invest your money can be the ideal side hustle if you're considering how to make extra cash. But there are risks to investing, including losses. You can minimize these risks by diversifying, or purchasing a wide range of different assets. For this reason, some people choose to invest in real estate development.
DiversyFund is a great option for those that want to learn how to invest in real estate without much cash, but it's not the only option. In fact, there are other online real estate investing apps worth considering, including:
- Fundrise: Fundrise is a good option for beginners that provides some additional liquidity compared to DiversyFund. However, it comes with management fees that DiversyFund doesn't charge.
- Crowdstreet: You need to be an accredited investor to use Crowdstreet. This option is better for more experienced real estate investors who have more money to invest and who want to add multiple property types to their portfolio.