Real estate can be a low-risk, lucrative investment if you have the patience to wait for returns. DiversyFund crowdsources investments from a variety of participants. The company’s founders then use that money to invest in multifamily properties with steady incoming rent payments, renovate them, and pass the returns on to investors.
Most people who go into real estate investing either look for best paying jobs in real estate investment trusts, buy property for themselves and find tenants or use sites like Fundrise, Roofstock or PeerStreet. However, if you want to make money without going though a lot of the work involved in actually keeping and maintaining a property, then you definitely want to look into DiversyFund.
Real estate is one of the best investment vehicles available. But purchasing and managing properties can be time-consuming. There’s also a learning curve that can create a barrier to entry for those who simply want to invest money and earn a return.
A Real Estate Investment Trust (REIT) specializes in the funding part of real estate investing, separating it from the task of doing day-to-day management.
DiversyFund automates the REIT process, pairing everyday investors with real estate opportunities previously only available to the wealthy. The real estate company purchases a pool of properties, many of which are multifamily buildings like apartment complexes. DiversyFund’s experts then renovate those properties to generate a steady stream of income that it can pass on to investors.
Shares are $10 each, so $500 gave me 50 shares in DiversyFund. There are multiple benefits of investing in a REIT, starting with the return that has historically beaten the S&P 500 when it comes to long-term performance.
How does DiversyFund work?
Your first step after signing up for a new account will be to choose how much you want to invest initially.
The chart you’ll see at signup, states that the most popular option is the one requiring a deposit of $15,000 or more, but you can get started with $500 by choosing between Starter Investor or Auto Investor.
I was curious about the difference between Starter Investor and Auto Investor, so I investigated both options. With Starter Investor, you can choose to invest any amount between $500 and $5,000. You’re in control of when money is transferred. With Auto Investor, you’ll turn over investing to the platform to handle, agreeing to transfer $500 initially, then allowing future investments to take place with monthly automatic deposits. The latter option is a faster path to achieving your investment goals.
Just choose which plan you want and input your contact information and Social Security number for tax reporting purposes.
You’ll be asked the type of ownership you’ll have in your investment account. The options are:
For the purposes of this article, I chose individual ownership.
I selected the Auto Investor option at signup, so my next step was to choose how much I wanted to invest both initially and each month. I chose to make a $500 initial investment, which offers an initial return of 12%.
You can up that initial investment in increments of $500, with a maximum initial investment of $1 million.
Once you’re completely signed up, DiversyFund takes you to the dashboard, where you can begin monitoring your investments. The investors take care of buying properties and managing them, passing a percentage of the proceeds on to you and other investors.
Pricing For DiversyFund
DiversyFund charges no fees to investors, taking the money you put toward their projects to create revenue-generating rental properties. The goal is to get proceeds rolling in that the company can then split with us as investors. It’s a win for all parties involved.
But your $500 investments aren’t the only way DiversyFund makes money. According to a presentation the company’s leadership team made to prospective investors, there are two major ways DiversyFund makes money:
- Selling the properties in its portfolio. Purchasing and renovating properties allows them to capture rents, but eventually, they’ll sell those assets, which will bring in revenue.
- Developer fees. By acting as the broker and the developer, DiversyFund can collect developer fees.
This revenue model has DiversyFund projecting it will make between 10 and 100 times the revenue of competitors. DiversyFund estimated it could collect $1.2M in project/developer fees, as well as a future income of $21.2 million on the sale of its acquired assets.
Features Of DiversyFund
You’ll get many benefits from using DiversyFund, including:
No experience required
Unlike many REIT investment opportunities, DiversyFund requires no previous real estate experience or income minimums to participate. Anyone willing to invest $500 or more into the opportunity can get started.
This brings the security and earnings opportunities of real estate to people of all backgrounds, rather than limiting it to a small pool of wealthy, experienced investors.
Every dollar of the money you deposit goes toward your investments, thanks to DiversyFund’s fee-free revenue model. They also ensure you get paid as money starts rolling in.
Currently, participation is priced at $10 a share, which means you’ll have to buy at least 50 shares to make the $500 minimum initial investment.
DiversyFund’s background instills confidence in potential investors. After two decades as an investor, Craig Cecilio came up with the idea for DiversyFund as a way to make real estate investing accessible to everyone.
The co-founder, Alan Lewis, was a former Wall Street investment banker and corporate lawyer who transitioned to real estate development in 2014. Together, they bring expertise in locating and renovating multifamily properties, and investors reap the rewards of that expertise.
There’s a reason experienced investors flock to real estate opportunities. The return can easily beat other types of investments, including stocks. But DiversyFund eliminates the risk that can come with other real estate ventures.
The founders focus on multifamily properties that are already generating rental income and put money into improvements for even better results. As investors, you can recoup 7% of our money before DiversyFund starts taking its split. The company estimates 17% annual returns for each investor.
Who Is DiversyFund Best For?
Novice real estate investors
If you’ve never invested in real estate – or even invested at all – DiversyFund can help you get started. You’ll turn your money over to experts who will take care of everything from there, working hard to honor the trust investors have placed in them.
At the same time, you’ll have access to a dashboard that shows your earnings, and the process could help you gain confidence that you can take toward other types of investing.
DiversyFund’s model is set up to keep risk at a minimum. Your money will go toward multiple properties, which means that even if one fails, others will offset the loss.
But DiversyFund focuses on properties that are already generating income and strives to make those properties even better. This is all in addition to the fact that even when the economy is struggling, real estate typically holds its value, coming back even stronger once things pick back up again.
Experienced investors new to real estate
This type of platform can be a great way for experienced investors to dip their toe into real estate. Simply dedicate $500, or a portion of your monthly spend, to the platform and monitor its performance. If it starts to exceed your other ventures, you can then increase its presence in your portfolio.
Who Shouldn’t Use DiversyFund?
Experienced real estate investors
Some real estate investors do it all. Instead of putting your money into a REIT, you may scour the globe for the best property, purchase it, and upgrade it to flip at a profit.
You may even be the type of investor who buys multifamily or rental properties and collects rent each month, taking on the management duties yourself. Although this type of investor can definitely benefit from putting some money into DiversyFund for extra income, if you think you might get frustrated with someone else doing the development and management, it may not be the best choice for you.
Those looking for quick returns
With real estate, you’re playing the long game. In fact, it could take you five years to begin seeing a significant return on your investment. If the market takes a downturn, you’ll wait even longer.
Those who look for a quick return on investments will probably want to steer away from real estate, unless you can find a great deal on a fix-and-flip property.
Investors in need of income
Any returns you make will be reinvested, so if you’re hoping for a steady flow of cash from your investment, this won’t be a good route for you. Instead, look for a rental property you can purchase and rent for that regular income if real estate is your interest.
- No fees — DiversyFund won’t charge you any maintenance fees, which is a rarity in investing.
- Low risk — The properties are already established, reducing the risk to investors.
- Open to everyone — Novice investors needn’t worry, as DiversyFund’s expert team handles choosing and managing the properties.
- Slow growth — With any real estate investment, you could be looking at years before you start to see significant money rolling in.
- An untested platform — DiversyFund is a new concept, which means we’re technically considered early adopters.