DiversyFund has marketed its real estate investments with an emphasis on low investor-level fees. Its fund disclosures, however, describe charges associated with property acquisitions, management, construction, financing, and investment profits. These expenses can affect returns even when they are not deducted directly from investor accounts.
The fee arrangements differ between DiversyFund's Growth REIT offerings. In 2026, Growth REIT I is winding up, while Growth REIT II has extended its dissolution date into 2027. This guide explains the applicable fees, their effect on investment economics, and how they compare with fractional real estate investing through individual property ownership.
Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.
Key Takeaways
DiversyFund disclosed acquisition and development fees of 6%–8% for Growth REIT I and acquisition fees of 1%–4% for Growth REIT II, based on qualifying project costs
Both funds permit approximately 2% annual company-level management fees using different calculation bases, although these charges were waived in 2024 and 2025
Other disclosed charges include property-level management fees of up to 2% of effective gross income, construction management fees of 7.5%, and qualifying financing and disposition fees
Growth REIT II's profit-sharing arrangement includes a 7% preferred-return threshold, sponsor catch-up, and subsequent 35% and 50% sponsor participation tiers
Growth REIT I is winding up, while Growth REIT II's dissolution date has been extended to December 31, 2027, making liquidity and distribution timing important considerations
Understanding DiversyFund's Fee Structure
DiversyFund's Growth REITs provided exposure to managed real estate portfolios focused primarily on multifamily properties. Investors purchased interests in the funds rather than selecting individual properties.
The funds' managers and affiliated entities could receive compensation for acquiring, developing, operating, financing, and selling real estate investments.
What "No Investor Fees" Means
DiversyFund historically promoted its offerings as having no investor fees, emphasizing the absence of certain charges deducted directly from individual accounts.
However, fund-level expenses can still affect investment results.
DiversyFund's Growth REIT annual report describes contractual compensation for its manager, sponsor, and related entities, including acquisition, asset-management, financing, construction, and disposition fees.
The distinction is between charges billed directly to investors and expenses incurred by the fund or its underlying property investments.
Actual costs depend on the specific fund, transactions completed, and services performed.
DiversyFund's Acquisition and Management Fees
DiversyFund's two Growth REITs disclosed different fee schedules. The applicable percentages depend on the offering and the financial amount used to calculate each charge.
Acquisition and Development Fees
The funds' historical acquisition-related arrangements included:
Growth REIT I: Acquisition and development fees of 6%–8% of qualifying total project costs
Growth REIT II: Acquisition fees of 1%–4% of qualifying project costs
Growth REIT II's 2025 financial disclosures describe its applicable compensation arrangements.
Project costs may include property acquisition and other eligible transaction or development expenses.
For example, a 2% fee on $5 million in qualifying project costs equals $100,000. This represents a project-level charge rather than necessarily a direct deduction from individual investor balances.
Company-Level Asset Management Fees
Both Growth REITs permit annualized management fees of approximately 2%, but their agreements use different calculation bases:
Growth REIT I: 0.1667% monthly, calculated on investors' aggregate capital accounts at the end of each calendar month
Growth REIT II: 2% annually, calculated on capital raised through sales of Class A investor shares
Both funds reported waiving their company-level management fees during 2024 and 2025.
These waivers meant that no company-level management fees were collected during those reporting years. They do not establish whether the fees will remain waived throughout 2026.
Property-Level Asset Management Fees
Separate from company-level management charges, the Growth REIT disclosures permit property-level asset-management fees of up to 2% of effective gross income from qualifying projects.
Growth REIT I's 2025 annual report recorded approximately $107,559 in property-level asset-management fees received by the sponsor from project entities.
This compensation relates to property-level services and is calculated using income from the underlying real estate rather than investor capital.
Construction, Financing, and Disposition Fees
Other disclosed transaction-related fees include:
Construction management: 7.5% of qualifying construction costs
Financing: Generally 1% of qualifying property loans or refinancing amounts
Disposition: Generally 1% of the applicable property sale price
Loan guarantees: A potential 0.5% guaranty fee on qualifying Growth REIT II indebtedness
Growth REIT II also permits reimbursement of certain organization and offering expenses, subject to a disclosed cap of 10% of capital raised. Its 2025 annual report recorded no such reimbursements in 2024 or 2025.
These fees apply only when the relevant transactions or services occur, so they should not be treated as recurring annual charges against every investor account.
How DiversyFund's Preferred Return and Promote Work
DiversyFund's Growth REIT arrangements also include sponsor profit participation, commonly called a promote.
Unlike management or acquisition fees, a promote allocates eligible investment profits between investors and the sponsor under a defined distribution waterfall.
The 7% Preferred Return
The funds' agreements describe a 7% cumulative, non-compounded annual preferred-return threshold.
This threshold determines the order in which eligible proceeds are allocated. It does not guarantee that investors will receive a 7% annual cash return.
Additional sponsor participation becomes available when the applicable preferred-return and distribution requirements are satisfied.
Sponsor Profit-Sharing Tiers
Growth REIT II's distribution waterfall includes:
A 7% cumulative, non-compounded preferred return for investors
A sponsor catch-up allocation under the operating agreement
A subsequent tier allocating 35% of qualifying profits to the sponsor
A higher tier allocating 50% to the sponsor after investors achieve the specified 12% internal rate of return threshold
The sponsor's share depends on the waterfall's sequencing, including preferred-return payments, capital-return provisions, and catch-up allocations.
Consequently, the 35% and 50% percentages should not be interpreted as charges automatically applied to all investment gains.
DiversyFund's Fund Status and Distributions in 2026
DiversyFund's legacy Growth REITs have different investment timelines, affecting when assets may be sold and proceeds distributed.
Growth REIT I Is Winding Up
Growth REIT I's term was extended through December 31, 2025, after which it entered its winding-up period.
Its manager described an anticipated period of approximately 12–24 months or longer to complete property transactions and distribute available proceeds.
The fund also reported no investor dividends declared during 2024 or 2025.
Actual distribution timing depends on asset sales, refinancing transactions, expenses, and outstanding obligations.
Growth REIT II's Dissolution Date Extends to 2027
Growth REIT II initially extended its dissolution date to December 31, 2026.
A September 2026 extension notice subsequently moved that date to December 31, 2027.
The extension provides additional time to manage and pursue sales of the fund's multifamily investments.
Growth REIT II's 2026 semiannual report also recorded no distributions declared on its Class A investor shares during the first half of 2026.
The dissolution date does not guarantee when final investor distributions will occur, as winding-up activities may continue after that date.
The 2023 Regulation A Suspension
Growth REIT II's Regulation A offering exemption was permanently suspended under a June 2023 regulatory order.
The proceeding concerned the offering's compliance and disclosures, including matters involving sponsor compensation.
The case was settled without admitting or denying the findings, apart from jurisdiction, and subsequent fund reports state that no monetary penalty was imposed.
The suspension applied to Growth REIT II's specific Regulation A offering exemption rather than every DiversyFund-related investment product.
How DiversyFund Fees Affect Returns and Liquidity
Investment outcomes depend on which expenses are incurred, how they are calculated, and when cash becomes available for distribution.
Why Fee Calculation Methods Matter
DiversyFund's fees use several different financial bases:
Acquisition fees are tied to qualifying project costs
Company-level management fees are tied to the applicable capital base
Property-level management fees are tied to effective gross income
Disposition fees are calculated on qualifying sale prices
Sponsor promotes depend on the distribution waterfall
Adding these percentages together would not produce a meaningful annual expense ratio.
The long-term impact of investment fees depends on their timing, frequency, and calculation base. Fund expenses must also be distinguished from charges already reflected in operating results and investment valuations.
Distributions and Total Returns
Fund distributions are payments made to investors, while total returns also reflect changes in investment value and the timing of cash flows.
A fund may retain cash for renovations, debt repayment, property operations, or future transactions.
For DiversyFund's Growth REITs, realized investor outcomes will ultimately depend on underlying property performance, applicable expenses, and available proceeds from asset sales.
Liquidity During the Holding Period
DiversyFund's legacy Growth REIT shares are not traded on public exchanges, making liquidity dependent on the funds' governing terms and available exit arrangements.
The liquidity restrictions of non-traded REITs can include limited redemption opportunities and extended holding periods.
During a wind-up, the manager may need to sell or refinance real estate investments before distributing available capital.
The timing and amount of those payments depend on completed transactions and outstanding fund obligations.
DiversyFund REITs Versus Individual Property Ownership
DiversyFund's pooled investment structure differs from fractional ownership models that provide access to individual residential properties.
These differences affect property selection, financial reporting, ownership arrangements, and tax treatment.
Pooled Real Estate Fund Ownership
DiversyFund's Growth REIT investors purchased interests in funds that managed portfolios of real estate projects.
The fund manager coordinated acquisitions, financing, property improvements, and dispositions.
Investors participated in the financial results of the managed portfolio according to the applicable offering and distribution arrangements.
Property-Specific Fractional Ownership
Property-specific investment models allow investors to select individual assets and review their acquisition economics, rental assumptions, operating expenses, and potential appreciation.
Ownership structures can also influence tax reporting.
REIT shareholders generally receive Form 1099-DIV information for qualifying distributions, while investors in partnership-taxed property LLCs may receive Schedule K-1 forms.
The applicable treatment depends on the legal entity and individual investor circumstances.
Why mogul Offers a Different Fee Structure
mogul provides a fractional real estate ownership model centered on individually selected residential properties, institutional underwriting, and professional property management.
Founded by former Goldman Sachs real estate professionals with more than $10 billion in combined transaction experience, mogul applies institutional expertise to property sourcing, evaluation, and ongoing operations.
Capitalized Platform Fees
mogul uses a one-time platform fee structure associated with property acquisition.
Its fees include:
One-time 5% platform fee: Calculated using the property's purchase price and capitalized into the initial transaction
No ongoing rental-income fee: mogul does not charge a recurring platform fee on collected rental income
No traditional annual AUM fee: The platform does not assess a recurring asset-management percentage against invested equity
The one-time platform fee equals 5% of the property's purchase price.
Property operating costs, reserves, and other applicable third-party expenses are reflected in each investment's financial structure.
This model distinguishes the one-time platform fee from recurring annual AUM-based fees while providing visibility into individual property economics.
Institutional Underwriting and Property Selection
mogul uses a structured underwriting process to evaluate residential investment opportunities.
Its team assesses local market fundamentals, acquisition costs, projected rental income, financing terms, property condition, and potential appreciation.
The company reports that fewer than 1% of the properties it reviews pass its diligence process.
Its property investment process includes:
Market research: Evaluating housing demand, employment trends, population changes, and rental fundamentals
Property underwriting: Reviewing acquisition economics, operating costs, financing, and cash flow potential
Due diligence: Assessing inspections, property condition, and anticipated capital expenditures
Operating preparation: Incorporating reserves and professional management arrangements
Investment alignment: mogul reports investing its own capital alongside members in properties offered through the platform
This approach provides members with access to individually evaluated real estate opportunities supported by detailed underwriting.
Professional Management and Monthly Income
Through mogul's investment-club structure, members acquire fractional interests associated with individual residential properties held through LLC arrangements.
The platform coordinates sourcing, acquisition, and ongoing property operations.
Members gain access to:
Individual property selection: Residential assets supported by detailed financial information
Monthly rental income potential: Distributions based on available property-level cash flow
Property appreciation exposure: Participation in potential increases in underlying property values
Investment transparency: Property-level reporting, valuations, and updates
Potential tax advantages: Applicable tax documentation and property-level tax treatment
Professional management: Coordinated operations without day-to-day landlord responsibilities
mogul also incorporates operating reserves into its property capitalization. Company materials describe allocations intended to cover approximately 8–12 months of complete vacancy, with actual amounts determined by each property's requirements.
This structure combines property-specific ownership with professionally coordinated management and financial reporting.
Member Benefits and Long-Term Property Ownership
mogul offers first-year loss protection for qualifying new members. Eligible investments made during the first seven days of membership may receive coverage of up to $10,000 in first-year losses, subject to the applicable promotion terms.
The platform focuses on residential investments intended for multi-year holding periods, providing opportunities for rental income distributions and potential long-term appreciation.
Members can review available investments through mogul's property marketplace, which presents individual property information and financial assumptions.
Its investment property calculator also allows investors to evaluate rental income, financing assumptions, and potential returns under different scenarios.
Together, these features provide access to individually underwritten residential real estate, property-level transparency, and professionally managed fractional ownership.
Disclaimer: The information provided in this guide is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult with a licensed professional before making any financial or investment decisions.
Frequently asked questions
What fees does DiversyFund charge investors?
DiversyFund's Growth REITs disclosed acquisition, management, construction, financing, disposition, and sponsor profit-sharing arrangements. Growth REIT I reported acquisition and development fees of 6%–8% of qualifying project costs, while Growth REIT II disclosed acquisition fees of 1%–4%. Actual costs depend on the relevant fund, transactions, and services performed.
Does DiversyFund charge an annual asset-management fee?
Both Growth REITs permit company-level management fees equivalent to approximately 2% annually, although Growth REIT I calculates its fee on aggregate investor capital accounts and Growth REIT II uses capital raised through Class A shares. Both funds waived these fees in 2024 and 2025, but that does not establish their treatment throughout 2026. Property-level expenses may still apply.
When will DiversyFund Growth REIT investors receive their money?
Growth REIT I entered its winding-up period after December 31, 2025, with an anticipated process lasting approximately 12–24 months or longer. Growth REIT II extended its dissolution date to December 31, 2027. Neither timeline guarantees a final payment date, as distributions depend on property transactions, available proceeds, and outstanding obligations.
What fees does mogul charge for fractional real estate investing?
mogul charges a one-time 5% platform fee calculated using the property's purchase price and capitalized into the initial transaction. It does not charge an ongoing rental-income fee or traditional recurring annual AUM fee. Property operating expenses and applicable third-party management costs remain part of the investment economics.
How does mogul differ from DiversyFund's Growth REIT model?
mogul provides fractional interests associated with individually selected residential properties through LLC structures, while DiversyFund's Growth REITs use managed real estate portfolios. mogul members can review specific property underwriting and financial information, with professional management coordinated through the platform. The model also offers potential monthly rental income distributions and exposure to property appreciation based on individual property performance.