crowdfunded real estate investing is one of the most popular ways to invest in real estate. There are a lot of choices out there. I’ve written about two of my favorites in a previous article. I’ve also written about what you need to know about REITs. Today I want to tell you why DiversyFund is my top choice for crowdfunded real estate.
You can also check out why we invested $50,000 of our own money into non traded REIT.
In the interest of full disclosure, DiversyFund is a paying client of The Money Mix (TMM), another website in which I have an interest. We agreed to work with them to help promote their offering of the DiversyFund Growth REIT. The team at TMM looked at several crowdfunded offerings and decided we wanted to work with DiversyFund. The team at TMM and I take our obligation to our readers seriously to only represent the best in the companies we represent. DiversyFund fits that category perfectly.
In today’s post, I want to give you the top three reasons we chose to endorse and work with them.
Table of Contents
DiversyFund – Our Top Choice for Crowdfunded Real Estate
The Best People
Along with Shark Tank, one of my favorite business-related television shows is The Profit. In the show, Marcus goes into struggling businesses to see if he’s willing to invest. If he does, he goes all in to help the owners turn around the company. For whatever amount he invests and the percentage of the business he owns, he always says if he comes on board, “I’m 100% in charge.” Even though the business owners know that’s what he wants, many still push back. They do this knowing that Marcus is a multi-billionaire investor.
When Marcus looks to invest in businesses, he cites the three most important things he looks for – people, product, process. Applying those three principles, DiversyFund checks all three boxes.
People
When looking at investing in a company or its products, one should always start at the top. In the case of DiversyFund, that means looking at CEO Craig Cecilio. I had the pleasure of interviewing Craig earlier in the year. I found him to be one of the most down to earth CEO’s I’ve met. His story is unlike many in his position. Craig tells me he comes “from the 99%, not the 1%.” That’s contrary to most CEOs in the real estate business.
Craig grew up in Fairfield, CT. He’s lived in San Diego since 1997. He says, “I’ve combined my East Coast competitiveness with West Coast mentality in business and in life.” He’s a workout enthusiast and likes to compete with people much younger than him (in their twenties no less!). When Craig is not working, you’ll likely find him hanging out with his wife and two daughters (a third on the way). You might also find him working to help local entrepreneurs grow their businesses or working on a social issue. Craig’s desire to give back is apparent in every aspect of how he manages DiversyFund.
In 2016, Craig partnered with Alan Lewis to formally start DiversyFund. Craig partnered with Alan because of his corporate securities background as a corporate lawyer Alan also spent time as an investment banker on Wall Street. They share the same mission of democratizing investing for everyone. They take compliance very seriously and make sure they adhere to best practices They get audited every year and submit financials 2x/year.
The team we’ve worked with at DiversyFund reflects Craig’s vision and values. They have been responsive, helpful, and active in executing the vision of bringing crowdfunded real estate to the 99%.
Everyday Investors
Most who create real estate funds target the wealthy accredited investors. You know them, right? From the SEC Website:
An accredited investor, in the context of a natural person, includes anyone who:
- earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
That leaves out the vast majority of investors. That didn’t sit well with Craig. He wanted to start a fund that catered to the everyday person. People who grew up like him. He is laser-focused on his customers’ experience. I’ll talk more about that shortly.
Craig wanted to use his twenty-plus years in real estate to develop a fund for the average American who never had access to such deals. When we first met Craig and his team, their minimum investment was $2,500. Craig and the team realized that was a level unavailable to a large number of investors. What did they do? They lowered it to $500. I cover the DiversyFund Growth REIT and how it compares to another company in a post I did for TMM. I’d encourage you to go there and get more details.
What’s the bottom line for the team at TMM and me? We loved Craig’s sincerity and concern for his team and his investors.
Product
Once again, DiversyFund’s product sets them apart. DiversyFund Growth REIT has a very focused investment strategy. They aren’t trying to be all things to all people. As the name suggests, the fund focuses on one thing – growth. They achieve that growth by focusing on one type of real estate – multifamily housing (primarily apartments and condos). Why multifamily? Because these properties are less risky than other types of residential real estate.
They have the technology and processes in place to find the best properties in the best markets around the country. It starts with the property and location, like most any real estate investment. But the team takes it a step further. Here’s what they look for in properties.
Property Characteristics
- Multifamily units
- Units must be occupied and cash flow positive
- Units need some repairs
Let me further explain the last point in the case it makes you nervous. When I say “needs some repairs” I’m not talking about foreclosure properties that need entirely redone. Remember, they are occupied and churning out positive cash flow. The repairs might be things like a new HVAC system, updates for kitchens or baths, or a fresh coat of paint. The team at Diversyfund does all of this work themselves. That saves a ton of money. It also assures that the work is done to their high standards.
At the end of the repairs, the units are of better quality than when the properties were purchased. What does that do? It allows them to increase the rents as the lease to new tenants or as existing tenants leases expire. Higher rents and better quality properties increase the value of the properties. That means the potential for higher profits when the team sells the properties.
Though the properties are cash flow positive, that money stays in the fund to fuel future purchases. Remember, the fund’s singular goal is the growth of capital, not income.
Processes
Property purchase
Once again, DiversyFund stands out and rises above the crowd (crowdfunding real estate that is; I couldn’t resist). From the property selection process to the ease of opening an account, the processes are smooth and reliable. Let’s start with the properties. Because they are vertically integrated, they eliminate the middlemen from the equation. That means savings that get passed on to you, the investor. Here’s the process:
- Use technology to identify potential properties
- Put those properties through a rigorous screening process to be sure they are a good fit
- Send a team to visit and analyze the properties to assess the condition, what updates need to be done, and the quality of the tenants
- Once selected, price is negotiated and if an agreement is made, purchase the property
- They don’t charge brokerage fees or commissions, saving investors thousands of dollars
- All improvements get done by their team
- There are no middlemen in the process
- Manage the properties from start to finish when sold
Investment Process
Investing in DiversyFund Growth REIT is simple and all done online. All you have to do is click the “Get Started” button on any page to enter your personal information. From there, follow the instructions to get your account opened.
There are a lot of resources available to educate yourself on investing in real estate. The has articles to help walk you through the process of understanding:
- Getting started with investing – covers saving, planning, working smarter, and determining how much to invest
- A primer on alternative investments – an explanation of alternative investments and ways they might protect your portfolio
- Real estate investing – a tool to diversify, minimize volatility, why multifamily, and the choices
Craig and his team want you to fully understand what you’re investing in and why before you fork over the first dollar. Spend some time educating yourself before investing. Or, if you’re a more seasoned investor that knows real estate is essential but haven’t pulled the trigger yet, DiversyFund is a great place to start.
Final Thoughts
I hope you see why we are so fond of Craig and the DiversyFund team. Rarely these days do you find a company focused on bringing quality investments to “the 99%.” That’s not just a tagline or marketing gimmick to the team at DiversyFund. I can tell you that they take the mission very seriously.
In general, multifamily properties are less risky than other types of real estate. The strategy DiversyFund uses makes that even more valid. They want to make investors feel good about getting into the private real estate market. They want to have their customers as long term, repeat investors. Their people, product, and strategy reflect that mission.
Getting to know Craig and working with him and his team has given me more confidence in their mission than ever. Don’t take my word for it. Check them out for yourselves. If you do, I’m confident you’ll walk away with the same confidence that the team at TMM and I have.
Now it’s your turn. Have you invested in crowdfunded real estate? Did you know there was such a thing? Has this post and our others given you a better understanding of real estate investing?
This post was previously published by The Money Mix
