DiversyFund vs. Streitwise - Which is Best for You? (2021)
While both Streitwise and DiversyFund are similar on the surface generally only one of them will be suitable for your investment needs as they have very different philosophies, particularly regarding dividends and property-type.
With Streitwise you can only cash out once a quarter, and there is a 10% penalty in doing so, and DiversyFund currently doesn’t even allow early withdrawals — meaning with DiversyFund you’ll have to hold the investment for multiple years before you’ll receive profits from the investment, other than dividends.
Due to the high fees of Streitwise we think DiversyFund is a better choice for most people — for who aren’t comfortable holding for multiple years and want more liquidity than DiversyFund offers we’d opt to go with Fundrise, which offers Quarterly redemptions like Streitwise, but with much less fees, better average returns, and more diversification.
Which Platform Has Less Fees - DiversyFund or Streitwise?
While fees aren’t the most important thing they’re generally the main deciding factor for most people when it comes to investing — In this case however we believe it’s more important to focus on overall return as well as the features and philosophy of each platform and what they have to offer.
However to get to the point — DiversyFund claims to be no-fee, and this is somewhat true as they don’t take any active fees every month or year — instead they opt to be a shared-owner in the investment and act as not only the manager of the property but also the property developer — and in return they take an equity stake of around 2% -> 8% in the properties they acquire — meaning in the 5-year vested period (more on this later) their fees are only 2% -> 8% of your invested capital depending on the project, generally around 3.5%.
On the other hand, Streitwise charges a flat 3% entry fee plus 2% a year in extra fees that are used to pay for an external property manager — which comes out to about 13% in the same time period as Diversyfund would take their 2% -> 8%, which sounds quite horrible if you ask me — but hey as we said above, fees aren’t what matters: total return is what matters — more on this later in the article.
Which Platform has Better Sign-Up Offers - DiversyFund or Streitwise?
Which Platform has Better Diversification & Transparency?
We’d say both aren’t super transparent compared to other competitors like Fundrise, but between DiversyFund and Streitwise we think DiversyFund is maybe a bit more transparent compared to Streitwise, but ultimately not by a significant margin — As a result The main differentiating factor is that Streitwise only has a few properties under management while DiversyFund has dozens of properties in the fund already, making it much more diversified and stable in it’s performance.
If you’d like greater transparancy than these platforms offer, which is more or less limited to property location, basic financials, and that’s it — then we’d recommend checking out Fundrise which is more transparent than either of these companies — or if it’s not a deciding factor for you and Diversification + maximum returns is, then DiversyFund is likely the better choice — but unfortunately in this category, as of 2021, Streitwise isn’t a great choice if you want diversification or transparancy.
Which Platform Offers the Best Overall Return - DiversyFund or Streitwise?
There’s no way to spin this — DiversyFund absolutely destroys Streitwise in terms of historic performance.
To elaborate, for the last few years DiversyFund smashed returns out of the park with 15%+ returns, while Streitwise has only yielded a bit below 10% for the last few years — maybe this is due to their way higher fees, or maybe this is due to the types of properties they seek out, or their lack of diversification, but there’s no disputing that Streitwise has yielded much less than DiversyFund historically.
To put this all into perspective if you invest $10,000 for 10 years into DiversyFund you’d be looking at a sum of $45,520~ at the end of the 10 years, a whopping 4.5x return — while with Streitwise you’d only have $26,440~ after the same time period, assuming both of their historic returns remain the same.
Don’t get us wrong — Streitwise isn’t a bad investment just because DiversyFund returns so much more, they both outperform the general broad market historically and with rewards generally comes risk, so theoretically this may mean Streitwise has less risk than DiversyFund — although we don’t really believe this to be the case.
Who is Better Off Investing with Streitwise?
If you aren’t interested in residential property and want to specifically diversify into commercial/office real estate then Streitwise is a pretty great choice — they seem to outperform publicly traded office/residential reits at large while at the same time having a healthy 8%+ dividend yield, providing some good income for folks who are moving into retirement or simply love cash-flow.
However if you aren’t specifically interested in office/commercial exposure then we don’t see a reason to go with Streitwise over DiversyFund or Fundrise, both of which offer more diversified types of properties both in terms of geographical diversification and also property type, as well as higher historic returns and lower fees.
Who is Better Off Investing with DiversyFund?
Unless you’re interested in pure-play Office/Retail exposure then we don’t really see a reason to go with Streitwise over DiversyFund, as pretty much in every single metric DiversyFund appears to be the better choice.
DiversyFund has lower fees, higher historic returns, better diversification, and in our opinion better selection of property locations and geographic exposure. As a result unless you specifically are looking for Office/Retail exposure then there’s not really a reason to opt for Streitwise over DiversyFund.
Streitwise & DiversyFund FAQ's:
Below we’ll answer the most popular questions we’ve been asked about the two platforms, or questions we personally had about them before we tried them both out ourselves — if you have any questions that aren’t answered below feel free to either email us or the companies their self to get those questions answered.
Does DiversyFund Pay Dividends?
While they used to not they now do pay dividends and offer a DRIP (Dividend re-investment Program) as well — so now just like Fundrise and other eREIT’s you can expect dividends every single month — assuming nothing catastrophic occurs that causes rent-delinquency’s to explode.
What are the terms for early-redemption (exits before the liquidation period) for Streitwise and DiversyFund?
When it comes to DiversyFund it’s quite simple — there aren’t any. If you want to exit before the fund/property is liquidated after 3-5years+ you’ll have to do a fancy pancy private-equity deal with someone off-market, which just isn’t viable for 95%+ of people — so essentially there is no option to liquidate early on, which is quite problematic if you are in need of quick-cash.
As for Streitwise things are a bit more complicated — You can ‘redeem’ your assets whenever you want and Streitwise will repurchase them from you — however they do have a small waiting period of between a few days and a little over 2 months depending on the product and time of the quarter you choose to redeem your assets and they do charge a redemption fee of 0% -> 10% depending on how long you were invested in the platform.
Does Streitwise or DiversyFund Use Debt/Mortgage’s With Their Properties?
Yes, we met with both DiversyFund and StreitWise and discussed this very topic — they both use a fractional debt when purchase deals — meaning that they take a portion of customers invested capital and use it as a ‘downpayment’ for a property, then finance the rest of the deal, generally around 35% -> 60% with debt and the rest of the property is paid for in cash, providing a healthy cash-flow right off the bat while at the same time providing a decent built-in inflation-hedge and low-risk leverage.