DiversyFund Review 2021: Is This Real Estate Investment Site Worth Your Time?
- Invest in real estate with as little as $500
- Not charged broker or management fees
- DiversyFund offers a knowledge base so you can make educated decisions
- You risk losing money on your initial investment
- Yield could be potentially lower than investing in the stock market
- May take around five years to see earnings on your investment
What Is DiversyFund?
Traditionally, real estate investments are limited to people with a large pool of financial resources. Even if you have the money to invest, you may not have the time to flip or build and manage properties.
With DiversyFund, many investors pool money together for a single property. Your investment goes toward an apartment building that has 100 or more units across 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 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 Internal Revenue Service. DiversyFund must pay out 90% of its taxable income to investors annually. In order to acquire these profits, DiversyFund follows a five-step process for all of its properties:
DiversyFund collects the amount of money needed for a particular property. Lesser investments may be pooled into a property of DiversyFund’s choosing. If you invest more, you may be able to choose the property for your investment.
The DiversyFund team identifies property that has 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 property. 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 value to go up after completing the renovation process. DiversyFund investors earn dividends each month. However, the money is automatically reinvested back into the property until the end of the five-year investment period.
Turning a Profit
DiversyFund sells the property and distributes profits to the original investors. At that point, you can withdraw your funds or allow your investment to stay with DiversyFund for another property.
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.
When you’re ready to invest, the DiversyFund site walks you through a questionnaire that helps recommend the best investment options for your particular situation.
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 create a password to create an account.
It’s important to invest in a REIT that is registered with the U.S. Securities and Exchanges Commission, or SEC. Since DiversyFund is registered with the SEC, you can access annual audits and all of DiversyFund’s filings with the SEC any time.
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?|
|CrowdStreet||$25,000||Varies by investment||Accredited Investors|
|YieldStreet||$500||1-2% collected from investors annually; 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
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.
DiversyFun FAQHere are the answers to some of the most frequently asked questions about DiversyFund.
- How do I manage taxes on my 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 I withdraw my money early?
- No. Once you commit money, it is tied to an investment property for a minimum of five years. After five years, you can choose to withdraw your money or reinvest.
- Is my 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?
- In 2019, DiversyFund investors received a dividend yield of 5%. This is representative of the cash flow DiversyFund took in from monthly rent. The total return at the end of the investment period may be different.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- 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)."
- CrowdStreet. "Is There an Investment Minimum?"
- Yieldstreet. "Learn How Investing With Yieldstreet Works."