DiversyFund vs. Fundrise: Which Real Estate Crowdfunding Platform is Best?

Real estate investing is a proven approach to growing wealth, but there are extra responsibilities encountered with owning and managing property. For this reason, crowdfunding platforms, like Fundrise, DiversyFund, and RealtyMogul, are increasingly popular with investors.

These platforms allow you to earn passive income and appreciation without the negative consequences of being a landlord.

There are many real estate crowdfunding platforms. Some are better for new investors, with easier access. Certain platforms are only available for accredited investors, or they may have high minimum investment requirements. So, it can be difficult to find the right real estate investment platform to meet your needs.

Two of the more accessible platforms are Fundrise and DiveryFund. Of the two, Fundrise is the more popular and established platform with many enthusiastic investors. DiversyFund is newer and working hard to build a solid reputation.

This article provides a direct DiversyFund vs Fundrise comparison to help you make an informed choice.

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DiversyFund vs Fundrise Overview

The main difference between DiversyFund and Fundrise involves the sizes of the two companies and their real estate portfolio. Fundrise has a much more extensive portfolio with more diversity in property types and locations. DiversyFund currently has a much smaller portfolio, and properties are concentrated in a few key geographic areas.

Additionally, Fundrise has a more established track record that proves its ability to generate excellent returns for investors thus far. DiversyFund probably needs a few more years before it will have a track record that could be accurately compared to other platforms.

While both platforms are open to all investors (not just accredited investors), Fundrise is more accessible for beginners. You can start investing with Fundrise for as little as $10. DiversyFund’s minimum is $500.

The last key difference is that Fundrise offers a few strategies that investors can choose from, according to their own goals and investment preferences. With DiversyFund, all investors are investing in the same portfolio.

DiversyFund Overview

DiversyFund is an investing platform that specializes in real estate investment, specifically, apartment buildings that have 100+ units. The company’s real estate investment trust (REIT) strategy is based on acquiring undervalued multi-family properties that generate cash flow from rental income. In most cases, these apartments need investment to improve and increase their rental potential.

When the rental prices increase, the property’s value increases as well. This is equally applicable to commercial properties like offices, commercial buildings, and storage units. The income generated from these properties is reinvested each month to finance the various improvements until the property is sold for a healthy profit.

After the sale, the capital appreciation and accumulated dividends are distributed to the private REIT investors. Then the investors can decide to cash out or use that money to invest with DiversyFund for future real estate projects.

Three key DiversyFund benefits make this platform an attractive prospect for real estate investment:

1. There are no management or platform fees to pay.
2. A DiversyFund account is free and only takes 5 minutes to set up.
3. Investors can co-own a managed real estate portfolio.

You don’t need to be an accredited investor to invest with DiversyFund. However, the platform is only open to U.S. citizens and residents. People with a valid Social Security number, a Visa, and other value entities operated by a non-U.S. citizen or resident may open a DiversyFund account. As a new investor, you must be 18 years or older. Minors cannot open accounts but can be named as beneficiaries.

To get started, you need an email address, you’ll set a password, and you’ll input your personal information, including your Social Security Number. Then you choose the investment amount. There’s a $500 minimum, and the maximum investment is $1 million.

According to the company, the average investment is around $1,500, and investors can invest once, or set up recurring investment payments. If you don’t want to make that commitment when you sign up, it’s easy to create a recurring payment later if you decide to.

The DiversyFund website has a small help section for current and potential real estate investors. This information is pretty basic, but it’s easy to find answers to some of your questions. But, DiversyFund does have online chat and email support, or you can call the company directly.

Fundrise Overview 

Investing with Fundrise places your funds into diversified investments classified as eFunds and eREITS. These are both professionally managed portfolios with assets that include apartment buildings, commercial properties, residential real estate, single-family residences, and private equity funds.

Upgrades made to your Fundrise account will provide access to a wider range of real estate investment opportunities. Fundrise offers five account tiers, which are based on the sophistication and investment size. They are Starter, Basic, Core, Advanced, and Premium tiers. Let’s take a look at each tier in more detail.

1. Starter: This is a $10 minimum. The low entry point makes this an attractive option for people who are just getting started or want to try the real estate platform with minimal commitment.
2. Basic: This requires a minimum $1,000 investment. The investor can set their goals easily, and they can invest in an IRA or a taxable account.
3. Core: A $5,000 minimum is required for this tier. Access to three portfolio strategies becomes available: Supplemental Income, Long-Term Growth, and Balanced Investing.
4. Advanced: This tier requires a minimum investment of $10,000 and allows you to allocate to specific funds and “Plus Plans.” Plus Plans take a portion of your portfolio and apply them to evolving sophisticated strategies for extra growth.
5. Premium: This top tier requires a $100,000 minimum investment to invest in certain private equity funds that have tremendous potential for growth and higher risks.

The best way to consider these five Fundrise tiers is that the Starter plan exists for newer investors who want to learn more about how this real estate investment platform works. As the investor gains confidence and when they have invested $1,000, they can upgrade to the Basic tier at no cost. This will give them access to extra features to further boost their investments to the $5,000 balance. The Core and the Premium tiers add even more customization features to build on the knowledge and gains made in the interim.

Three key Fundrise benefits make this an attractive platform for investors interested in real estate:

1. You can get started with only $10.
2. Fundrise has a large and highly diverse portfolio, which helps to reduce risk.
3. Fundrise offers different strategies rather than treating all investors the same.

Any U.S. citizen or permanent resident living in the U.S. aged 18 or older can open a Fundrise account. A single person can open an account, and joint accounts are also available. Fundrise also offers IRAs.

Other entities and businesses can also open a Fundrise account, but the platform doesn’t currently support self-directed 401(k) investments or custodial accounts opened for minors. Fundrise is available to accredited investors and non-accredited investors. You don’t need to be accredited to use the Starter, Basic, Core, or Advanced portfolio tiers. But, accreditation is required to invest in certain Premium portfolio-tier products.

Becoming an accredited investor requires you to reach particular net worth or income requirements. You need to have earned a $200,000 ($300,000 joint) minimum in both of the past two years. Or you need to have a net worth of at least $1 million (and this cannot include the value of your primary residence).

Fundrise has extensive support articles on its website to help new and even more experienced investors get the most out of the platform. It’s pretty easy to get your questions answered, and more specific questions can be directed to customer support via the contact form or email.

Getting started with Fundrise is easy. Simply provide the usual personal information and a valid email address. During the signup process, you’ll set your investing goals and state your investment experience. Fundrise will need to know your time horizon and how much you intend to invest in the platform annually.

Based on your answers to these questions, Fundrise will suggest an account level to meet your investment goals. But, if your circumstances change or you want to select different options, you can downgrade or upgrade anytime.

To learn more, please read our Fundrise review.

DiversyFund vs Fundrise: Features

Of the two platforms, DiversyFund is the more straightforward. The size of your investment balance is irrelevant, as you get the same features and access to the same real estate assets at any level. As a real estate investor, you can track your account via the mobile app or online anytime.

Fundrise opens up far more options, including the low minimum investment amount of just $10. The different Fundrise account levels give potential investors a lot of choices, and the in-app news feed keeps you up to date.

Generally speaking, DiversyFund is a simpler way to get started, but many investors will outgrow this platform quickly. Fundrise is a far more sophisticated platform where you can grow your account over a longer period, and there are more options to explore.

Winner: Fundrise

Investments 

DiversyFund specializes in apartment buildings. They seek out apartment complexes with a minimum of 100 units underperforming in rental income and occupancy. After acquiring the building, they perform upgrades to attract new tenants. This increases the rent and the value of the entire building.

All DiversyFund investors pay a 2% asset management fee. However, some projects may have 2-4% developer fees.

Fundrise has a broader selection of real estate assets, including apartment buildings, single-family homes, commercial units, and more. Investors at the Premium account level with $100,000 or more invested with Fundrise can also access private equity funds. This is a more sophisticated way to invest in real estate that is simply not available with DiversyFund.

Platform fees for Fundrise are 1% annually. This breaks down to 0.85% for asset management and 0.15% for advisory services. An additional 0-2% asset organization and acquisition fee may be charged to originate, negotiate, and close debt and/or equity investments.

Fundrise and DiversyFund fees may seem higher than other investment opportunities like mutual funds and ETFs. But, they’re low when compared to many other alternative investments on the market. Fundrise can facilitate a diversified investment opportunity in a residential and commercial real estate portfolio with a total fee of 1-3%. Fundrise has a very transparent fee structure and this is not the case with many other crowdfunded real estate investment platforms.

Winner: Fundrise

Withdrawing Funds 

Withdrawing funds from Fundrise and DiversyFund, like any real estate investing platform, should be considered carefully. Bear in mind that this is a long-term investment strategy and investments should be committed for at least five years.

That being said, both of these real estate crowdfunding platforms are non-publicly traded REITs, and as such, they lack liquidity. The platforms are the sole market for their funds. The investments are illiquid and you cannot cash out or claim those funds on a whim.

This is very different from some other financial assets such as stocks and bonds, which can be bought and sold quickly and easily when required. When you invest with Fundrise or DiversyFund, you’re making a true commitment to growing your portfolio over the long term.

DiversyFund doesn’t permit early withdrawals before the investment has run its full term but Fundrise does have some limited withdrawal capacity. Let’s take a look at how these platforms handle early withdrawals in more detail:

Fundrise Withdrawals

Although it’s possible to make an early withdrawal from a Fundrise investment, there are some rules to consider. First, these withdrawals can only take place quarterly, and they’re not eligible until a minimum investment period of 90 days has passed.

When you make an early withdrawal during the first five years of the initial investment, you’ll incur a 1% fee on the distributed amount. After five years have elapsed, there is no withdrawal fee.

But, Fundrise has warned investors that quarterly withdrawals are not guaranteed, and they’re only allowed with sufficient free cash in the account to cover the withdrawal amount. That means, if too many investors are trying to withdraw, Fundrise has the right to decline early withdrawal requests.

Withdrawals can be unavailable or limited during business downturns due to a lack of new investments and greater early withdrawal demand from others on the real estate crowdfunding platform.

DiversyFund Withdrawals

DiversyFund has made it clear to its investors that their investments are illiquid and there is no way to make a withdrawal against an investment until the funded projects are fully liquidated.

Most projects take five years until the REIT is funded, and after that time the necessary purchases, renovations, and price appreciation can take place. The REIT is targeted at selling properties in the fund within that five-year period. Once they are sold, the principal is distributed between the investors.

What if those properties are not sold when the five-year period is concluded or they are sold at a loss? DiversyFund has stated that there’s no guarantee, but they mitigate risk with measures to protect the investment.

A Growth REIT can hold multiple properties. Diversification will spread the risk to make the investment less volatile. Although the real estate market can and will fluctuate, it tends to be less volatile than many other asset classes over the long term.

This is even true during a recession when people tend to downsize and move from larger family homes to smaller properties. An average multi-family apartment complex may have more than 150 tenants, which gives the investors a cushion if some renters cannot cover their rent.

So, there’s a possibility that investors could experience a loss of principal, just like any investment that’s not guaranteed. DiversyFund pays a dividend of 5% annually, but these are automatically directed back into the fund to improve the properties and their values. In this respect, DiversyFund is not a steady source of income or a source of funds to cover unexpected short-term requirements. Fundrise investors have the option to receive dividends as cash or to have them reinvested.

Winner: Fundrise

Average Returns

Fundrise returns are dependent on the dividend yield of the eFund or eREIT that you’re investing in. Over the past five years, returns (including dividends and appreciation) have ranged from 1.5% to 22.99%. While 1.5% may not seem impressive, public REITs had a -25% return during the same year (2022).

DiversyFund launched its Growth REIT in 2018. It’s still in the process of acquiring properties and there’s very little data available on returns at this point.

An investor can use the DiversyFund portfolio to view forecasts for the internal rate of retire (IRR) to evaluate long-term expectations.

Overall, both platforms offer the potential for excellent returns, but Fundrise has a more established track record at this point.

Winner: Fundrise

DiversyFund vs Fundrise Conclusion

In these turbulent times, commercial real estate is a tried and tested alternative investment model. The costs of traditional real estate investments are simply out of reach for a person with a moderate income. However, crowdfunding has been a real game-changer, even if you’re not an accredited investor.

Property management headaches can be a drawback for people who can afford traditional real estate investments. Platforms such as Fundrise, DiversyFund, and others are a great way to get started in real estate investment with a minimum buy-in of only $10 or $500. These platforms also benefit from an experienced project manager’s input to handle complex details.

In some regards, Fundrise and DiversyFund are close comparisons at the lower investment tiers. They both have a low barrier to entry, and they focus on proprietary funding projects rather than focusing on one specific property. This helps to mitigate the risks and to maximize the potential gains. But, despite these similarities, they are quite different platforms, and these differences need to be considered carefully before making a commitment.

Fundrise is the best choice for investors that want a flexible platform that will grow with them over time. There are some limited withdrawal capabilities and five different plan levels to select from. You can choose the ideal plan to meet your current needs. Invest for growth, income, or a combination of both. And with the Starter portfolio available for just $10, it’s ideal for beginners.

DiversyFund is a long-term investment solution for people that want capital appreciation. It’s impossible to liquidate investments early, so you’re pretty much locked in for the entire term of the investment. DiversyFund offers little flexibility, but the returns may be higher than most real estate crowdfunding platforms. This platform offers no income option, the dividends are automatically reinvested into the fund to maximize growth potential.

As you can see from this DiversyFund vs Fundrise comparison, both platforms provide different services for a specific type of investor, and it’s pretty hard to say that one is superior to the other. DiversyFund is a good choice for patient long-term investors that only want capital appreciation. Fundrise is the best choice if you want plenty of investment flexibility and early access to your funds if you need them.

You can also learn more about other Fundrise alternatives here.

Vital Dollar is an affiliate of Fundrise. If you click a link from our site and invest with Fundrise, we may receive a commission for the referral.