I have a similar experience with a couple property management companies. But my feeling was that the pain is self cause. The overload that causes not properly manage customers request is just crazy. Topics that can be closed within days ends being weeks and months and a lot of emails.
Crowdhouse leaves the property management business
1 Like
Did anyone ever do a comparison between investing in direct real estate fund vs. crowdfunding like Foxstone / Crowdhouse etc?
To me it seems like Direct real estate funds have following advantages
- a more diversified portfolio because multiple underlying assets are involved
- Higher liquidity
- Tax advantages
- No landlord responsibilities
Co-ownership via Crowdfunding advantages
- higher leverage which improves Return on Equity. This can also be a problem because in terms of losses , the losses are also multiplied
- Annual Costs of investing -: not sure how annual fees of Crowdfunding compares with TER of Direct real estate funds. But I would expect this to be lower for crowdfunding
- No day to day activities (more or less outsourced)
Other elements
Operational costs of maintenance/renting/tenant management/services should ideally be better for Direct funds. But if crowdfunding expands, maybe they will come close to each other.
The buy-in costs for Crowdfunding should be compared to the buy-in spreads of the funds. However these are one-off costs
Both of these donât really give investors a real right on the property itself. However on paper the land register has a name of investor.
Liabilities
- When co-ownership Investment is made, one gets an asset but also a liability (mortgage) in their personal balance sheets. This in reality means the health of the balance sheet and ability to pay mortgage premiums might be linked to other investorsâs personal balance sheet. One has to trust the due diligence of platforms
- For RE Funds, the liability is for the fund. Of course if Fund collapses, then investor money is at risk.
Based on a quick back-of-the-envelope estimate, it seems comparable. I took two random examples and it seems Foxstone might actually be pricier than Mobimo.
- In a recent Foxstone offer, Foxstone fees seem to amount to about 498k for a 7 years long holding time*, and transactions fees (notary costs) to about 594k. They are seeking to collect 2675k from investors.
So on average over 7 years about 5.8% of the NAV goes to Foxstone and transaction fees. - If Iâm parsing Mobimo 2023 financial report correctly, they spent about 93M in such fees for an about 1904M market cap, so about 4.8%.
Caveat: The numbers donât cover exactly the same thing so they canât be directly compared. And also, Foxstone is more levereged, and maybe the ratio over AUM makes more sense. But as a first approximation they look similar.
* 7 years holding time is what Foxstone themselves suggest. This is shorter than what I would expect and might explain some of the difference in costs.
1 Like
Does anyone have further experience / info on this?
Weâre looking at 5-6% yields in CHF which are not corellating to the market.
My gripe is the liquidity⊠what happens if you need to sell, who will buy and at what fees?
I looked at it many years ago but finally did not invest.
It is my impression that you are adding a middle man (incl. its fees) for not much added value. What exactly does co-ownership mean? To me, the worst case could be endless discussion among the owners about paying or not for renovation or replacement of appliances.
From a renterâs perspective, there was a report that crowdhouse was a pain to deal with.
1 Like
Well the upside is you can âaffordâ a property that you normally canât buy.
Buty indirect RE offers similar returns, less hassle and more liquidity, the downside is that you donât see âyourâ property. I personally would never invest in such a wehicle.
1 Like
I would consider it as a high yield bond if thinking of lending option.
And if considering co-buying then itâs a complicated ownership structure
For the renters part⊠well thatâs up to them to deal withâŠ
As for why: I wish I had 2-3M in purchasing power for a block in a rural canton, but I donât. 4-6% yield however is a pretty solid ROI on 100K in CHF and itâs very unrelated to market returns, which is pretty good.
Frankly thatâd be up to the management of the building, I just want to make money, not build nice real estate.
⊠you (in the end).
On their website they qualify 4-5% income as âexpected distributionâ. I would translate that into âmaximum distributionâ. Also, itâs not clear to me if this is already a net distribution, i.e. after crowdhouse management fees. Further quote from their risk statement (highlight is mine):
If renovations or repairs are necessary, there is a risk in extreme cases that no return can be distributed. In the case of higher costs, it can happen that no return can be distributed during the entire term of the investment and even further fresh equity capital must be contributed.
Sure, but you also maybe have an amortization component + appreciation of the properties.
yes of course, thatâs how it is when you invest in RE - but itâs not in their intrest to make a bad rep for themselves either. Their business model is mainly based on managing the properties, not on ripping you off with bad deals (which then means they need to manage more).
1 Like
I hope itâs clear to you, you are not getting 4-5% yield on investment
You are getting 4-5% + DEBT of X times the investment value.
1 Like
Yes, the mechanic is the same as it would be with a real estate investment (at least for the co-ownership model).
1 Like
Right except the fact that Investment is illiquid because it is not full ownership.
I know some people who are invested in such things. It works but has its own risks in my view
1 Like
Crowdhouse does multiple events per quarter, sign up on the newsletter.
Since the abolishment of the Eigenmietwert will hurt direct ownership of non-self-lived property owners, they are now pushing everyone to a model where they establish a holding company and you buy shares in the company that owns the building. More liquid, easier management, more expensive to maintain though.
Experience since 2024:
- still reliably OK. One of my properties is actually at 7.5% yield, the others tick around 6-6.5%, which is decent.
- minus taxes (at your marginal tax rate, mostly), plus declaring taxes in every canton (the admin is very much not zero)
- Iâm just getting a top up slice of a building on their secondary market, the process is slow but it seems to work
- in a premature exit, your price for your original investment will be your original investment plus whatever premium the secondary market will give you. Usually lower than the appreciation of the building. Well, you shouldnât exit RE ever, so this is OK I guess.
If you want 6% CHF returns you donât need to own RE though:
- Foxstone does construction financing in a crowd-sourced manner, same ~6% annual interest but without the building ownership, on shorter terms (1-2 years), tickets start at 10k CHF
- PGHN (Partners Group) gives you 6.5% divvies currently plus upside in the stock plus ultimate liquidity (plus a lot of risk added ofc
)
1 Like
This is property management and is outsourced now. You donât have a say in these things (and that is okay), the management company does what they must do, you get the costs.
What CH does is asset management (gathering money, buying assets with the money, and then distributing yields to owners).
1 Like
My experience is with Foxstone, but I had also checked Crowdhouse, fairly similar for what I could see.
In the end I never bought a share of a building, but I invested in crowdlending for some construction projects, the yields are similar, but there is a clear exit with a defined endgame (12 months to 36 months for the ones I checked). This worked fine.
The shared ownership for me doesnât work: either after 7 years a majority agrees to sell the whole building or you keep going for another 7 years.
The only way out is to sell on the Foxstone secondary market, no idea as to how well that works.
In addition with the abolition of the Eigenmietwert as mentioned by @user137, interests are no longer deductible 100% (works should still be OK thou), so I wouldnât invest in shared ownership until things become clearer.
At the end a direct RE fund is quite competitive for me once you take into account the wealth tax and dividend tax-free distribution: with my marginal rates for the two taxes, a 2% dividend becomes equivalent to 4.1% before tax.
No declarations in other cantons, no uncertainty about Eigenmietwert induced changes and very liquid.
So Iâm not looking anymore to shared ownership.
1 Like
this makes sense, however I wouldnât write off the asset class immediately:
- owning real estate (vs. owning a stock-traded RE fund) is entirely different. Real estate is a physical good that doesnât seem to exist and one that throws yields every month, regardless of the weather or a stock market exchange.
- physical real estate doesnât really have âagioâ, where the market pays a premium or a discount for the collateral underneath, selling might be illiquid, but the prices are quite certain.
- during a deeper stock market crash, you are not pulled down with âthe sentimentâ into deep red as the asset class is pretty independent of stocks. You canât say this for the exchange-traded ETFs and funds as liquidity in this case is a double-edged sword, especially if too many people want to escape, the fund may be forced to sell assets at the wrong point in time (see: Partnerâs Group)
- we need to see what the âcompany-owned real estateâ is going to be via Crowdhouse, vs. direct ownership. At least itâs marketed as more liquid (no notary business) and completely tax-free. And we still have 2.5 years until this gets to be a reality.
It will be interesting to see the market going into 2029, where holding a physical non-self-used property will be much less appealing for most retail owners, financially speaking. It might balance the market out a little with a lot of individual selling.
I agree completely with you, but I have not been clear.
Iâm not discounting owning real estate at all, I was only commenting on the shared ownership scheme that Foxstone (and Crowdhouse in the past) are using.
I guess we will have to wait for 2030/2031 to see the effects on retail owners, thatâs when the 2029 tax return will be filed and some taxation decisions might only come by 2031: at that moment reality will hit.
1 Like
If I had a 2M+ portfolio, Iâd just get a 700K margin loan (down payment) and buy an old muti-unit building in a rural canton at 100% LTV⊠but my portfolio is like 1/5 of that, so still need to wait for such shenanigans. Yields of 5-6% arenât a rarity either (with a managing company, so you donât do tenant business at all).