April 20, 2022
The DiversyFund Growth REIT goes through six phases to create its portfolio and provide potential returns for investors. To better understand the benefits of investing in a REIT, it’s a good idea to take a closer look at each of these phases. The first phase is the capital raise, which refers to the process a business uses to raise funds for investment. The capital raise process for other industries, such as individual corporations, might include selling off equity or borrowing money to pay for future investments or improvements. REITs like DiversyFund take a different approach to capital raising, giving all investors a distinct opportunity to add to their portfolios and participate in the real estate market.
REITs use the capital raise phase to gather the funds for purchasing portfolio assets. Typically as money is invested/raised, the REIT can begin vetting and acquiring properties. The capital raise phase is essential, as it creates the investment used to purchase cash-flowing properties.
The approach some REITs take may differ from others, but DiversyFund was founded after the passing of the JOBS Act in 2012. This law leveled the playing field for startups – like DiversyFund – and paved the way for every investor (accredited or not) to invest in institutional-quality assets. The door was opened to crowdsourcing for capital raise phases of real estate investing.
This setup provides smaller investors with the opportunity to share in both the cost of purchasing real estate and the potential profits from their eventual sale. Investors at every stage of the earnings game can balance their portfolio without having to invest in a full real estate deal and become a landlord. In this way, DiversyFund raises the capital needed to complete the capital raise phase.
The benefits of this type of capital raise for individual investors include:
With DiversyFund’s capital raise process, individuals can make one single investment or schedule monthly deposits throughout the phase (Auto-Invest), so they can select exactly how much they want to invest in each REIT as they open.
REITs cover a host of different industries, from retail to residential, industrial to commercial. DiversyFund uses capital raise to invest in residential multifamily assets, which provides potential benefits for its crowdfunding investors.
For example, in Q4 of 2021, the national vacancy rate for these types of properties dropped to 5.6 percent, with renter-occupied units making up approximately 30.9 percent of all occupied housing in the United States. Vacancy rates tended to be lower in secondary and tertiary markets when compared to gateway communities. This demand for rental housing provides a unique opportunity for REITs to create a strategy for long-term investments. Raising capital to invest in these areas makes it easy for investors to take advantage of the current real estate market trends and create a long-term strategy for building potential wealth.
DiversyFund is currently in the capital raise phase for REIT II, collecting contributions to use when purchasing additional multifamily properties. The fund targets the phase to last one year or until fully funded. The original REIT has closed to investments and has moved on to the next phases of the six-step strategy: Acquisition, Renovation, and Cash-Flowing.