DiversyFund investing review: Pros, cons, and who should set up an account – Business Insider

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  • DiversyFund is a real estate investing platform that offers professionally managed accounts to individuals with at least $500 to invest. 
  • The investing platform charges $0 in management fees and directly owns and manages the real estate properties, or REITs, you’re invested in. 
  • DiversyFund requires each investor to stick to a five-year investment term, so plan to park your money for a while.
  • DiversyFund is best for investors who want to add real estate projects to their investment portfolio without managing or selling the properties themselves.
  • Click here to open an account with DiversyFund.

DiversyFund is best for passive investors looking to get into the private commercial real estate market without paying high account minimums or management fees. The company primarily offers its own real estate investment trusts (REITs), and it makes these available to everyone, not just accredited investors (individuals who have a net worth of at least $1 million).

DiversyFund’s $500 investment minimum is relatively low compared to other real estate apps like CrowdStreet ($25,000) and Yieldstreet ($1,000 to $10,000). And like most robo-advisors, the company manages your investments for you. 

One thing to be aware of is that DiversyFund only offers REITs. The company doesn’t offer any other asset types, nor does it allow you to open retirement accounts like IRAs or other savings accounts. 

Another thing to look out for is that real estate investments are extremely illiquid. Illiquid investments are assets — such as property and other tangible investments — that you can’t quickly turn into cash. 

And since DiversyFund’s Growth REIT is a public non-traded real estate investment, you won’t be able to withdraw your investments’ earnings until the real estate assets, or properties, are sold. This is because the company reinvests dividends and earnings until it sells the real estate assets. 

DiversyFund strives to maximize investment returns by requiring each investor to stick to a minimum term of five-years. Once you set up your account, you won’t be able to make early withdrawals, so be prepared to let your money sit for at least five years.

DiversyFund also says it offers each investor 7% preferred return. This means that the company doesn’t profit off of real estate projects until investors receive 100% of returns up to the first 7%.

Bottom Line: DiversyFund is best for investors who don’t mind waiting five years to see their investments grow. The company manages everything for you, so it’s not the best option for DIY investors who prefer active trading.

DiversyFund pros and cons

Pros

  • $500 minimum investment 
  • No management fees
  • Automated real-estate investment management
  • Available to non-accredited investors

Cons

  • Limited investment selection
  • You cannot choose your own investment projects
  • No retirement accounts or education savings options

Alternative investments are assets that deviate from traditional asset types such as stocks, ETFs, bonds, and mutual funds. Common examples include real estate, art, hedge funds, master limited partnerships, private equity, and precious metals such as gold.

Experts typically recommend investing in alternative assets as a way to diversify your portfolio and generate higher returns. However, this type of investing presents special risks.

For one, most alternative investments are highly illiquid, meaning that they can’t be easily converted into cash like a stock or bond. This is why some real estate investing companies like Fundrise advise against investing for the short-term and ask that investors be prepared to buy and hold their investments for at least five years. 

Another thing to look out for is that the value of alternative investments like real estate can either be positively or detrimentally impacted by economic and environmental conditions. For instance, economic inflation can make your returns skyrocket, while recessions can bring down your investments’ value, decreasing your returns.

The brightside, though, is that real estate investments like REITs generally pay higher dividends than stocks and other conventional investments. (Dividends are cash, or share, payments that some companies give you on each share you own.) 

DiversyFund could be a great fit for you if you don’t mind tying your money up for a few years.

Automated investment management

DiversyFund solely offers automated investment management. This means that the company manages your private commercial real estate investments for you. You’ll just need to meet the $500 minimum requirement to get started.

When you sign up, you’ll be investing in a REIT. A REIT is a company that owns and manages income-generating real estate assets. In other words, when you invest in REITs, you’re investing in multiple real estate projects. 

In some cases, REITs own different types of real estate assets like hotels, rental units, or retail centers. However, DiversyFund’s Growth REIT mainly owns multifamily properties. This means that your $500 deposit grants you access to all of the real estate projects, or multifamily properties, that DiversyFund currently owns.

DiversyFund currently owns properties in California, North Carolina, and Texas. 

DiversyFund is an online real estate investing platform that offers private commercial real estate investments to nonaccredited investors (or people with less than $1 million to invest). While some platforms let you trade on your own, DiversyFund is completely automated. 

The company says it aims to serve everyday investors who don’t have millions of dollars to invest but want to build wealth in meaningful ways. DiversyFund’s mission is to make high-value alternative investments available to everyone.

According to its website, the idea of DiversyFund was born in 2014 after Craig Cecilio, the company’s co-founder and chief executive officer (CEO), decided he wanted to create more wealth-building opportunities for all investors, not just the wealthy ones.

The company also presents another unique feature: It owns all of the real estate assets it offers. This means that DiversyFund itself manages each real estate project from start to finish and profits off of those projects alongside you.

In 2018, DiversyFund was officially qualified by the US Securities and Exchange Commission (SEC) to make its Growth REIT more accessible to investors. In June 2019, with SEC approval, the company lowered its minimum investment requirement from $2,500 to $500.

Rickie Houston is a wealth-building reporter at Personal Finance Insider who covers investing, brokerage, and wealth-building products.

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