DiversyFund vs. Fundrise: Which Way Should You Buy Real Estate?

When comparing DiversyFund vs. Fundrise, you’ll find that one is the clear winner for investors who also want access to sophisticated investment options.
Last updated Nov 11, 2020 | By Lee Huffman
DiversyFund vs. Fundrise

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Investing in real estate doesn't always require a large sum of money or taking out a loan. Real estate investing platforms like DiversyFund and Fundrise enable people to get into real estate even with $1,000 or less.

These passive income tools can provide a great way to buy into real estate without a major investment or the hassle of managing a rental property. In this article, we'll compare the pros and cons of investing with DiversyFund vs. Fundrise so you can decide which one is right for you.

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DiversyFund vs. Fundrise

DiversyFund and Fundrise are part of the growing ecosphere of crowdfunded real estate platforms. These platforms seek to democratize real estate investing by offering the average investor the ability to open an account with low minimum investments.

Although DiversyFund and Fundrise have a lot of similarities, there are distinct differences as well. This table helps to compare the two companies.

DiversyFund Fundrise
Minimum investment $500 $500
Management fees
  • None
  • 2% to 8% developer fee on each project
  • .15% annual advisory fee
  • .85% annual management fee
Asset classes
  • Multifamily real estate
  • Commercial real estate
  • Residential real estate
  • Private equity
Account types available
  • Individual account
  • Joint account
  • Trust account
  • Entity account
  • Individual account
  • Joint account
  • Entity account
  • Trust account
  • Individual retirement account
Features
  • Invest in a single portfolio of apartment buildings
  • Online education and webinars
  • Varies based on your account level
Holding period
  • At least five years
  • At least five years
Withdrawals allowed
  • Not allowed
  • Yes, during the 90-day introduction period.
  • Investors may request withdrawals, but they are not guaranteed.
  • Withdrawals before five years may be subject to a penalty.
Who can invest?
  • U.S. citizens
  • U.S. residents
  • Visa with valid Social Security number
  • Valid U.S. entities operated by non-U.S. residents Investors must be 18 or older.
  • U.S. citizens
  • U.S. permanent residents Investors must be 18 or older.
Accredited Investor required? No No
Best for... Long-term investors who want to invest in real estate without conducting individual property research. Long-term investors who want the option to invest in advanced real estate strategies.

DiversyFund: What it is and how it works

DiversyFund is a real estate investing platform that invests in apartment buildings of 100 or more units. The company's growth real estate investment trust (REIT) acquires undervalued multifamily apartment buildings that are already generating income. These properties typically need improvements to increase their cash flow. As the rental income increases, the building's value increases as well. The value of commercial properties like office buildings and apartment complexes rise as rents and profits are increased.

Income from these properties is reinvested monthly to finance improvements until the asset is sold. When properties are sold, the accumulated dividends and capital appreciation are distributed to investors. At that time, you can cash out or reinvest with DiversyFund.

You do not need to be an accredited investor to invest with DiversyFund, and the platform is open to U.S. citizens and residents. Additionally, people with a visa and valid Social Security number, those with an Individual Taxpayer Identification number (ITIN), and valid U.S. entities operated by non-U.S. residents may open accounts. You must be at least 18 years old to invest with DiversyFund. Minors are not allowed to open an account, however they can be designated as a beneficiary.

The DiversyFund website offers a limited number of help topics for potential and current investors. As you search through the site, you may sometimes find yourself in a loop without finding the information you're searching for. If you have questions or need help with your account, you can also contact DiversyFund via chat or by email at hello@diversyfund.com. You can also call DiversyFund directly at 858-430-8528.

To get started with DiversyFund, you’ll need to provide an email and password as well as have your personal information on hand like your Social Security number or ITIN.

You will also choose the amount of your investment. There is a minimum investment of $500 and a maximum of $1 million. According to DiversyFund, the average investment is $1,500. You can choose to invest once or set up a recurring investment. If you're not ready to set up a recurring investment at the time of signup, you can create one later.

Read our DiversyFund review for more information.

DiversyFund Pros

  • Start investing with as little as $500
  • Simple investing platform that offers a hands-off solution
  • No annual management fees

DiversyFund Cons

  • No withdrawals allowed
  • Investors cannot choose investments
  • Retirement accounts not available

Fundrise: what it is and how it works

Fundrise offers three distinct options for investors based on the size of their investment and sophistication. When you invest with Fundrise, your funds are put into diversified investments known as eREITs and eFunds, both of which are professionally managed portfolios.

Fundrise investments include single-family residences, apartment buildings, commercial properties, and private equity funds. As you upgrade your account, you'll gain access to a wider variety of real estate investment options.

There are three primary account tiers: Core, Advanced, and Premium.

  • Core ($1,000 minimum): Allows you to invest in a diversified real estate portfolio with a small minimum investment. You can choose from three portfolio options — supplemental income, balanced investing, or long-term growth.
  • Advanced ($10,000 minimum): Gives investors access to Plus plans and the ability to allocate directly to specific funds. Plus plans allocate a portion of your portfolio to "more sophisticated real estate strategies that evolve over time."
  • Premium ($100,000 minimum): Investors may invest in specialized private equity funds. These investments are illiquid and carry more risk but have the potential for outsized performance.

Fundrise also offers a Starter plan that introduces new investors to the platform and real estate investing. You can open this account with just $500. In the Starter portfolio, your money is evenly split between the Income and Growth portfolio options available to Core investors. Once you've invested at least $1,000, you can upgrade to a Core plan at no cost and have more control over how your money is invested.

Investing with Fundrise is open to any U.S. citizen or permanent resident currently residing in the U.S. However, you must be 18 years or older. Accounts may be opened by an individual, jointly, in a trust, or in an IRA. Additionally, businesses and other entities may open a Fundrise account. Fundrise does not currently support investments through a self-directed 401(k) or a custodial account on behalf of a minor.

Fundrise investors do not have to be accredited for its Core and Advanced portfolio options. However, you must be an accredited investor to invest in the Premium portfolio option. To be an accredited investor, you must meet certain income or net worth requirements. The first criteria is if you have earned at least $200,000 ($300,000 for joint income) in each of the past two years. The second option is to have a net worth (excluding primary residence) of at least $1 million.

The Fundrise website offers an extensive catalog of support articles. This made it easier to find answers to the questions I had while reviewing its services. If you have further questions, you can also submit them through its contact form or by emailing support@fundrise.com.

To get started with Fundrise, you’ll need to provide an email and personal information. You’ll also need to indicate your investment experience and choose your goal for investing with Fundrise. You’ll then be asked your time horizon for your investments and how much you plan to invest with Fundrise each year.

Based on the answers you provide, you'll receive a suggested account level from Fundrise. However, you can change your selection if you’d like to upgrade or downgrade.

Read our Fundrise review for more information.

Fundrise Pros

  • Three levels of accounts based on account size and sophistication
  • IRA accounts available
  • Longer track record of performance

Fundrise Cons

  • Advanced features require $10,000+ investment
  • Early withdrawal penalty applies
  • Annual fees of 1%

3 important differences between DiversyFund and Fundrise

DiversyFund and Fundrise have many similarities, but there are three important differences that you should know about when deciding between the two platforms.

1. Features

DiversyFund is a straightforward real estate investing platform. No matter the size of your investment balance, you'll receive the same set of features and be able to invest in the same real estate assets. Investors can track their account online or through a mobile app.

Fundrise provides investors with more options as their account balance grows. With three account levels to choose from, Fundrise can be an attractive option for a broad spectrum of investors. The in-app news feed keeps investors up to date on individual investments as well as new assets added to the portfolio.

If you’re looking for a simple real estate investment where you won’t be inundated with choices of how and where to invest, then DiversyFund will be better for you. If you’re looking for a real estate investing platform that provides more options and more sophisticated investment opportunities, then Fundrise will be better for you.

DiversyFund Benefits

  • Co-own A Portfolio of Cash Flowing Assets In 5 Minutes
  • Create your free account
  • No fees
  • All in one platform with no middle man

2. Fees

DiversyFund does not charge annual advisory or maintenance fees. It charges a one-time development fee of 2% to 8% of the total project cost to manage the acquisition and development of each project.

Fundrise charges total fees of 1% per year. These fees consist of .15% in annual advisory fees and .85% in annual management fees. Additionally, if you request a withdrawal during the first five years, you will pay a penalty up to 3%.

If you would rather invest with a company where you pay just a one-time fee based on the cost of the project, then DiversyFund will be better for you. If you prefer a more traditional fee-structure approach to an investing portfolio, then Fundrise might be a better fit.

Fundrise Benefits

  • Build a portfolio investing in real estate without being a landlord
  • Invest in million-dollar deals without writing million dollar checks
  • Lowest-ever $500 minimum investment plus special offers

3. Types of investments

DiversyFund specializes in apartment buildings. It seeks out apartment complexes that have at least 100 units that are underperforming with occupancy and rents. After acquisition, DiversyFund upgrades the buildings to attract more tenants and increase the rent prices. The combination of these two factors greatly increases the revenue it generates for that property.

Fundrise invests in a broad selection of real estate properties. Its website highlights a variety of commercial buildings, apartment complexes, and single-family homes. Additionally, clients who reach the Premium account level with $100,000 or more invested have access to private equity funds for more exotic and sophisticated real estate investments.

If you want a simple portfolio that is focused on one type of investment property, DiversyFund will be better for you. If you want to invest in a variety of real estate properties and have access to more advanced strategies, then Fundrise will be the better investment platform for you.

DiversyFund vs. Fundrise: which should you choose?

If you are investing money and choosing between DiversyFund vs. Fundrise, you should keep in mind that Fundrise is the option with a track record of success and more established systems in place.

You can start with either company with an initial investment of just $500. However, Fundrise is the only one that provides investors access to more advanced strategies and investments as their balances grow. At the introductory level, Fundrise also beats DiversyFund because investors can choose between income, growth, or a balanced focus. DiversyFund does not provide these options. All investors are investing in the same assets, regardless of balance or sophistication.

Fundrise invests in a variety of commercial and residential real estate projects. For investors who prefer a singular focus on apartment buildings, then DiversyFund is a solid choice.

FAQs about DiversyFund vs. Fundrise

Can you really make money with Fundrise?

Yes, investors can make money with Fundrise through regular dividends payments and through capital appreciation when properties are sold.

Is DiversyFund a good investment?

DiversyFund can be a good investment for the right investor. Investors should have a long-term horizon of five years or more because there are no withdrawals allowed. Investors can invest in apartment buildings through DiversyFund for as little as $500.

How do I get money out of Fundrise?

You can get money out of Fundrise by logging into your account and requesting a withdrawal. Shares held less than five years may be subject to a penalty. Redemptions may be limited and may not be approved right away. Because of this, you should consider only investing money that you can invest for the long-term.

What is the average return on DiversyFund?

According to DiversyFund, the Growth REIT was launched in 2018 and is "still in the ramping up phase of acquiring properties." Investment returns are lower initially due to acquisition, construction, and leasing costs for these properties.

In 2019, Growth REIT investors saw a 5% dividend yield. This does not factor in the appreciation of assets that happens over time. Investor returns include accumulated dividends and capital appreciation that is realized at the time of sale. Investors can use DiversyFund's portfolio to see the forecasted internal rate of return (IRR) of individual real estate deals to get a better idea of long-term expectations.

What is the average return on Fundrise?

Fundrise’s current annualized dividend yield is 3.09%, which is comparable to the Vanguard Real Estate ETF's dividend yield of 3.11%. As of November 2020, it has 215 active projects and 75 that have been completed. You can view these projects on the Fundrise website. It's most recent average annualized returns for 2019 were 9.47%.

Does DiversyFund or Fundrise pay dividends?

Dividends are the share of the income that is returned to investors. Both DiversyFund and Fundrise provide dividends to investors. DiversyFund automatically reinvests all dividends into its investments until a property is liquidated. Fundrise makes quarterly dividend payments to investors in cash. Fundrise investors may elect to automatically reinvest their dividends through its dividend reinvestment program.


The bottom line on DiversyFund vs. Fundrise

With the rise of technology, aspiring real estate investors can now more easily diversify their portfolio without a large investment and without taking on debt. You can even invest in real estate without buying property. Real estate can now be a part of just about anybody's personal finance plan and long-term investment strategy. We have real estate crowdfunding platforms and REITs to thank for this.

As with the stock market, REITs carry investment risk and the potential for loss, so you should always do your due diligence before deciding where to put your money. But online real estate investing platforms like DiversyFund and Fundrise can help take the hassle out of investing through their technology and professional management expertise. Investors can invest in a diversified portfolio of real estate on either platform for as little as $500.

If you’re looking to build wealth and you're investigating how to invest in real estate, it could be worth your time to get to know both these platforms and decide if one of them might be a good component to your investment portfolio.

Fundrise Benefits

  • Build a portfolio investing in real estate without being a landlord
  • Invest in million-dollar deals without writing million dollar checks
  • Lowest-ever $500 minimum investment plus special offers