The idea of investing in land is appealing to several people. But “direct land investing” are often intimidating since it requires buying a property, finding tenants for it, and managing it.
An alternative land investment path is crowdfunding. With crowdfunding, the investor buys into a true estate fund. The investment is totally passive.
Traditionally, these passive investments were open only to accredited investors. DiversyFund is changing that by allowing non-accredited investors to take a position as little as $500 in its fund. during this article, we’ll check out what DiversyFund has got to offer and who it’s going to be an honest fit .
Who Is DiversyFund?
DiversifyFund may be a crowdfunding land investment platform. it had been formed in August 2016. Its founders are Alan Lewis and Craig Cecilio. DiversyFund is predicated in San Diego , CA. the corporate has raised $13.8 million through a Series A.
“We’re a tech-enabled platform that not only provides financial literacy and awareness to the everyday investor, but we also allow them the chance to take a position just like the wealthy,” said Lewis to AOL.
What Do They Offer?
DiversyFund markets itself as an alternate investment to stocks. It only has one product, which may be a public REIT.
Although the REIT is public, it doesn’t trade on any exchanges. it’s a non-traded REIT. But since it’s public, it must do filings with the SEC like all publicly-traded company. These public filings are available for anyone to look at .
Many crowdfunding land platforms require investors to be accredited and have high initial investment requirements. DiversyFund has neither. Investors don’t got to be accredited and therefore the minimum to take a position is merely $500.
DiversyFund gives investors access to land . Or, said more accurately, it gives investors access to its private REIT, which invests in land .
DiversyFund’s investment product is named the expansion REIT. it is a fund that invests in cash-flowing apartment buildings. DiversyFund owns and manages the properties in their REIT. Apartment buildings are a minimum of 100 units in size.
These properties are value-add investments. DiversyFund renovates each property then re-positions (i.e., re-markets) it, hoping to draw in higher rents. Each project is predicted to play out over five years. the interior Rate of Return (IIR) of the REIT is predicted to be between 10% and 20%.
Currently, there are only three properties listed on the DiversyFund website. DiversyFund invests in properties located in California, Texas, and North Carolina. All properties that DiversyFund invest in enter an equivalent REIT. You’ll be ready to keep tabs on each property’s performance through the web site .
Full-Service Investing Platform
There is no middleman with DiversyFund. that’s one reason why they don’t charge a sales commission. All of the research on potential properties is completed in-house.
In fact, DiversyFund handles the whole process from researching potential properties, raising capital from investors, managing the properties, and eventually selling them. They’re an all-in-one land investment shop.
No Redemption Policy Or Secondary Market
DiversyFund’s REIT is very illiquid as isn’t publicly traded and investors are expected to stay their money within the fund for about five years. Once you invest with DiversyFund, your money is locked up for several years and there’s no share-redemption program.
Additionally, you won’t receive any cash flows or dividends since these are reinvested back to the fund. Once the project is over, investors’ principal plus any appreciation and cash flows are returned.
Unlike investing during a stock or publicly-traded REIT that you simply can purchase and sell within the stock exchange , DiversyFund’s REIT doesn’t have any method of real-time price discovery. there’s also no secondary marketplace for selling your interest within the fund.
Given the shortage of liquidity, DiversyFund is extremely almost like investing directly in land . Once you purchase an investment property, you can’t just rotate and sell it without taking an outsized hit. Instead, you’ve got to ride it out for a couple of years.
Are There Any Fees?
Unlike virtually all other crowdfunding land platforms, DiversyFund charges no management fees. That’s an enormous benefit that would dramatically improve your net income over your entire investment term.
How Do I Open An Account?
You can visit the DiversyFund website to open an account. you’ll fund your investment as a private , entity, or trust. Once your account has been opened, you will be ready to connect your bank and choose your initial investment amount. You’ll even have the choice to line up a monthly recurring investment.
Is My Money Safe?
Money invested DiversyFund’s isn’t FDIC or SIPC-insured. And, like investments in other assets, all of your capital are often lost. Of course, DiversyFund performs due diligence on each property in an attempt to assist reduce risk.
Is It Worth It?
For investors who want to diversify into passive land investing and are comfortable with locking their money up for several years, DiversyFund are often worth finding out . the shortage of any AUM fees may be a huge plus.
However, the corporate is fairly new, so there’s not an extended diary to match against. There are risks involved investing on any crowdfunding platforms, but especially new ones. you would like to form sure you are doing your own diligence on the management team and properties to ascertain if the danger is worth it to you.
Investors who don’t need to lock up their money for several years may simply consider investing during a REIT that trades on public exchanges. Or they’ll want to seem for non-traded REIT platforms that provide more liquidity like Fundrise or Realty Mogul.