DiversyFund Review 2023: Is This Real Estate Investment Site Worth Your Time?
Written by
Katy Hebebrand
Edited by
Amber Barkley
Commitment to Our Readers
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GOBankingRates Score
-
Cost
4.0
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Risk
3.0
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Accessibility
5.0
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Transparency
5.0
Pros
- Invest in real estate with as little as $500
- Income generated by value adds as well as appreciation
- DiversyFund offers a knowledge base so you can make educated decisions
Cons
- Funds for non-accredited investors are not always available
- Yield could be potentially lower than investing in the stock market
- Funds can't be withdrawn before five-year investment term ends
What Is DiversyFund?
Traditional real estate investments are limited to people with significant financial resources. But even if you have the money to invest, you may not have the time to flip or manage properties.
With DiversyFund, many investors pool money together for a portfolio of properties. Your investment goes toward real estate investment trusts that invest in multifamily buildings, typically with at least 100 units, located within the United States.
The DiversyFund team sets an anticipated rate of return between 10-20% for each complex. You can anticipate seeing a return on your investment over the course of a five-to-seven-year profit cycle.
How Do DiversyFund Investments Work?
Businesses like DiversyFund that use the REIT model for investments must follow strict guidelines set by the Securities and Exchange Commission. REITs must pay out 90% of their taxable income to investors annually. The payouts come in the form of dividends. To acquire these profits, DiversyFund follows a five-step process for all of its properties:
Raising Capital
DiversyFund collects the amount of money needed to purchase properties. Qualified investors may be able to choose the property for your investment.
Property Acquisition
The DiversyFund team identifies properties that have the potential to turn a profit. Investment properties must meet certain outlined criteria that indicate the potential for an increase in value.
Renovating the Property
DiversyFund pays for upgrades and repairs that improve the properties. The goal is to offer enough value to increase the cost of rent for each unit.
Increase in Value
It may take time for the overall property values to go up after the renovation process is complete. During this time, the properties generate cash from rent. DiversyFund investors earn dividends each month. However, the money is automatically reinvested back into the REIT until the end of the investment period.
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Turning a Profit
DiversyFund sells the properties and distributes profits to the investors. At that point, you can withdraw your funds or allow your investment to stay with DiversyFund for another five-to-seven-year period.
DiversyFund Features
When you’re ready to invest, the DiversyFund site walks you through the registration process. DiversyFund‘s Growth REIT funds for non-accredited investors have no investment opportunities available as of Feb. 23. However, there is one opportunity for accredited investors.
Investing Goals
First, the site asks about your reason for investing. Answers include:
- Desire to invest in real estate
- Wanting to diversify your portfolio
- Saving for retirement
- Not sure
After selecting your choice, you provide your email address and a password to create an account.
Learning Center
DiversyFund offers a blog microsite with topics from investment basics for beginners to more advanced topics for seasoned investors.
Transparency
Since DiversyFund is registered with the SEC, you can access annual audits and all of DiversyFund’s filings with the SEC at any time.
Best for Seasoned Investors
Investing in real estate through a REIT may not be for you if:
- You’re new to investing
- You’re looking to make money fast
- You can’t commit long term
As an investor, you understand that you are taking a risk with your money. Experts believe that REITs can be less stable than more traditional stock market investing.
While REITs are a great way to diversify your investment portfolio, don’t put all of your money in real estate, as the market is prone to volatility, and diversifying your portfolio is the only way to protect against that volatility.
Alternative Real Estate Investment Options
If you’re interested in comparing real estate investment options, take a look at DiversyFund’s top three competitors to see how they stack up:
| Option | Minimum Investment | Management Fees | Who Can Invest? |
|---|---|---|---|
| DiversyFund | $500 | – 2% – Offering and organization expense reimbursement fees might apply and are capped at 10% per year |
Anyone |
| CrowdStreet | $25,000 | – Varies by investment | Accredited Investors |
| YieldStreet | $5,000 | – 0% to 2.5% maximum – Fees disclosed on the individual offering page |
Anyone for YieldStreet Prism Fund; must be accredited for single-class asset offerings |
| Fundrise | $10 | – 0.15% annual advisory fees – 0.85% annual management fees |
Anyone |
Is DiversyFund Right for You?
If you’re interested in a passive investment option, DiversyFund may be right for you. However, you have to be open to accepting some risk since your investment return is tied to the overall performance of the real estate market. And unlike publicly traded REITS with shares you can sell whenever you want, DiversyFund’s products are private REITs that can’t be liquidated before the five to seven years are up.
DiversyFund FAQ
Here are the answers to some of the most frequently asked questions about DiversyFund.- How do you manage taxes on your earnings?
- DiversyFund reports earnings on a monthly basis. You receive a 1099-DIV each year to file with your taxes. Once DiversyFund sells a property, your 1099-DIV will report the capital gains.
- Can you withdraw money early?
- No. Once you commit money, it is tied to an investment property for a minimum of five years. After the investment period ends, you can choose to withdraw your money or reinvest.
- Is the investment insured by the FDIC?
- No. Risk is inherent with investments. The FDIC only insures deposit accounts.
- What does the average investor earn with DiversyFund?
- DiversyFund doesn't disclose average earnings. However, in a December 2022 press release announcing the first cash dividend distribution for the DF Growth REIT I for accredited investors, the company noted the fund produced an annualized return of about 6.1%. REITs similar to DiversyFund's Growth REIT average 11.2% annualized, according to the company's website.
Daria Uhlig contributed to the reporting for this article.
Information is accurate as of Feb. 23, 2023.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
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- Business Insider. 2020. "Stocks vs. Real Estate: Which Investment Is Right for You?"
- Forbes. 2020. "How To Invest In Real Estate."
- Investor.gov. "Real Estate Investment Trusts (REITs)."
