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Regulation & SecurityFoxstone uses the IT infrastructure of a Swiss data center, in compliance with FINMA’s requirements as per the Federal Act on Data Protection and certified ISO 27001:2013. All the sensitive data is hosted in Switzerland.
Foxstone is a real estate crowdfunding platform linking investors together to purchase shares in a rented investment property in co-ownership, (to collect a rental income proportional to their equity stake) or to grant a loan to a real estate developer, (to collect a fixed amount of interest). Foxstone is neither a financial intermediary, nor a real estate investment fund. The platform solely acts as a link between investors and sellers or property developers.
Yes, 100%. Foxstone’s business model complies with all the Swiss regulations. Two non-compliance confirmations were obtained from the FINMA (the Swiss Financial Market Supervisory Authority). Foxstone’s business model is compliant with:
Yes, the platform uses advanced encryption technologies (SSL 256 bits) to ensure a high standard of security throughout the system.
Co-ownershipEach investor expressing an interest in an offer receives the investment file including:
And must fill, sign and return the following documents:
These documents are required by the mortgage provider and the notary.
No, crowdinvesting does not give access to the individual use of the property, unlike the PPE condominium. Co-owners invest in order to collect returns and not for the purpose of living on the property.
No, for obvious logistical reasons we usually do not organize private tours of the buildings before buying them. However, you have access to the photos as well as the technical and structural details of the property, summarized in the prospectus of each investment proposal.
PPE condominium usually consists in the purchase of an apartment. It gives the owner the right to use this apartment either to live in it or to rent it (and generate returns). A crowdinvestment in co-ownership consists in the purchase of a part of a building; each co-owner holds a fraction of the entire building. The goal is to earn a return and not to live in it. As a real estate investment, crowdinvesting in co-ownership has the following advantages over PPE condominium:
The renovation fund consisting solely of cash, is owned by the co-owners. Therefore, the share of each investor in the renovation fund is calculated pro rata of his or her share of co-ownership. In the event of a sale of a share of co-ownership, the shares of the renovation fund belonging to the out-going co-owner increases the selling price.
In order to guarantee the maintenance and renovations of the building, which will be necessary in the coming years, the co-ownership agreement requires the administrator to set up a capex reserve (guarantee account) on behalf of the co-owners community. The percentage of revenue collected for this account is determined in advance based on the condition of the property and the recommendations in the inventory of fixtures. This percentage is defined by the administrator at the general assemblee for the following year. This fund is solicited in case renovations are needed and for the payment of the bank if the rents no longer cover the payment of the interests. Thus, the co-owners are all the more protected from a possible subsequent call for funds. When selling their shares of co-ownership, investors collect the balance of this account in proportion to their participation.
Co-owners receive quarterly the net cash flow from the property. It results from the rental income from which operating expenses, investment expenses for the improvement of the property and mortgage-related expenses are deducted. Below is an example of an annual account:
| Rental income | |
|---|---|
| Operating expenses | (Water, electricity, maintenance costs, insurance, property management fees) |
| Mortgage interest | Rate fixed for 7 years with a banking partner |
| Property tax | Varies according to the canton |
| Rental vacancy protection | Safety margin if an apartment stays empty for several weeks |
| Foxstone’s management fee (0.05% to 0.25% of the property price) | Monitoring of the management, quarterly reports and proposition of a strategy for the building |
| Net income | |
| Provision for renovation fund(or guarantee account) | Provision to perform the works |
| Amortization | Since the credit is relatively low, banks do not require an amortization |
| Distributed income |
At the time of sale of the property or when the investors sell their shares, they shall receive their invested capital in return plus any capital gain resulting for the appreciation of the property. Each investment carries a risk which can strongly impact the yield. Foxstone advises every investor to read the Risk Factors document, which summarizes some of these risks, and to consult a financial expert and a tax advisor for each investment. No guarantee whatsoever is given as for the reimbursement of the capital and the payment of dividends.
Once the acquisition of the building is concluded, the name of each investor is entered in the cantonal land register as a co-owner. The entry in the land register guarantees ownership through the existence of a real rights.
Co-ownership implies that the names of the co-owners are entered in the land register. This title guarantees the co-owner investor real rights on the building. Therefore the investors have no dependency on Foxstone which is only the administrator of the co-ownership. In the event that Foxstone comes to disappear, this would have no consequence on the co-ownership. The administration of the co-ownership would then be delegated to another company.
Co-ownership refers to the direct acquisition of fractional ownership of a property with the entry of the acquirer’s name in the land registry as a co-owner. The properties proposed for acquisition are existing and rented yielding buildings. The co-owners of the property receive quarterly their net rental income, in proportion to their number of shares, and realize a potential capital gain at the sale of the property. Co-owners can put their shares on sale at any time on the Foxstone platform.
In order to protect the co-owners from a potential interest rate hike which could negatively impact the investment’s revenues, Foxstone generally sets interest rates over a seven-year period.
Foxstone has partnerships with several renowned Swiss banks through which agreements are concluded to make the crowdinvestment in co-ownership as fluid as possible. Each investor has to have filled beforehand the investment form supplied by Foxstone at the time of his subscription. These forms are sent to the bank in order to verify the origin of the funds and the investor’s solvency.
In Switzerland, the debt ratio on residential buildings can reach 80% of the value of the building. For the financial stability of the investment and in anticipation of future hikes of interest rate, we generally prefer to borrow a maximum of two-thirds of the property’s value. We want the building to be self-sustained and the mortgage cost to be largely covered by the rental income.
For crowdinvesting in co-ownership, Foxstone takes the following fees: 3% of the gross value of the asset once the transaction is concluded and management fees of 0.05% to 0.25% of the property price, decreasing according to the amount of the transaction.
The costs of the eventual maintenance and renovations are directly collected on the rental income; if this one is not sufficient, the capex reserve (guarantee account) can be solicited.
The co-owners are free to choose the property manager and revoke Foxstone’s management mandate. This will require a qualified majority of co-owners, as provided in the co-ownership agreement.
The collection of the rents and the day-to-day management of the buildings are delegated to established and renowned property managers with whom Foxstone concluded advantageous agreements for the co-owners, giving them preferential rates throughout Switzerland. The co-owners community delegates the renovation decisions and the payment of the mortgage to Foxstone.
CrowdlendingFoxstone charges structuring and fundraising fees as a percentage of the loan amount.
The loan is materialized by a debt contract issued by the borrowing company which owns the construction project or the building to be refinanced.
Crowdlending is the granting of a loan to a real estate company in order to finance a real estate development project or refinance an existing real estate asset. Investors receive a fixed interest on a quarterly basis and recover their capital at the maturity of the loan, the duration of which varies from 1 to 5 years. They have the possibility to put their loan contracts up for sale at any time on our secondary market.
Each investor expressing an interest in an offer receives the investment file including:
And must fill, sign and return the following documents:
These documents are required by the mortgage provider and the notary.
The real estate developer supplies quarterly reports (according to the project) on the project’s progress with photos of the construction site. Foxstone synthesizes these reports and publishes them on the investor’s online dashboard for an easy consultation.
Enterprise contracts are generally preferred by Foxstone because they reduce the risk of delays and budget overruns. This is because the company can be held responsible for any variances. Thus, any overrun of the set construction budget is the responsibility of the construction company and any overrun of the delivery time is penalized. Therefore, enterprise contracts are instrumental in the risk of overruns.
In the event that Foxstone were to disappear, this would not affect the loan. Investors are still in possession of the debt contract issued by the company owning the real estate development project entered in the land register on behalf of the company. Depending on the investment offers, these contracts may also be linked to a first or second rank mortgage note, thus increasing the safety of the investment.
InvestmentA KYC (Know Your Customer) is the form used by banks to verify the compliance of the customers with the anti-corruption laws and to prevent identity theft, financial fraud, money laundering and the funding of terrorism. This form is required by the bank, independently of Foxstone, to accredit the investor before he transfers funds on the bank account dedicated to the transaction.
In order to simplify the acquisition process, the investors sign a power of attorney which allows Foxstone to represent them in front of the notary to finalize the acquisition of the building in co-ownership. This avoids investors having to move to notaires in the different cantons in which they invest.
The amount of your subscription includes all the transactional expenses. These comprise the notary’s fees, the bank charges, the technical, financial and legal audit, the independent valuation and Foxstone’s fees. The investor has to bear the fees of the advisors he hired for an investment besides the notary costs for the certification of his signature.
For the time being, Foxstone does not invest in the opportunities offered on the platform. However, in the near future, an entity owned by Foxstone will co-invest in the proposed offers in order to insure a perfect alignment of interests with investors.
If the amount to be raised is not reached, funds already transferred on the escrow account opened for this purpose are returned to the investors.
We strongly recommend you to diversify your portfolio. This is why we propose buildings with various usages, in diverse geographical areas with a panel of financial instruments offering an optimal diversification and allowing to limit the systematic risk.
The capacity of an investment offer is allocated on a “first-come, first-served basis”. An investment is registered once the investor fills all the documents, is approved by the bank and transfers the funds on the escrow account.
No. All the information displayed on the Website and through the platform as well as in all the investment documents is for information purposes only. Each investment entails risks which can strongly impact the yield. Foxstone advises every investor to read the Risk Factors document, which summarizes some of these risks, and to consult a financial expert and a tax advisor for each investment. No guarantee whatsoever is given as for the reimbursement of the capital and the payment of dividends.
Taxes vary according to the type of investment and the particular taxation of each investor. Each investor is invited to consult his own tax advisor before considering an investment.
All information, documents and contracts are available at any time on the platform in your secure account. You can view, download or print them. You receive an activity and management report containing detailed information on the evolution of your investment quarterly. In addition, an online professional dashboard allows you to monitor your portfolio and calculate the exposures by investment type, geography, liquidity and many other financial ratios.
Depending on the size of the transaction and the regulation in effect for this type of investment (crowdinvesting in co-ownership or crowdlending), the minimum amount can vary. It is generally starting at CHF 25,000.
Yes. However, the majority of the company’s beneficial owners have to be Swiss citizens or Swiss residents. The applications will be treated on a case by case basis.
For the time being, we focus only on residential properties, which are subject to the Federal Law on the Acquisition of Real Estate by Persons Resident Abroad (LFAIE). Therefore, only Swiss citizens and holders of residential permits B and C from the Member States of the European Union (EU) or the European Free Trade Association (EFTA), are allowed to invest in this type of offer.
Foxstone is seeking investment opportunities the price ranges of which vary between CHF 1 million and CHF 15 million for crowdinvesting in co-ownership and between CHF 2 and 30 million for crowdlending projects.
Our team is at your disposal to meet you and answer all your questions
Call us now +41 22 800 26 26
