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Old 16.01.2020, 09:59
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Foxstone real-estate crowdfunding

Anyone has experience with them? https://www.foxstone.ch/en/

According to startupticker they are the first in Suisse Romandie who offer crowd investing for real estate. Apparently in German speaking part there are more offers.
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Old 16.01.2020, 11:30
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Re: Foxstone real-estate crowdfunding

The terms are curious to say the least.



1) https://www.foxstone.ch/en/co-owners...me-a-co-owner/


"Each property is financed on average by 40% equity and 60% mortgage. Therefore, each co-owner holds a part of the mortgage.......For example, for an investment of CHF 50,000 (40%), you hold a mortgage of CHF 75,000 (60%)."


Why the leveraged investment when the very purpose of co-ownership is to pool resources from several people? Just ask more capital to investors, or wait for more investors instead of selling the customers a mortgage.



Why the mortgage? Either because: (i) they're worried they will never get enough funds from customers to buy properties with 100% customer capital meaning Foxstone has no experience on what they try to do, or (ii) their profit is precisely in acting as sales people for a bank.



From another perspective, Foxstone requires a 40% initial payment for a mortgage when banks ask only 20%.



2) https://www.foxstone.ch/en/faq/


"Foxstone’s management fee (0.05% to 0.25% of the property price)"



Foxtone has fixed income and no incentives to ensure the property is well managed, the bagholder......errr investor is the only one in problems if the property is vacant and no rental income is generated.
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Old 16.01.2020, 11:47
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Re: Foxstone real-estate crowdfunding

That name arouses my suspicions. Why a one letter change to a well known upmarket UK estate agent? Are they linked or are they trying to cash in on brand familiarity?
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Old 16.01.2020, 12:41
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Re: Foxstone real-estate crowdfunding

I don't know the company, and understand why they would look to mortgage their properties. It gives more leverage and the interest is fully tax deductible. As to 40% own capital, I'd imagine this is to give the mortgage giver more security as the loan is on the company, rather than the individual, and in this case can be more risky. Not only that, but the bank gives 80% of the firesale value, so just 60% is not unusual.

However, anyone who invests must make sure the company is reliable, check to see how their investment is protected. Has the property had a valuation from, for example, Wuest Partner or other reliable valuer,. Can the property be sold without the investors agreement for example, or worse, if the property is to be sold, can one person prevent the sale? After sale how will the proceeds be distributed?

Final caveat, property is not a liquid investment. We've seen many property funds halt redemptions recently. So if everything stacks up, remember, you're in for the long term.
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Old 16.01.2020, 14:42
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Re: Foxstone real-estate crowdfunding

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As to 40% own capital, I'd imagine this is to give the mortgage giver more security as the loan is on the company, rather than the individual

The language indicates that mortgage is also owned by the investors who are indeed the bagholders.



And getting a mortgage ofcourse helps the sponsors get paid on higher value, as their fee is based on property value.
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Old 16.01.2020, 15:46
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Re: Foxstone real-estate crowdfunding

Ive been using Property Partners for a number of years. Its offering the same thing in the UK.

To start I was really happy. The net annual rental yield was paid monthly and was 5-7%. Fluid re sale market. Really good.

Then they changed the CEO, introduced fees for having the account with them, and introduced an assets under management fee. Its still not bad compared to a bank, and pays a net of 2-3% yield. The problem is this move destroyed the resale market, and personally it showed me that these new style investments which are semi or loosely regulated can change the goal posts and conditions as they like.

Things to watch out for are the fees, and how easily they would be able to change them. And the property market, is it correctly valued, under or over? Will it go up, or will properties go down here. These investments base the predicted return on yield plus capitol gains...its up to you if you think thats accurate. You should also look at the exit mechanism.

With property partners you can sell your shares on the resale market or at 5 years the property is put up for sale if the share holders vote for it.

The concept is great. People that jumped in with Property Partner from the start made a lot of cash. The new CEO has changed things and up set people so I am less in favour of it now, as for 2-3% theres other investments you can make without the risk of loosing on the initial capitol.

One big difference with PP in the UK and the link you have sent. You can start small with PP and see if you like it and it works for you, with this link its quite a sizeable initial investment to make.
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Old 16.01.2020, 16:27
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Re: Foxstone real-estate crowdfunding

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And getting a mortgage of course helps the sponsors get paid on higher value, as their fee is based on property value.
The fee would be the same, even if not mortgaged as the asset under management would have the same value.

The difference for an investor, on say a CHF 1 million property at 3% yield would be CHF 30,000

Borrowing 60%, less interest at say 1.2%, would give a yield of 5.7% on own capital invested. Almost the double.
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Old 16.01.2020, 19:02
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Re: Foxstone real-estate crowdfunding

I helped found a crowdfunding / peer-to-peer company some time ago but it involved lots of people so all the loans were chopped up into tiny pieces, people can stick the equivalent of CHF 50k in and yet never be exposed to any borrower for more than CHF 50. It's still working ok.

The real estate versions like this though see you much more exposed to particular developments / properties. So if one goes wrong, your portfolio can take a big hit and as a crowd project it's hard for you to know the risk you're taking on as most people won't visit the property in question, evaluate it personally etc.

In short be as aware as you can of the risks of real estate crowdfunding as you can, know what you are effectively lending too.
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