Silvabrand | Join the Crowd
Silva Brand

Join the Crowd

Jul 26, 2022 | by Team Silva
4 min

Property ownership is undergoing a transformation. Once considered a milestone, buying a home is becoming an unrealistic prospect for many young people. “Prospective Gen Z homebuyers are now grappling with saving more for a down payment while paying escalating rent prices,” Bankrate writes. “In 2017 — when some of these buyers were just finishing high school — the median sale price of a home in the U.S. was $313,000. Now, it’s $428,700.” Difficult economic conditions are also hampering other generations’ ability to purchase a house. For example, addy writes that “millennials struggle with a wage gap that’s made home buying in its traditional sense, unattainable.” These financial challenges are causing alternatives to single-family homeownership to emerge, giving new investors a foothold in real estate. A decades-old practice called crowdfunding is a now a popular way for consumers to add property to their portfolios. According to ROCKET Mortgage, crowdfunding “invites investors to pool their money using online financial technology (fintech) or crowdfunding sites to fund real estate investments, with an eye toward making an eventual one-time or ongoing profit.” Here’s a look at Fundrise and DiversyFund, two crowdfunding brands that are ushering in a new era of real estate investing.

Innovative company Fundrise is providing the public with affordable investment opportunities that eschew the old way of doing business. According to The Dough Roller, the company’s CEO and co-founder, Ben Miller, “felt that online technology had developed to a stage where individual investors could directly invest in properties without relying on the stockbrokers as middlemen,” and he subsequently started Fundrise in 2012. The company is “marshaling a business model that melds PE-like funds and fintech to help people buy real estate stakes with investments as low as $10,” writes Fortune. These low prices have helped the brand reach new investors. As The Dough Roller notes, Fundrise “is popular among millennials and young investors who want to be directly in control of their money.” The company’s appeal among these burgeoning investors has resulted in major gains. According to Exploding Topics, “with over 150K active investors, $5.1B in total asset transaction value, and $100M earned in net dividends, Fundrise is one of the major players in the crowdfunded world of real estate.”

Like Fundrise, DiversyFund is a crowdfunding brand that is charting a new path for investing in property, one that offers greater affordability to those who have traditionally felt sidelined in the real estate market. “The JOBS act of 2012 made it possible for everyone to invest in institutional-quality real estate by removing barriers that previously made it impossible,” according to DiversyFund’s website. “Our fintech platform is dedicated to helping investors add the power of wealth creation through real estate to their portfolios.” It does this by opening investment opportunities to more people. “A big plus for less well-heeled investors, the minimum investment in DiversyFund is only $500 and is open to nonaccredited investors,” writes nerdwallet. Those funds can go toward real estate projects. “DiversyFund focuses on multi-unit, residential properties, with several medium to large-sized projects in California, Texas, and elsewhere, with a focus on long-term capital appreciation from the renovation and repositioning of these multifamily properties. DiversyFund opens up access to private market investments through its Growth REIT. Your initial investment purchases a stake in a diverse portfolio of multifamily apartment buildings that comprise the fund,” Entrepreneur writes. “When the time is right, DiversyFund also manages selling properties, splitting any profits generated among investors. Currently, more than 19,000 investors are investing with DiversyFund and taking steps to build generational wealth for themselves and their families.”

Crowdfunding brands like DiversyFund and Fundrise are making it possible for the greater public to buy real estate, and this trend has important implications. “Through crowdfunding technology, it’s possible to give everyone who’s impacted equity in the project and participation in its societal returns,” according to Forbes. “As members of the socially conscious generation look to support businesses that match their values, fintechs are responding with thoughtful product development and marketing. Let’s face it, the existing system was built to reward some while locking others out.” It will be important to see if traditional homeownership becomes more democratized in response to crowdfunding’s rise. The real estate market’s future currently seems full of possibilities.