The two most profitable forms of investing are the stock market and real estate.
While investing in the stock market has always been accessible to the average American, investing in real estate has not. The vast majority of Americans simply don’t have the funds or expertise to purchase and manage rental properties, let alone commercial or multi-family properties.
However, real estate has recently become more accessible to everyday investors with real estate crowdfunding. These companies allow individuals access to a portfolio of properties with a much smaller investment.
The following DiversyFund review will detail what the company is, its product, what makes DiversyFund different from other crowdfunding companies, and who should consider investing.
What is DiversyFund?
DiversyFund came on the scene in 2016 but was originally focused on other areas while awaiting SEC (U.S. Securities and Exchange Commission) approval to work with non-accredited investors. They were qualified by the SEC to open up alternative investment opportunities to everyday people with a lower minimum investment of $2,500 in late 2018. In June 2019, DiversyFund received SEC qualification to lower their minimum investment to $500.
Although more recently qualified by the SEC, the groundwork for DiversyFund began in 2015, shortly after the passing of an amendment to the JOBS Act. This amendment made it possible for companies to offer investment opportunities to every day, non-accredited investors.
Although their current product offering is a REIT (Real Estate Investment Trust), DiversyFund is actually a financial tech start-up.
Their mission is to open up alternative investment opportunities to everyone by giving the average American access to investments that were previously only available to the wealthy.
DiversyFund is passionate about reducing the wealth gap and providing everyday people the chance to build wealth, and especially giving investment opportunity access to people of color and women.
What is a REIT?
A REIT, or real estate investment trust, is a product or company that owns or finances income-producing real estate.
There are several types of REITs, but the two main types are public and private. Public REITs are typically traded on the major stock exchanges while private REITs are not. Private REITs are also not subject to SEC regulations.
In the past, private equity real estate has only been available to the wealthy, or what are known as accredited investors. An accredited investor is one with an income of at least $200k (jointly $300k) or a net worth of $1,000,000 excluding their residence.
With these requirements, only a small percentage of Americans were able to access private REITs. However, crowdfunding sites have recently made real estate investing more accessible to the average American.
The DiversyFund Growth REIT
DiversyFund currently offers the DiversyFund Growth REIT for everyday investors.
This is a private REIT, but unlike most others, it IS regulated by the SEC. SEC regulation means that DiversyFund is bound to follow certain guidelines including disclosure and sharing of market-related information, fair dealing, and protecting investors against fraud. In other words, SEC regulation means DiversyFund is regularly checked on to ensure they are doing what’s best for their investors.
The REIT consists of a portfolio of multifamily apartment properties, each with at least 200 units. In addition to the size, properties in the portfolio also require work in some way. These are not run-down properties, but the goal is to increase the value of the property through upgrades as well as appreciation.
Additionally, DiversyFund looks for properties across the country in places where the job market is strong and growing. Properties must also be cash-flowing (already making money) to meet DiversyFund criteria.
The REIT is set up on a five-year timeline, meaning once properties are acquired the goal is to renovate and hold them for a period of five years, then sell for a profit.
Individuals can invest in the REIT for as little as $500 but will need to leave their money invested and growing for the five-year timeline. It is also possible to start with an initial investment of at least $500, then to add money to the investment over time. However, all investments will mature at the same time.
Although dividends will be reinvested over the five years, investors will be able to track the growth of their money on a monthly basis through DiversyFund’s investor portal.
While DiversyFund cannot provide their projected returns because of SEC regulations, the portfolio has pulled in between 17 and 18% a year since inception.
Although the five-year commitment may be a drawback for some individuals, the best part about the REIT fund is that investors pay no fees. None.
This is only possible because DiversyFund finds, owns, and manages all the properties in-house, cutting out the middleman and allowing them to partially fund their operations through the cash flow of the properties.
For Accredited Investors
While DiversyFund’s main focus is on giving average Americans access to alternative investments, we’d be remiss if we didn’t mention that they also offer something for accredited investors.
There are a few select funds available, as well as the DiversyFund Growth REIT.
For more information, you can email customer relations or schedule a call with the DiversyFund team.
What Makes DiversyFund Different?
It is becoming easier for everyday individuals to become investors, and for less money. With so many options out there, it can be difficult to know where you should invest your hard-earned money.
While there are other real estate crowdfunding companies out there, DiversyFund offers a different, and for many, a better option.
As previously mentioned, DiversyFund is a financial tech company, and although their current investing option is real estate, they plan to add more alternative investments as they go. However, no matter what options become available, the goal of DiversyFund will always be to open up investing options to everyday Americans.
Another way in which DiversyFund is different than its competitors is in the product they offer.
The DiversyFund Growth REIT, regulated by the SEC, allows anyone to begin investing in multi-family real estate for $500. This option allows non-accredited individuals access to properties that would require an investment of at least $3 million in cash to get in the game otherwise.
Aside from the lower cost to invest, DiversyFund is also different from their competitors in that they charge no fees, platform or management, to their investors. They accomplish this through vertical integration, cutting out the middleman by handling every step of the investment process internally.
There isn’t currently another crowdfunding company that doesn’t charge fees, nor is there a stock market investment option that doesn’t charge some form of fees.
How Does DiversyFund Protect My Investment?
Any investment carries risk, and it’s important to do due diligence before deciding to invest in any venture.
However, the DiversyFund Growth REIT provides a relatively safe investment in a number of ways.
First, SEC regulation means that the company is subject to follow its rules and regulations. It also means someone is monitoring the company and looking out for investors.
Another way DiversyFund protects your investment is by spreading out the risk over several properties located in different markets. Thus, while one or two properties may not provide a good return, it is next to impossible that all the properties will return a loss.
Finally, the DiversyFund Growth REIT is designed in such a way that DiversyFund will only make money when investors do. Because DiversyFund manages everything in-house, they are subject to even more risk than investors and thus are motivated to pick the best investment properties and manage them well.
If investors are losing money, that means the company is losing money and they will do everything in their power to ensure that doesn’t happen.
Who Should Invest?
With all the information that’s been presented, is DiversyFund a good idea and who should invest?
Again, each individual must do their own due diligence and check out investment opportunities for themselves. It’s also important to understand the level of risk involved and your comfort with that level of risk.
Having said that, we feel the DiversyFund Growth REIT is a great low-cost option for dipping your toes into real estate investing and diversifying your overall investment portfolio.
With a minimum investment requirement of $500, this option is accessible to most Americans and also presents a relatively low-risk investment. While you will not get rich with a $500 investment, you certainly shouldn’t lose money.
Thus, those who should consider investing with DiversyFund are those that are looking to begin investing in real estate, those who are risk-averse and looking for a relatively safe option, and those looking to diversify their investment portfolio.
DiversyFund may also be a good option for those just learning about investing. This is a longer-term investment (5 years) designed to allow your money to compound and to show investors the value of leaving their money in the game and letting it grow.
With a low entry cost, relatively safe investments, and a forced waiting period of at least five years, new investors have the opportunity to learn about real estate and compound interest with little cost and little risk for their money.
Thus, if you’re interested in real estate investing but have little money to invest and are able to let your money sit and grow for five years, the DiversyFund Growth REIT is worth a look.
Moral of the Story
The last few years have seen a boom in different investment companies and opportunities targeted at beginning investors.
One of those booming industries has been real estate crowdfunding, which offers individuals an opportunity to invest in a real estate investment trust portfolio.
DiversyFund is one such company that grants everyday individuals access to multi-million-dollar real estate, and for the low cost of $500.
However, DiveryFund is much more than a crowdfunding company. As a financial tech company, their goal is to eventually open up alternative investment opportunities to everyday Americans, and not just with real estate.
Their current product, the DiversyFund Growth REIT, is a portfolio of 200+ unit apartment complexes in need of updates. The goal of the portfolio is to find cash-flowing properties, complete updates, and then sell the properties for a large profit after five years of appreciation.
This private REIT is SEC-regulated and charges no fees. All you need is your initial investment to get in the game.
This low-cost and relatively low-risk fund makes DiversyFund a great option for beginning investors looking to get into real estate or to diversify their portfolio with real estate.
And with historical returns between 17 and 18%, there’s really no reason not to give DiversyFund a look.
Sign up here and get started with real estate investing today!
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Tawnya is an elementary special education teacher by day and co-blogger at Money Saved is Money Earned by night.
She holds an Honors BS in Psychology from Oregon State University and an MS in Special Education from Portland State University. She has had a pretty successful writing career, first as a writing tutor at the Oregon State University Writing Center, and in recent years, as a freelance writer.
Tawnya and co-blogger Sebastian have a wealth of knowledge and information about personal finance, retirement, student loans, credit cards, and many other financial topics. They teach people how to save money, make money, and understand money.