Why I decided not to invest with DiversyFund
What is DiversyFund?
DiversyFund is an online platform which allows investors the opportunity to invest in a public REIT under Reg A+. That means that if you are a non-accredited investor and would like to invest in companies who are raising capital to fund their own growth (up to 50M) you have the ability to do so under Reg A+.
DiversyFund invests in commercial real estate and boasts some really great returns. The advertised returns are from 10-18% and from what I could see generally fall on the higher end of the spectrum. They, similar to some other online platforms have a relatively low entry amount of $500.
Relatively low initial investment
The starting amount of $500 is becoming more common and is especially popular with younger investors who are looking for great returns but might not necessarily have much capital to start investing. This is especially beneficial to non-accredited investors and opens up access to wealth building opportunities previously reserved for accredited investors.
There are currently zero management fees. This is really great since management fees have the ability to erode earnings and can have a substantial impact over a long period of time.
DiversyFund does some due diligence.
DiversyFund has a decent screening process and their selection criteria are good, this of course does not mean you should assume they have done everything possible to weed out bad deals. You should do some of your own due diligence, not just from a security standpoint but from a learning standpoint as well.
Limited investments available
There are limited projects to invest in on the site. Now this is not always a bad thing since I am sure many of the deals brought to them do not make it through the funnel but at the same time there are limited options available.
They are regionally focused on Texas and California. Again this is not necessarily bad as this does allow them to focus on the markets they know and are familiar with. However this also has some limiting factors in that they may be at risk from certain regulations that might be passed that could negatively impact the market.
No dividend payments
One of the main things that kept me from investing with them is that there is no regular dividends from cash flow. I feel like if I am investing long term (there are no early redemption opportunities) I want to see some periodic return from my investment.
Limited to REITs
The only investment vehicle they have are REITs. Investors are not able to select a specific property for investment and investor’s funds are spread across all the properties in the REIT. This is nice for diversification but not good if there is something such as student housing which may already make up a large portion of an investors portfolio.
If you are OK with not receiving dividends and are looking for an entry into commercial or multifamily real estate but only have $500 to start with, then DiversyFund might be right for you. Additionally if you are already invested in other asset classes and are looking for some diversification then this might be a good option.
I try to ensure I see dividends coming in every month. I have some like my Cardone Capital coming in every month and other like my Harvest Returns investment coming in quarterly. I am fortunate in that I am not living from those dividend payments so I am able to reinvest those funds every month.