Investing in your future by way of real estate investment trusts (REITs) is an amazing opportunity. These investments allow the companies to take care of the bulk of the work while you reap the benefits.
With minimal money up front, you can invest in a multitude of real estate categories within minutes of getting started while not actually owning real property. However, all real estate investment platforms are not created equal. To understand the differences and see which real estate investing platform is best for you and your portfolio goals, let’s dive right into these 2 popular REITs.
What is a REIT?
Real estate investment trusts are a low-risk way of getting into the real estate investing world, whether you are just starting out or are an experienced investor.
This is an investment into a company that owns, manages and rents real estate space to tenants. From there, investors receive a portion of the profits back in the form of dividends from these income-producing properties. This way, you are a shareholder in a REIT and own a share of real estate without having to maintain, manage or buy the property yourself.
Another important quality of REITs is the tax advantage. There is no double taxation, which means they are not taxed at the corporate level like other investment companies, and as an investor, you are able to deduct up to 20% of your dividends.
REITs are also required to distribute 90% of their taxable income each year to their shareholders, giving you higher returns and more dependable income. REITs are a great alternative to stocks and bonds, with higher dividend yields.
How Does a REIT Compare to Equity Crowdfunding?
As equity crowdfunding platforms have been popping up in a variety of fields over the last few years, it’s hard not to explore this as an option for your investing. There are some clear benefits to investing in real estate through crowdfunding — including direct ownership — which is important to some investors.
Through crowdfunding, you are investing in a specific property or project and hold partial ownership with other investors. You have more control over where your money is going and more transparency surrounding the details of the investment than with a REIT. However, your returns are limited to what that single property can provide. With a REIT, on the other hand, any losses or temporary vacancy in a particular property are offset by the cash flow from the rest of the portfolio. Your shares also have the potential to increase in value if the REIT adds additional properties to its portfolio.
In addition, you are part of a smaller pool of investors with crowdfunding, which can lead to higher returns and more money back in your pocket. But with this also comes higher risk.
REITs are known for having lower risk and more people are typically able to invest in REITs as well because the minimum investment is usually quite reasonable and relatively inexpensive compared to crowdfunding, which is commonly reserved for accredited investors.
While REITs and equity crowdfunding are both popular investing routes to take, knowing which one works best for you and your goals is what’s important. Do you want more control over which specific properties you’re investing in while taking more of a gamble and putting more money upfront? Or do you want something lower risk where a company takes care of everything and you keep an eye on your investments?
Who Benefits From Investing in REITs?
REITs are a great investment opportunity for anyone looking to invest in real estate. They are easy and uncomplicated and provide the ability to earn passive income and diversify your portfolio. You can get set up within minutes and begin investing. REITs allow you to dabble in the real estate investing world without having to own real property, maintain it or rent it out yourself.
What is DiversyFund?
DiversyFund is a private REIT fund platform that’s aiming to bring wealth-building opportunities to the middle class. DiversyFund realizes that everyone should have access to the tools wealthy investors are accustomed to. With DiversyFund you can invest in multifamily housing with just $500 and no management fees. If long-term wealth is your goal, this is definitely a REIT worth checking out.
The platform for investors includes 24/7 access to educational services and private market investment funds. You can learn more about how REITs work and how you can benefit from this type of platform. This company is open to emails at firstname.lastname@example.org if you have any questions, or attend one of the webinars on DiversyFundund’s Growth REIT for more information. You can also check out our DiversyFund Review for more details.
It's important to note that DiversyFund no longer offers monthly dividends. Instead, it requires investors to commit to at least five years, or until DiversyFund closes the fund and begins selling the assets, to receive a payout.
What is Streitwise?
Streitwise, like DiversyFund, is a private REIT company. This platform specializes in commercial real estate investing. You will need a minimum of 500 shares to get started, which equals about $5,000 and may not be doable for every beginner investor though it is still considered a low initial investment in this industry.
Large gains on your returns are common because of consistent payouts and share prices. A yield of more than 8% is enticing to investors looking to earn a passive income stream. Streitwise is also open to international investors, as well as nonaccredited investors.
Streitwise is an online platform that offers 24/7 online chat and same-day support. They also recently launched an iOS app to allow investors to easily check in on their investments. The investor center supplies investors with a space to access dividend payments, handle account details and access tax information. You can also check out our Streitwise Review for more information on this platform.
How are Streitwise and DiversyFund Different?
Startup costs and fees: Though both of these platforms are considerably inexpensive to begin investing in, it’s worth looking at the minimum entry requirements. You can start investing with DiversyFund for as little as $500. There are no ongoing management or brokerage fees, but depending on the investment, there can be a development fee of 2% to 8%, a disposition fee of 1% when a property is sold, and construction management fees when properties are being renovated.
Streitwise, which is sponsored by Tryperion Partners, has a $5,000 minimum investment. Streitwise charges a 2% management fee annually after that. The investor retains the total shares purchased which is the basis for all dividend calculations, meaning you will own 100% of the shares you purchase. This is a one-time fee reimbursed to the sponsor and occurs for any new share issuances.
Type of real estate: The type of real estate you would be investing in is the main difference between these 2. Streitwise specializes in commercial real estate investing, while DiversyFund focuses on multifamily real estate within the DiversyFund Growth REIT. Each is an excellent way to get into the respective real estate markets, but knowing which you are investing in and what your goals are is important to keep in mind.
Investing in Streitwise will give you the ability to be a partial owner of commercial property in a growing market. However, it’s a newer company with just 2 properties and looking to expand as the number of its investors increase.
DiversyFund invests in apartment complexes chosen by the DiversyFund Growth REIT. It invests in cash-flowing properties with a focus on long-term appreciation. It is, however, a blind pool, meaning you do not have the option to choose what properties to invest in or opt-out of.
Age and experience: When deciding to invest your hard-earned money, you should take into consideration the age and experience of your investment platform as well as the management team that's handling your investment.
Both platforms are relatively new, but each come with an experienced management team with decades of experience. DiversyFund is a well-known financial tech company that launched its Growth REIT in 2018 with the executive team having more than 20 years of experience under their belts. Streitwise launched in 2017, but shares the same executive team as its sponsor, Tryperion, which was founded in 2013. Its founders have a combined 40 years of experience in the industry.
Which REIT is Best?
Both of these investment opportunities allow the investor to jump right into real estate investing. Low entry costs (though Streitwise is considerably higher) and fees allow even non-accredited investors to begin investing. These alternative modes also allow seasoned investors to diversify their already impressive portfolios.
Both DiversyFund and Streitwise are-easy-to use digital investments that will have you up and running almost instantly while removing a lot of the risk involved with investing big money . It really just comes down to which platform you are more comfortable with and how you see your portfolio progressing over time.
Benzinga’s Favorite Private REITs
Here at Benzinga, you can learn about all the different types of REITs. Once you have all the information you need to make an educated decision on your investment, you are set to begin your real estate investing journey. However, there are a few to really consider before taking the leap.
The Bottom Line on DiversyFund Vs. Streitwise
Overall, it seems that these are both excellent options. DiversyFund is quick and easy to get started with just $500, so it is the most doable for anyone looking to start out or add to their portfolio. It also has more experienced experts with more years of impressive results than trying out a new company like Streitwise with a $5,000 investment upfront. But if you are open to a bigger gamble, you could end up with much larger gains with Streitwise — just be sure to check back at Benzinga for more information on the ins and outs of current investment opportunities.
Frequently Asked Questions
What is the best crowdfunding real estate site?
The best crowdfunding real estate site is the one that works best for you and your investment needs. Are you more concerned with startup costs? Transparency? Customer support? Type of real estate? The best site will be the one you are most comfortable working with to achieve your individual investment goals.
How do I make passive income?
Investing in REITs or real estate crowdfunding is your key to making passive income. Real property is not passive — you are doing the work to operate and maintain it. Investing in crowdfunding or REITs can take that responsibility away and earn you passive income for years to come.
What does REIT stand for?
REIT stands for Real Estate Investment Trust.
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