Invest in fractionalized rental properties
Invest in franchises
Moderate Risk
3/5
Investing with Lofty carries typical real estate investment risks, including market volatility, economic changes, and property management challenges. Additionally, the use of cryptocurrency and tokenization presents legal and regulatory uncertainties.
High Risk
4/5
Investing in FranShares involves risks such as market volatility, economic changes, and franchise-specific challenges. Despite efforts to mitigate risks, there's no guarantee of returns, and FranShares' financial health could impact investments.
Moderate Liquidity
2/5
Lofty provides liquidity by allowing investors to list their property tokens for sale on the marketplace at any time, with a 2.5% transaction fee. Orders are held in escrow and have a 30-day expiration.
Minimum Liquidity
1/5
While liquidity isn't guaranteed, the platform is developing a secondary market for potential future liquidity opportunities.
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Low Return
5 %
Lofty offers a 5% cash on cash return, with token values updating monthly based on HouseCanary's Automated Valuation Model (AVM).
Moderate Return
20 %
FranShares' TNT Franchise Fund Inc., with 55 locations across major U.S. metros, historically generates returns of 20 to 28% EBITDA per location after 16-18 months.
Short-term Investment
1 year
Investment time horizon on Lofty is not fixed and is determined by property owners' collective decision on when to sell through the governance system.
Long-term Investment
5-15 years
Income portfolios target a 10-15 year hold; growth funds aim for a 5-7 year period before selling.
Who can invest
International
Investors from the US and abroad can invest with Lofty, excluding those from OFAC-sanctioned countries.
Who can invest
International
FranShares welcomes both accredited and non-accredited investors, focusing mainly on opportunities for non-accredited individuals. The platform also accepts international investors from many countries, depending on the specifics of each offering.
Moderate Volatility
3/5
The value of assets on Lofty's platform can be volatile, influenced by economic trends, interest rates, and real estate market conditions, potentially leading to variable financial outcomes for investors.
Moderate Volatility
3/5
Franchise investments are subject to volatility due to economic shifts, industry trends, and franchise performance. While some franchises may be more resilient, values can fluctuate, posing a risk to investment value in adverse conditions.
Regulation and audits
Audited
Lofty's marketplace transactions are executed using a smart contract on the Algorand blockchain, which has been audited by CertiK for security.
Regulation and audits
SEC Regulated
FranShares employs SEC regulations A+, D, and CF for its investment offerings, creating structures with a main investment vehicle and subsidiaries for each franchise brand, possibly including locations or groups of locations.
Insurance
No
Lofty's specific insurance details are not provided, but properties on investment platforms are usually insured against physical damage.
Insurance
Yes
FranShares' insurance covers physical damages or losses to franchises but does not protect against market fluctuations, economic downturns, or fraud. Coverage limits may not fully reflect market values, meaning insurance does not eliminate all investment risks.
Payouts
Rental Income
Lofty provides daily rental income to investors, which can be withdrawn at any time through various methods including ACH, PayPal, and cryptocurrency options.
Payouts
Dividends
FranShares plans to distribute excess cash flow to investors 12 to 18 months after each offering closes, with distributions expected quarterly. The frequency can vary (quarterly, semi-annual, or annual) based on the specific offering.
Withdrawals
Investors on Lofty can sell tokens anytime on the marketplace and withdraw proceeds using methods like bank transfer, PayPal, or cryptocurrency.
Withdrawals
Investors in FranShares can receive their investment back through the sale of franchises, targeted within 5-15 years depending on the fund type. Upon sale, net proceeds are distributed to investors based on their fund ownership share.
Extra Fees
Yes
FranShares charges a 1% to 3% annual management fee and possibly a performance fee, detailed in each offering's documents. No management fees are charged for the "TNT Franchise Inc." offering.
Taxes
Tax Form
Lofty provides US residents with pre-filled 1099 tax forms for income and capital gains reporting. Non-US residents may reduce withholding taxes with forms W-8BEN or W-8BEN-E if they have a US SSN or ITIN.
Taxes
Annual Statement
FranShares investors may owe capital gains taxes on profits from share sales and pay taxes on dividends, classified as ordinary or qualified based on holding periods and individual tax situations.