Foxstone as an investment vehicle

You’re not investing into property on a “slapped up website”, but you are buying RE through them as asset managers. Your name is on the deed and the money is flowing through notaries and lawyers and everything that’s stipulated in CH. Their ultimate business is management of the buildings forever, plus the initial honors and revenue of getting the deal done.

If you as a co-ownership collective don’t like foxstone, you can vote to kick them out on the first annual gathering.

update here:

Foxstone does not play into property management (their COO thinks it’s not worth the effort) but are letting their properties be managed by a local management company. Foxstone’s play is the commissions on buying/selling buildings and being able to generate funding on the market (crowd-owning, crowdlending).

I’ll report back in a couple of years.

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I already did 4 crowdlending with success with foxstone. Interest between 4.5-6.5%.

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Just for my understanding.

Talking about Crowdsourcing
Should we consider this investment similar to high yield bond with low liquidity and no firm exit timeline ?

I mean it has a nice real estate wrapper but it doesn’t seem like anything different than high credit risk real estate bond

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I do crowdlending only as it has an reimbursement date. You buy bonds issued by a swiss company which lend the money for RE projects.

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with crowdlending, you buy a relatively secured bond (1.6-2x security) with a limited timeframe (typically 12-36 months). If they build a property out of the money or buy coke and :women_with_bunny_ears:'s is none of your business, roughly said.

with crowd-owning, you own the building and they are channeling you the yield of the rental property and arranging the mortgate, etc. same as crowdhouse.

The difference is in the first option you don’t need to worry about the underlying too much,with the second option you get to own something with all the benefits (appreciation) and drawbacks (liability) that comes with it.

The cashflow for the first couple of years is roughly the same.

This is clear. But I am not able to understand why yields are high. This has to be because of credit risk. Otherwise why would the builder not take the loan from banks?

Any idea who has the mortgage liability?
Let’s say foxstone defaults, who is ultimately liable? The investor who owns X% of the building?

Because the banks only finance them up to 66%, and they don’t have the rest of the capital themselves.

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Liability comes with the ownership.
If Foxstone defaults, you still own the property, and the mortgage, etc… The property management agency is still there.

This is the point. Banks are already in.
Foxstone bankrupt does not matter. They create a company (SARL in french) for every project they finance. They are independent from foxstone and independent from among others.

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My question is more about understanding the model. Even if they make a SARL, it wouldn’t change the liabilities for the investor.

SARL has assets and liabilities. And as investor in the SARL, investors are exposed to mortgage as well. Is this not the case?

Maybe it’s clear to everyone. But sometimes when I hear about Foxstone, it seems like people only talk about ownership in real estate but I never heard about liability of mortgage.

With increased interest rates, refinancing can reduce the yield from rent.

don’t mix ownership and lending.

  1. they create a holding company for lending. the sole purpose of that company is to finance the operation, then take the interest and then get dissolved. You are not liable for any part of a mortgage, you are a lender who gets back coupon payments and later, the principal.

  2. there’s no holding company for ownership, you are directly on the deed as a co-owner. You co-own the mortgage as well. Rates are decreasing slowly, so your rental yields are going up with time now. But yes, it might as well go the other way. There’s risk to it as with everything. And you are leveraged 2:1 as with all property deals. Foxstone fixes 50% of the mortgages in fixed interest and 50% with SARON to have a compromise.

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Btw, just create an account on their portal and have a look to offers. They contain very interesting documents and figures to read, even if you dont invest.

(pm me for a refferal hahah)

yields are not high relative to the risks. when i first saw it, my first thought was actually “why are the yields so low?!”

For a short term secured hard money loan, I’d expect 6%-12% premium over short term government bills.

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So if any of your co-investors default, you are on the hook for their share too? OK.

what is your expected return on rental yield from a fully managed property?

They might default, but again that doesn’t change anything on the running deal. They’ve already put in the money, the only cash flow is giving them money quarterly - their next potential evaluation point is at the refinancing 5-7-10 years later. At that point, they they can most probably stay (again, no more capital injection is needed and not a lot of checks are done on you as an investor), or they (or their custodians then) will offer their shares on the secondary market, someone will pick it up (probably at a discount) and everything goes on like nothing happened.

Minimum of 9% in normal times. 5% in low interest environment if I can fix a cheap long term loan (i.e. after period of fixed low rates, I’m back to 9% equivalent rental yield).

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I guess you have more security if the rental income is somehow ring-fenced and offset against mortgage payments first, but if you are really just co-owners, then perhaps a co-owner could simply take their share of rental income and use it for other things while not paying their share of the mortgage and leaving others to have to bridge the gap.

pls drop some hints on where this (a 9% net yield) is doable (without appreciation), I’d be very interested :slight_smile: