Assess their risks, liquidity, returns, and timeframes
Fundhomes sets its minimum investment threshold at $100, with shares available at $10.
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.
Investing in Fundhomes carries risks such as potential loss of capital, market fluctuations, and regulatory changes affecting profitability. Investments are generally illiquid with a long-term exit strategy, and early withdrawal may result in penalties. A secondary market to improve liquidity is under consideration but not guaranteed.
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.
Fundhomes offers liquidity options including automatic share sales when properties are sold (5-10 years), a secondary market for selling shares to other investors, and a buyback program, with potential early sale penalties within the first year.
Lofty offers a 5% cash on cash return, with token values updating monthly based on HouseCanary's Automated Valuation Model (AVM).
Investors in Fundhomes can expect cash dividends from rental income, projected at a hypothetical rate of 6.62% per year, and property appreciation, estimated at 4.74% per year, upon sale within 5-10 years. This totals a hypothetical annual return of 11.36%.
Investment time horizon on Lofty is not fixed and is determined by property owners' collective decision on when to sell through the governance system.
The investment time horizon at Fundhomes is typically 5 to 10 years, focusing on long-term gains from rental income and property appreciation.
Investors from the US and abroad can invest with Lofty, excluding those from OFAC-sanctioned countries.
To invest in Fundhomes, one must be a U.S. Citizen or a resident of the U.S. with a valid Social Security Number.
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.
Fundhomes' vacation rental properties face real estate market volatility, with valuations influenced by economic shifts, interest rates, and regulatory changes.
Lofty's marketplace transactions are executed using a smart contract on the Algorand blockchain, which has been audited by CertiK for security.
Fundhomes utilizes Regulation A for public offerings, enabling investors to buy shares in Series LLCs that each own a vacation rental property. This approach grants investors partial ownership in a property, with all details outlined in SEC-filed offering circulars.
Lofty's specific insurance details are not provided, but properties on investment platforms are usually insured against physical damage.
Fundhomes insures its properties against physical damage, but this doesn't cover market risks or regulatory changes affecting property values. Insurance limits may also not match property market values.
Lofty provides daily rental income to investors, which can be withdrawn at any time through various methods including ACH, PayPal, and cryptocurrency options.
Investors in Fundhomes receive quarterly dividends derived from the net rental income of vacation rental properties, after deducting operational expenses. These dividends reflect a portion of the property's profitability but are not guaranteed and can fluctuate based on occupancy rates and market conditions.
Fundhomes earns through fees for property and asset management. This includes handling vacation rental operations like maintenance and guest services, as well as overseeing investment strategies and performance.
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.
Fundhomes provides K-1 Tax Forms for each investment property, detailing investors' share of income, deductions, and credits. Typically, these forms are issued by March 15th each year, with an IRS extension deadline of September 15th if needed.