Anyone here have any experience investing in the reit called Diversity Fund. It is a private Reit that doesn't pay dividends until the properties sell. They buy fixer upper multi-family dwellings and fix them up and re-rent. Expenses are low, but it would definitely be a long term investment.
"It is a private Reit"Whether it is a true private REIT or just a non-publically traded REIT, most around here just avoid such REITs. A few questions.1) Who is brining this REIT to your attention?2) Will they make a commission on your purchase?3) If yes to above, how much?4) If a sales person was involved, did they give you any disclosure documents?5) Have you read it/them?A couple of broad comments.1) A healthy degree of skepticism can be a valuable trait, especially if someone is trying to sell you something. 2) If you are actually considering investing, then there is no short cut to reading the disclosure documents. If you cannot understand something in the document after reading it say three times, the fact that you cannot understand it is intentional!Buyer beware!
It is a private Reit that doesn't pay dividends until the properties sell.When you read through the documents as Valuemongeragain suggests, make sure you pay particular attention to any/all restrictions on how you can get your money back out. Many 'private' or 'non-publicly traded' REITs have restrictions on how you can sell the shares, and how long it takes to get your entire investment out. Especially if you hold in a tax-advantaged account, you/your spouse or your non-spouse heirs will need to sell at some point due to RMDs (you/your spouse) or the requirement to disburse the entire account in 10 years (your non-spouse heirs).AJ
I read through their web site and from it, this is what I think is going onThis is a publicly traded REIT, not Private and not exchange traded.Per the annual REIT >= 90% of taxable income distributions rule, distributions are made and if in a taxable account will be income to the account holder, but they are required to be reinvested.The 'maturity' period is projected to be 5 years when apartments will be sold (liquidity event) and, I'd image, the proceeds are distributed as partly return of capital and partly capital gains. While being operated, the first 7% of 'profits' each year (REIT Taxable Income or GAAP income??) goes to investors, then the 'profits' are divided 65% investors and 35% management up to 12% return for the year and thereafter, the 'profit' is split 50-50. At least that's how I read it to work.My assessment: don't go there.Any time you get off the grid, you run the risk of getting fleeced. Like the roach motel, its easy to get in but ner' impossible to get out until you're let out. In the meantime all you can do is watch and management will do whatever it is they wish to do....and most of the time, from my readings, it does not go as you thought it would.The power of buy and sell orders cannot be over-emphasized. When you go off the grid, you give up this right, and management knows this. Its not a good position to be in.Stick with individual REITs, REIT funds and REIT ETFs you have the discretion to buy and sell as you see fit.https://diversystaging.wpengine.com/how-it-works/?utm_source...Oh, and a minor point....its 'Diversy', not 'Diversify'.BruceM
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