DiversyFund Review

DiversyFund lets you invest in real estate with $500. But how does it work? Find out the pros and cons, and if it's better than Fundrise.

	Overall Score	3.6
	Minimum Deposit	5.0
	Commissions and Fees	5.0
	Customer Service	3.0
	Ease of Use	4.0
	Liquidity	1.0

5-point scale (the higher, the better)

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Pros and Cons

• Only $500 to start
• No platform fees
• No income requirements

• No early withdrawals
• 5 year investment
• Cannot cash out dividends

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Bottom Line

Good real estate investing platform if you don't mind a long investment

Think you don't have enough to invest in real estate?

With DiversyFund, you can invest in multi-unit properties for just $500. Plus, zero management fees.

But is it a legitimate company? And what are their average returns?

Find out if DiversyFund is worth investing in with this review, including fees, returns, pros, cons, and more.

• What Is DiversyFund?
  
• How DiversyFund Works
  
• Pros & Cons
  
• Pricing & Fees
  
• DiversyFund Returns
  
• How DiversyFund Chooses Projects
  
• Is DiversyFund a Good Investment?
  
• Downsides
  
• How to Invest with DiversyFund
  
• Alternatives

What Is DiversyFund?

DiversyFund is a real estate crowdfunding platform founded in 2016. Based in San Diego, they focus on large, multi-unit properties like apartment complexes and condos - one of the safest types of real estate for stable growth.

DiversyFund looks for properties that can generate 10-20% over a five-year investment.

The minimum investment is just $500 and, unlike many similar platforms, it's open to unaccredited investors.

Their main offering is the DiversyFund Growth REIT. This is a public, non-traded REIT that owns and manages all its own properties. DiversyFund directly owns all their real estate projects. This allows them to charge no management fees to investors.

How DiversyFund Works

DiversyFund currently offers properties in Texas, California, North Carolina, Utah, and Florida. Here's their process:^[1]

1. DiversyFund's Growth REIT buys multi-unit properties, like apartment buildings, that are already generating revenue from rent but need improvements.

2. The properties are then renovated so they have a higher value and can be rented at higher prices.

3. Finally, the properties are held for another five years so the value continues to appreciate.

4. Then, they're sold at a maximum profit.

5. Investors are paid in two ways: in monthly dividends from rent (which are automatically re-invested) and and when the property is sold at the end of the investment period.

Investors are protected by a 7% preferred return. This means they get a return of 7% before DiversyFund gets any share of the profits.

DiversyFund Pros & Cons

Not sure if DiversyFund is right for your portfolio? Review these pros and cons for the quick takeaway.

PROS:

• Completely passive investing of real estate
  
• Only $500 minimum to start
  
• No platform fees or commissions
  
• Don't have to be an accredited investor
  
• Historically high annualized returns
  
• Investments in reliable sector of apartments
  
• Invests in cash flow positive properties

CONS:

• Lack of diversity in location
  
• At least a 5-year investment
  
• Return on investment takes some time
  
• No early withdrawals

Pricing & Fees

There are no management fees and no fees to buy in or exit an investment.^[3] You pay no additional amounts beyond your investment.

So how can they afford to charge no fees?

DiversyFund directly owns all their projects. They're the sponsor, manager, and developer. By acting as the only player, this allows them to offer a REIT for no management fees to investors.

However, DiversyFund still needs to make money. Instead of charging investors platform fees, they take up to 8% in fees from the REIT for their operations.

DiversyFund Returns

DiversyFund is still fairly new, having just been established in 2016. They have already seen a strong performance of double-digit returns since their founding. The returns for the past years have been:^[5]

• 18% average annualized returns in 2017
  
• 17.3% average annualized returns in 2018

These returns are very high compared to other investments, including stocks. In 2019, investors saw a 5% yield from the dividends alone, not including the appreciation of the property.

Just remember that past results don't guarantee future success. It's important never to invest what you can't afford to lose.

How DiversyFund Chooses Projects

DiversyFund is very selective with their projects. They look for underperforming multi-unit housing projects with the potential to increase the value.^[6]

The main criteria include:

• Location in high-growth metropolitan areas
  
• Projects whose rent and value can be increased with renovations
  
• Projects that can be sold within five years

DiversyFund has a team of real estate professionals who analyze potential growth, trends, market comps, and more to choose the projects.

Because of the focus on multifamily buildings, DiversyFund claims that they can better leverage deals, make industry connections, and maintain high returns potential.

Is DiversyFund a Good Investment?

Considering the relatively low minimum ($500 ) and the solid growth potential, DiversyFund may be a good investment for those looking to get in on real estate.

A positive thing about DiversyFund is that they own all their assets, which means they are more likely to be responsible and proactive. In addition, they invest in apartment complexes, which are historically one of the safest sectors of real estate.

In general, it's smart to diversify your portfolio to include some real estate investments. This way, you have some assets that are not correlated to the stock or bond markets. That provides some protection against the volatility in those markets. Historically, real estate investment returns have outperformed the stock market.

As an investment in an area of real estate that is considered lower risk, DiversyFund's Growth REIT seems to provide some principal protection as well as reliable earnings.

DiversyFund Downsides

Every investment comes with risks and downsides. Review the points below to see if DiversyFund's cons outweigh the pros.

Lack of diversity in location
DiversyFund is expanding their locations, but is still not well diversified. So far, DiversyFund has several apartment complexes in California, Texas, North Carolina, Florida, and Utah.^[7]

Having more diversity lowers your risk, so you're not so heavily invested in one area. For example, if the Texas market fails, your portfolio could be in jeopardy.

At least 5 year investment
DiversyFund holds properties for five years and then disperses profits once the assets have been sold. You can't withdraw your funds before five years.^[8]

Unlike some platforms (like Fundrise), DiversyFund does not have a secondary market where you can sell your shares early.

No dividend payouts
You do receive monthly dividends from rental income, but they're automatically reinvested to take advantage of compounding interest.^[9]

This is fine if you don't mind holding the investment with no returns for 5 years. But if you're also hoping for some monthly dividend payouts, you don't get the choice of opting out of dividend re-investment.

How to Invest with DiversyFund

The DiversyFund Growth REIT is available to any U.S resident over the age of 18. There is no income or accreditation requirement.

Signing up is easy and is done entirely through the company's online platform.^[10]

1. Create an account by providing a few details: name, phone number, email, and zip code. You can also sign up using Facebook or LinkedIn.

   You will need to provide your Social Security number for tax reporting reasons.

2. Fund your account by linking it to your bank account. The minimum investment is $500.

3. Then, browse their properties and choose one that fits your investment goals.

4. Finalize your investment by completing a transaction online or setting up auto-invest.

5. You'll be able to monitor your investment on DiversyFund's dashboard.

That's it. Your account will be funded in about 1-2 business days. You can add additional funds at any time, in increments of $500.^[11]

Your dividends are automatically reinvested. At the end of the investment period, the projects are sold and profits disbursed. You can take a full payout or reinvest it into the next fund.

Alternatives

If you're not sure if DiversyFund is right for you, there are a lot of other real estate crowdfunding platforms. Each one is a little different.

Here are some other popular ones for non-accredited investors.

Fundrise
Fundrise has a more diversified portfolio of projects across the U.S. They acquire all types of projects—from new construction to stabilized apartments to renovations. Your portfolio can include up to 80 different projects.

Fundrise has a few portfolio options, so you can choose the one that best fits your goal. For example, the Supplemental Income Portfolio focuses on rent generation, while the Growth Portfolio focuses more on properties expected to increase in value over time.

Fundrise's minimum investment is $10 and it has no income requirements. They also have a 90-day money-back guarantee. If you're not happy, Fundrise will buy your investment back for the amount you paid.

	Learn More	Visit Site
	DiversyFund	Fundrise
	SPECIAL OFFER Earn Passive Income with Real Estate - Learn More	SPECIAL OFFER Invest in Real Estate with $10+ - Learn More
	Benefits and Features
Annual Fee	$0. No management fees and no commissions	1% management fee
Minimum Deposit	$500	$10
Phone Support	Yes, normal business hours	No
Live Chat Support	Yes	No
Email Support	Yes	Yes
Investment Types	Apartment buildings and condos	Commercial, single family, multi-family, industrial
Accredited Investor Requirements	None	None
Dividends	Automatically reinvested	Choose quarterly payouts or auto reinvest
Investment Period	5+ years	5+ years (with opportunities to liquidate on a quarterly basis)
	Learn More	Visit Site
	Earn Passive Income with Real Estate Become Part-Owner in Apartment Complexes Growth REIT	Invest in Real Estate with $10+ $0 Advisory Fees for 3 Months Starter Plan
		Terms Apply. Offering Circulars

The Bottom Line

DiversyFund has a lot to offer investors, but some downsides to consider as well. If you want to add diversity to your portfolio, DiversyFund is worth considering, especially with only a $500 minimum investment.

DiversyFund allows you to passively invest in real estate without being a full property owner yourself. Adding real estate investments can also offer some protection from volatile market trends.

References