DiversyFund vs. Groundfloor

DiversyFund and Groundfloor are two popular real estate investment platforms, each catering to different investor needs and preferences. While DiversyFund focuses on long-term growth through multifamily real estate investments via a managed REIT, Groundfloor offers short-term opportunities by funding real estate loans for flippers and developers.

Both platforms are accessible to non-accredited investors and provide unique ways to diversify your portfolio. Understanding their differences in focus, risk, liquidity, and returns can help you determine which platform aligns best with your financial goals.

What is DiversyFund?

DiversyFund Inc. is a private REIT that has been set up to allow investors to buy shares for as little as $500. In addition to the low buy-in, DiversyFund doesn’t have a minimum net worth requirement for its clients, which many REITs do. This allows small investors to participate in the real estate market in such a way that has historically only been available to high net worth individuals. 

DiversyFund still buys and sells real estate like a traditional REIT, but with an added focus on being user-friendly for small investors. In addition to the low buy-in, DiversyFund offers a number of user-friendly additional benefits, including:

• Webinars where investors can learn about REITs and how DiversyFund works
• Huge FAQ page that answers many questions potential investors may have
• Transparency — DiversyFund is publicly traded and subject to federal and state regulations regarding investment vehicles 

In addition, DiversyFund actually is easy to contact through email and encourages its investors (or potential investors) to reach out with questions. This is a marked departure from many investment firms, where the person you want to talk to or ask questions is usually unavailable.

While DiversyFund used to offer monthly dividends, the company no longer does. Instead, shareholders cannot sell their shares until DiversyFund closes the fund and begins selling the assets. The firm aims to allow investors to begin selling their shares in five years.

What is Groundfloor?

Groundfloor is a unique real estate investing option that is built on crowdfunding and offers a higher level of investor control. Unlike a REIT, where you invest in a particular property portfolio that’s been pre-selected by a fund manager, Groundfloor operates as a lender for a wide range of real estate investments around the country and provides the capital for that lending through investor funding. Then, Groundfloor allows individual investors like you to pick and choose which property (or properties) you want to invest in. 

Groundfloor offers a menu of options for investors to choose from and a buy-in as low as $10! Each individual investment opportunity on Groundfloor features its own profile and an individual prospectus with its own interest rate, loan term, and loan to after-repaired-value (ARV) ratio. This puts the power completely in your hands. This makes Groundfloor a great source of funding for home flippers or people who like to recondition distressed assets for profit. 

Additionally, Groundfloor offers individual retirement accounts (IRA) to investors and even offers opportunities to become brokers.

DiversyFund vs. Groundfloor

Here’s a side-by-side comparison of DiversyFund and Groundfloor to help you evaluate which platform fits your investment goals:

1. Investment Focus

• DiversyFund: Focuses exclusively on multifamily real estate. Investors contribute to a managed real estate investment trust (REIT) that acquires, renovates, and holds properties for long-term growth.
• Groundfloor: Specializes in short-term loans to real estate flippers and developers. You invest in individual loans, earning interest when borrowers repay.

2. Minimum Investment

• DiversyFund: $500 minimum investment.
• Groundfloor: As low as $10 per loan, offering much more flexibility for small-scale investors.

3. Investment Duration

• DiversyFund: Long-term (5+ years), as funds are locked until the properties are sold.
• Groundfloor: Short-term (6–12 months), depending on the loan term.

4. Payouts

• DiversyFund: No immediate payouts; profits come from property sales and appreciation at the end of the investment term.
• Groundfloor: Regular interest payments once loans are repaid, providing quicker returns.

5. Liquidity

• DiversyFund: Highly illiquid, with no option for early withdrawal.
• Groundfloor: More liquidity since loans have shorter durations, but there’s no secondary market for selling loans.

6. Fees

• DiversyFund: No management fees; profits are reinvested into properties during the growth phase.
• Groundfloor: Borrowers, not investors, pay platform fees.

7. Risk

• DiversyFund: Risk is tied to the overall performance of the REIT and real estate market trends.
• Groundfloor: Risk is tied to the borrower's ability to repay loans, though the loans are secured by real estate as collateral.

8. Accreditation Requirements

• DiversyFund: Open to both accredited and non-accredited investors.
• Groundfloor: Also open to all investors, making it highly accessible.

9. Transparency

• DiversyFund: Investments are pooled, so you don’t pick individual properties.
• Groundfloor: High transparency, as you can select individual loans to fund and see detailed project information.

• DiversyFund: Ideal for long-term investors seeking passive, hands-off exposure to multifamily real estate.
• Groundfloor: Great for those who want more control over their investments, prefer shorter-term commitments, or have smaller amounts to invest.

DiversyFund and Groundfloor are just 2 of many real estate investment options available for investors. If you want to know more about the best real estate investment platforms to invest in, Benzinga has a great list to consider.

Which Real Estate Investing Platform is Right for you?

As with all investments, beauty lies in the eye of the beholder. If you’re someone who likes to dig into the details of what you’re investing in, or have a higher level of control over where your money goes, Groundfloor may be the best option. On the other hand, if you prefer to leave the investment decisions to a seasoned fund manager, DiversyFund or another REIT might be the way to go. But perhaps the best part about DiversyFund and Groundfloor is that the buy-ins are so low, you can invest in both.

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