What is DiversyFund and how does it work?
DiversyFund is a real estate investment platform that allows individuals to invest in multifamily rental properties across the United States.
The company operates by pooling funds from investors to purchase and manage these properties. Here's an overview of how it works:
1. Capital Raise: DiversyFund opens a fund or asset to investors, gathering initial capital that will be used to acquire multifamily properties.
2. Acquisition: The company conducts a thorough evaluation to identify multifamily properties that are believed to have strong growth potential.
3. Renovation: Once a property is acquired, DiversyFund's professional management team oversees any necessary construction, maintenance, or upgrades to enhance the property's value.
4. Stabilization: After renovations are complete, the property enters a phase of natural appreciation as it generates rental income.
5. Liquidation: At a strategic point, typically at the end of an investment cycle, DiversyFund looks to sell the fund's assets or individual properties.
6. Distribution: Proceeds from the sale are then distributed to investors, with REITs distributing at least 90% of net profits in compliance with IRS rules.
Investors in DiversyFund can choose to buy shares in a fund, which includes a diversified portfolio of multifamily properties, or in a special purpose vehicle (SPV), which concentrates on a single asset. By investing, they own a proportional share of the real estate within the fund or SPV.
The company targets multifamily properties in various regions of the U.S., focusing on areas with positive job and population growth trends and lower-than-average vacancy rates. The platform's in-house real estate professionals meticulously vet each property before moving forward with the investment.
The investment process is long-term, often spanning five years or more. This duration allows for the planning and execution of property improvements, which can lead to increased rental income and potentially maximize returns upon exit.
However, it is important to note that there is no guarantee of successful execution of the strategy, distributions to investors, or the full return of capital, as past performance is not indicative of future results.
Receive new reviews from Fintorial
How risky is DiversyFund?
3/5— Moderate Risk
Investing through DiversyFund, like all investment opportunities, carries risks. These can include market fluctuations, economic shifts, and property-specific issues that impact the performance of the real estate assets within the fund.
How liquid is DiversyFund?
1/5— Minimum Liquidity
DiversyFund does not provide a traditional liquidity option for its investors as it focuses on long-term growth through real estate investments.
Since the investments are in real estate, which is inherently illiquid and requires a longer time horizon, investors should be prepared to commit their funds for the entirety of the investment period, typically ranging from 5 to 7 years, until the properties are sold and the proceeds are distributed.
There is no secondary market or platform feature that allows for the listing and selling of shares before the end of the investment period.
How volatile is DiversyFund?
3/5— Moderate Volatility
The assets on DiversyFund are real estate properties, and while real estate markets can be less volatile than stock markets, they are still subject to fluctuations. Market conditions, interest rates, and local economic factors can all influence property values.
Since real estate is a long-term investment, short-term volatility may be less of a concern for DiversyFund investors, but it's important to recognize that property valuations can change and may affect the investment's performance.
What is the average rate of return for DiversyFund?
11-18 %— Moderate Return
DiversyFund has reported historical annual returns in the range of 11% to 18%.
However, it's important to note that past performance is not indicative of future results, and returns can vary based on a variety of factors impacting the real estate market.
What is the minimum investment amount for DiversyFund?
The minimum investment amount at DiversyFund varies based on the type of real estate investment chosen.
The company requires a minimum investment of $500 for individuals to participate in its offerings, which include multifamily properties. The investment hold period ranges from 5 to 7 years, with an objective to acquire between 12 to 15 properties.
For the Premier Direct SPVs and the Premier Opportunity Fund, which are options available to accredited investors, the minimum investments are $50,000 and $25,000 respectively.
What is the investment time horizon for DiversyFund?
The investment term for DiversyFund's REIT I was initially set for 5-7 years.
The platform is currently in the latter part of this period and has opted to utilize the additional two years to further enhance property values through improvements and potential rent increases.
As the properties are sold, disbursements will be made until all assets are liquidated and investors receive their initial funds plus any profits.
Who can invest in DiversyFund?
DiversyFund's Growth Offerings are open to both non-accredited and accredited investors.
However, the Premier Offerings from DiversyFund are exclusively available to accredited investors.
Is DiversyFund regulated or audited?
DiversyFund is regulated by the U.S. Securities and Exchange Commission (SEC), which requires the company to adhere to certain reporting and compliance standards.
The company’s funds, structured as REITs or other investment vehicles, undergo regular audits to ensure accuracy and transparency in their financial reporting.
The results of these audits, along with other disclosures, are made available to investors and the public as mandated by SEC regulations.
Is DiversyFund insured?
As of today, specific details about DiversyFund's insurance policies are not provided.
In general, real estate investment platforms usually secure insurance on their properties to protect against physical damage and other losses.
However, such insurance does not cover market fluctuations, economic downturns, or other non-physical risks that could affect the value of the investment. Coverage limits might also not match the full market value of the properties.
Does DiversyFund distribute payouts?
No Recurring Payouts
At DiversyFund, dividends are typically not distributed immediately but are instead reinvested to finance the improvements of the acquired properties.
This reinvestment aligns with the company's strategy to add value and foster growth or seek opportunistic gains from the properties. The reinvestment of dividends allows for the potential compounding of interest and longer-term appreciation of the assets.
However, it should be noted that there are no guaranteed dividends or other distributions, and past performance does not assure future results.
What are the annual fees for DiversyFund?
DiversyFund charges fees for asset management and transaction closures throughout the investment process.
Additionally, the company may take a share of the net profits, known as a "promote interest," after investors have received their preferred return. Specific fee details and expenses for DiversyFund's offerings can be found in the fees and expenses sections of the relevant Offering Circular.
How do I handle my investments in DiversyFund?
DiversyFund manages the investment process, including property acquisition, improvement, and eventual sale.
Investors have limited asset management responsibilities; their involvement is primarily through capital investment, while DiversyFund's team handles the day-to-day management and strategic decisions of the properties.
There is no platform-provided secondary market for investors to manage their shares actively.
How does DiversyFund get taxed?
DiversyFund provides investors with tax documents such as Form 1099-DIV and/or Form K-1, which report distributions paid during the tax year.
These documents are available for download in the investor's account under the Documents section, organized by the year they were issued.
Taxes on dividends are typically treated as ordinary income, while capital gains taxes may apply to distributions after the investment term ends.
How many investors are on DiversyFund?
The platform has drawn more than 30,000 investors and an investment portfolio that includes over 150 property units, with a combined market value exceeding $175 million.
Who is the CEO of DiversyFund?
Craig Cecilio is the CEO and Founder of DiversyFund, bringing over 25 years of experience in real estate with a focus on enabling equal wealth-building opportunities. His extensive background includes a vast array of real estate transactions in various sectors.
Alan Lewis is the CIO and Co-Founder, leveraging his Wall Street experience and expertise in real estate law and private equity. He has been involved in significant transactions totaling over $41 billion, contributing to the strategic investment approach of DiversyFund.