Real estate investing represents a powerful wealth-building strategy, allowing property owners to generate rental income while working toward their investment objectives and capitalizing on appreciation as property values climb over time.
However, traditional real estate investment presents significant challenges for prospective investors. It demands substantial capital—whether through debt or equity—to acquire properties, fund renovations, and handle ongoing management based on your objectives. Additionally, most large-scale real estate investment opportunities remain exclusive to accredited investors with higher net worth requirements.
Real estate investment trusts (REITs) have emerged as popular investment vehicles for those seeking more liquid exposure to real estate markets while generating income—making them an excellent gateway into alternative investments. When publicly traded on an exchange, REITs allow anyone with a brokerage account to buy and sell shares while collecting dividend distributions.
But what if you want deeper exposure to commercial property without knowing where to begin your real estate investing journey?
Diversyfund tackles this challenge directly through their public non-traded REIT, featuring a low minimum investment threshold designed for everyday investors willing to commit their capital for three to five years.
In this comprehensive Diversyfund review, we’ll explore what this platform delivers, examine how it stacks up against competitors, and determine whether Diversyfund belongs in your investment portfolio. Ready to dive in? Let’s begin!
About DiversyFund
Founded in 2016 by Craig Cecilio and Alan Lewis—both seasoned professionals with extensive backgrounds in commercial real estate investment and project management—DiversyFund launched its real estate investment trust (REIT) in 2019. The company currently develops five multifamily and student housing projects across California, Texas, and North Carolina.
How DiversyFund Works
DiversyFund operates as an REIT with a unique twist. The company simultaneously offers a REIT for public investors while developing and managing the properties within that REIT. This means DiversyFund maintains complete control over project selection, development strategies, and capital management throughout their REIT operations. Few real estate investing platforms available to non-accredited investors achieve this level of vertical integration.
This structure’s primary advantage is that DiversyFund eliminates management fees from your investment. The only charges you’ll encounter are standard project development fees found in any REIT. Crucially, DiversyFund expects to generate most of its profits from selling investment properties at the conclusion of each development cycle. This aligns the company’s interests directly with individual investors’ success.
What comprises the DiversyFund REIT portfolio? As of summer 2020, the company was developing five projects—four multifamily apartment complexes and one student housing facility—distributed across California, Texas, and North Carolina. The company’s strategy involves improving these properties and selling each within approximately five years.
It’s worth noting that DiversyFund channels all income generated from these properties during the five-year period back into property improvements or new real estate projects. Consequently, investors won’t receive any distributions until properties are sold, which likely won’t occur for several years.
Diversyfund Services and Features
Diversyfund investments distinguishes itself by providing universal access to a public, non-traded REIT—not just to accredited investors. The fund mirrors closed-end private-equity funds in structure, requiring investors to commit capital for a three-year minimum while the fund purchases, renovates, manages, and eventually sells properties.
Currently, the Diversyfund Growth REIT consists of multi-family properties (apartment complexes) featuring a minimum of 100 units distributed throughout North Carolina, Texas, and California. Each portfolio property represents a value-add real estate development opportunity, meaning Diversyfund handles renovation and management responsibilities to increase property values and achieve target returns upon sale.
Real estate investing through Diversyfund offers simplicity and automation. After establishing your online account, they handle fund management and allocate capital to various properties based on your contribution amount.
DiversyFund Platform And Tools
DiversyFund’s platform maintains a streamlined design, as there’s limited activity to display until properties sell and profits distribute. The platform centers around projected return graphs, though investors should view these projections with healthy skepticism. You can also access tax documents and quarterly investment reports through the platform.
Diversyfund Performance
Real estate funds typically measure returns using Internal Rate of Return (IRR), which demonstrates fund growth if you were to liquidate the portfolio at any given moment.
Diversyfund’s Growth REIT targets an IRR between 10%-20% for each portfolio property over a 5-year investment horizon.
Your actual returns depend on the realized rate of return when properties sell. Investors receive their principal plus profits up to 7% (when 7% or greater profits materialize) before DiversyFund claims any earnings. Beyond the initial 7% profit threshold, investors receive 65% of additional profits up to 12% annual returns and 50% of profits exceeding that level.
Preferred Return
Real estate investors sometimes benefit from preferred returns, guaranteeing specific payments after property sales before funds claim remaining profits.
Diversyfund provides a 7% preferred return before claiming any remaining profits (when available).
When profits exist, investors receive a 65% split while Diversyfund takes 35%.
If average annual returns exceed 12%, profit splits adjust to 50/50.
Remember that investor payments occur only after property sales, with no expected building sales before 2023.
DiversyFund Account Requirements
DiversyFund’s accessibility sets it apart with an exceptionally low entry barrier. Any US resident can invest in the company’s REIT with just a $500 minimum investment—reduced from $2,500 when the company launched in 2019.
Diversyfund Pricing and Fees
Diversyfund Growth REIT investors pay no asset management fees since the company manages and develops properties internally. However, developer fees may range from 2% to 8%, depending on the specific multifamily real estate properties within the portfolio.
How Does Diversyfund Compare to Other Services?
Diversyfund stands apart from other online real estate investment platforms through its elimination of asset management fees and affordable entry requirements.
Primary Competition
Fundrise investments ranks among the leading names in online real estate investment, offering low minimums and diverse investment access. While Diversyfund Growth REIT focuses exclusively on multifamily properties, Fundrise’s portfolio encompasses residential real estate investments as well. Both platforms offer highly illiquid non-traded REITs, though Fundrise provides more liquid options like their Interval Fund for investors requiring cash access.
Another major competitor is CrowdStreet. This real estate crowdfunding platform enables accredited investors to participate in various commercial real estate opportunities through three investment methods: funds and vehicles, individual deals, and private managed accounts. Key differences emerge immediately—CrowdStreet exclusively serves accredited investors, while Diversyfund welcomes non-accredited investors. Additionally, while Diversyfund specializes in multifamily properties, CrowdStreet focuses on commercial real estate investments. Your investment objectives will determine which platform better serves your needs.
Diversyfund also differentiates itself in real estate crowdfunding by serving as both property manager and developer, significantly reducing investor costs.
Comparison to Other Investment Options
Real estate investing requires patience and extended time horizons before investors see returns.
If you prefer shorter-term investments, consider exploring the stock market, equity crowdfunding opportunities, or other alternative investment options.
Regardless of your selection, maintaining a diversified investment portfolio remains crucial so potential gains in one asset class can offset losses in another—encompassing stocks, real estate, and alternative investments.
DiversyFund Key Differentiators
DiversyFund delivers low-cost commercial real estate investment access, specifically targeting multifamily apartment complexes. With just a $500 minimum initial investment and elimination of the typical 1% or higher management fees charged by most REITs and real estate platforms, it stands apart from competitors.
Another crucial distinction is DiversyFund’s business model, designed to generate most revenue from property investments themselves. This structure encourages investors, as it demonstrates DiversyFund’s equal stake in property success.
Is Diversyfund Trustworthy?
Diversyfund maintains an A+ rating with numerous positive reviews from investors and clients, reflecting positively on their trustworthiness as a real estate investment platform.
However, as a relatively new company operating in the complex world of real estate investment and management, approaching their REIT with some caution remains prudent. Encouragingly, the company maintains equal skin in the game with individual REIT investors, and its founders bring several decades of commercial real estate investment experience.
Importantly, DiversyFund holds SEC qualification, requiring the company to disclose financial and management information while undergoing annual audits. To maintain honest and transparent operations, Diversyfund contracts an independent third-party auditor for annual financial statement audits.
What Are the Risks Associated With Diversyfund?
Illiquid investments like the Diversyfund REIT create significant risks around accessing cash when needed urgently. Additional risks include potential capital loss, real estate market volatility, and other hazards associated with real estate investments.
Ensure you can manage without your investment capital before committing to the Diversyfund Growth REIT.
Who is Diversyfund Best For?
New investors seeking education about vertically integrated real estate funds with minimal investment thresholds will appreciate Diversyfund’s market insights. Since Diversyfund handles both development and property management, their annual reports deliver comprehensive information about fund performance and capital management strategies.
Investors preferring more liquid real estate exposure have alternative options, including publicly traded REITs and REIT-focused mutual funds and ETFs.
Final Verdict: Diversyfund
Overall, Diversyfund represents the new generation of crowdfunded real estate platforms, delivering fresh investment opportunities to non-accredited investors. Most similarly structured funds demand much higher initial investments and typically require institutional and accredited investor participation in capital raises.
For investors wanting diversified portfolio exposure while exploring real estate investing, Diversyfund may present an excellent opportunity—provided you maintain an existing investment portfolio and retain cash access outside your Diversyfund commitment.
Pros
- Unique access to non-traded REIT for real estate investing
- Low fees and minimum investment
- Nonaccredited investors can invest in alternative assets
- Access for the average investor to earn dividend income
Cons
- New fund means limited investment options
- Hard to access cash if you need it for other investments
- More liquid real estate deals are available elsewhere
