The bottom line: With a $500 minimum investment and no management fees, DiversyFund is a low-cost entree into the often high-roller world of real estate investing. But investors should take a long-term view, as all distributions are reinvested into properties until they are sold.
What is DiversyFund? DiversyFund is a real estate crowdfunding platform. The company offers investors a non-traded real estate investment trust (REIT). The DiversyFund Growth REIT is open to non-accredited investors at a low investment minimum.
Potential returns and cashflow
DiversyFund reports a 17.6% average annualized return, though that's not based the REIT performance, it's based on the overall returns from the individual projects they previously offered before starting the REIT.
If you want a simple portfolio that is focused on one type of investment property, DiversyFund will be better for you. If you want to invest in a variety of real estate properties and have access to more advanced strategies, then Fundrise will be the better investment platform for you.
Similarly, if you want to double your money in five years, your investments will need to grow at around 14.4% per year (72/5). ... PPF at an annual interest rate of 7.1% will take around 10 years to double your money assuming the interest rate remains at 7.1% (72/7.1 =10.14).
Real estate investment trusts (REITs) are popular investment vehicles that pay dividends to investors. ... Publicly traded REITs have the risk of losing value as interest rates rise, which typically sends investment capital into bonds.
No Option to Take Cash Distributions.
DiversyFund doesn't allow shareholders to withdraw cash distributions from their accounts. Until DiversyFund sells assets in its portfolio, all distributions are reinvested in the REIT. While this may increase returns in the long run, it's frustrating for income-seeking investors.
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.
Fundrise liquidity
One of the primary differences between Fundrise and DiversyFund is the fact that Fundrise investors will receive quarterly dividends that have been generated through rental income. Distributions can be reinvested or taken as cash.
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With excellent deal flow and an early track record of impressive returns, CrowdStreet offers accredited investors access to a variety of deals that were once only available privately. In comparison to other platforms, CrowdStreet has a lot of pros and a few limitations.
If you're willing to take on more risk for somewhat higher returns, Groundfloor might be a great investment for you. Investors who don't need liquidity and are willing to experiment should look at this platform. It's a passive way to get into the fix-and-flip action of real estate investing.
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