Residential
CHF 150,000
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.
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.
