Real Estate Investment
We have certified and experienced real estate investment professionals available 24X7 to answer any questions you many have regarding Real Estate Investing.
Frequently Asked Questions (FAQ)
CO-PURCHASE
+ Why should I join a co-purchasing deal when I can get a mortgage and own the real estate investment myself?
The beauty of co-purchasing lies in its multifaceted nature:
When an investor buys a property using a mortgage (say with a 30% down payment), the investor does not "own" the property until the day he/she pays off the entire loan; the lender owns the property until then. If the mortgage investor does not make timely payments during the loan period, the lender can repossess the property, and the mortgage investor can lose the property, the equity, and the down payment. However, by purchasing with cash and contributing 30% of the house price, the Funding Realty user actually owns 30% of the property immediately. Foreclosure is impossible with this method of investment as the property is owned by the group outright.
Investors can also diversify their portfolio by subdividing their investment funding and purchasing portions of real estate in different cities or even different countries.
+ I love the idea of co-purchasing real estate investment properties, but I don't know enough people who would join me to fund an entire projects. How can I find people to join me?
This is why you should work with Funding Realty. Funding Realty will facilitate your search for fellow investors who share a similar outlook on real estate investment. Funding Realty's platform uses intuitive technology to match other investors with similar taste in property types and real estate investment goals.
When a user joins a deal at Funding Realty, each user's name is submitted to Thomson Reuters World-Check database. If the member is found to have a history of money laundering, organized crime, terrorism, or criminal activities, the member will be flagged as “problematic”. Once flagged, the member is subject to a detailed background check to either clear the user as a false positive or reject the user from joining any Funding Realty Projects.
Furthermore, this is a member-managed LLC, all decisions for the Projects will be made by vote from the all of the deal members. For decisions that are approved by the deal group, the action will be executed by the controller manager, Accutech Services, an Funding Realty subsidiary. The co-purchasers can feel at ease with Accutech Services being the gatekeeper of the deal.
Any member of Funding Realty can become a Deal Visionary. When a member selects a neighborhood that he/she wants to invest, he/she sets up a deal through our website and joins the deal. At that time, the deal will be published, and the deal creator will become a Deal Visionary.
It should be noted that the Deal Visionary does not have "veto" power, and must abide by the decisions made by the group based on the voting outcomes.
After the visionary creates a deal, he/she is responsible for setting up the deal. The parameters that need to be considered and set are:
- Whether he/she wants to keep the deal private and invite his/her own friends to the deal or open the deal to all Funding Realty members
- How much the funding target should be?
- What is the minimum investment amount?
- What is the holding type (buy-rent-sell, buy-flip-sell, buy-rent-flip-sell, etc.)?
- What the maximum holding period should be (if the property is a long-term real estate investment)?
There is a minimum of two co-purchasers, but there is no maximum. Funding Realty's mission is to encourage real estate investment for all, which is achieved through having at least two co-purchasers. The total number of co-purchasers in each deal depends on the funding target and the minimum investment amount set by the Visionary.
All decisions will be made based on the members voting results. Depending on the type of vote, the voting approval requirements will be unanimous, supermajority (75%), or simple majority (50%); the requirements are listed in the FIA and OA documents. The voting results will be calculated based on the actual number of members who voted. The voting results are permanently stored on Funding Realty's system so historical voting records are available for review at any time.
HOW TO INVEST WITH FUNDING REALTY
There are no restrictions preventing US entities from joining Projects on Funding Realty's platform. However, each business entity needs to evaluate its own operating agreement or articles of incorporation to ensure that it complies with its own business requirements and rules.
This is why you should work with Funding Realty. Funding Realty will facilitate your search for fellow investors who share a similar outlook on real estate investment. Funding Realty's platform uses intuitive technology to match other investors with similar taste in property types and investment goals.
Funding Realty uses proprietary big data and machine learning technology to crawl through the Internet, analyze data of demographics and market trends. Our members can use these features as a reference to locate areas of interest. In addition, our text mining technology will look in forums and blogs focused on discussions of market trends.
+ Can my spouse use my login name to invest in Funding Realty? How about my business entities, can I use the same login name as well?
Each username can only be used by one individual. Should your spouse want to join Funding Realty Projects under his/her own name, he/she will need to join Funding Realty to become a member.
However, under each username, you can pledge different Projects using different entities. The stipulation is that, each entity will need to have its own unique EIN.
"Location, location, location" are the top three considerations for a successful real estate investment. Thus, Funding Realty developed "neighborhood areas" to cover hot neighborhoods in each potential market. These designations can assist our members in understanding each neighborhood area's relationship between demographics, growth, and rental income. Ultimately, this will help our members select the type of investments that would best suit their taste. For example, some neighborhoods are geared towards high rental income with moderate appreciation, while some are more suitable for high appreciation, but only low to moderate rental income.
Funding Realty wants users to focus on "location, location, location" for their real estate investment properties and not a particular property. In addition, we are also aware that houses in hot markets can move very quickly and sometimes before the group can fully form or fund the purchase. In such instances, if a group is formed based on a neighborhood, it can wait for the right property to come onto the market and act immediately.
Please note that Funding Realty is constantly monitoring the market to adjust and readjust these concept areas. Don't be surprised that the number of neighborhoods changes with time; some neighborhoods may disappear while new ones are added to our lists.
When a member finds a deal and decides to join, he/she will be asked to agree on the terms of the FIA. This document's premise is to declare that the member agrees that he/she intends to join the deal, and he/she also understands the following:
- The group members will form a Limited Liability Company (LLC) to hold the title of the real estate investment property.
- Prior to the forming of the LLC, the member is giving a special power of attorney to Funding Realty's subsidiary, Accutech Services, to act on their behalf during the negotiation period and for the closing of the property.
+ Why does the group need to set up an LLC to hold the property? What is an LLC anyways? Our family used to hold properties in joint tenancy or tenant-in-common. Why can't the group hold the property this way?
- LLC is the acronym for "Limited Liability Company", which is "designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership," according to the IRS. Essentially, members of the LLC, considered as partners, are limited in their liability of debts and obligations to each member's initial real estate investment contribution.
- Joint tenancy requires that all partners have equal share of the property, as well as right of survival, meaning if one partner dies, that partner's share is transferred to the rest of the partners in equal shares. This method would work well for family members co-owning a property, but not for members of FundingRealty.
- Tenants-in-common is a method similar to LLC. However, it does not have the advantage of limited liability.
+ I signed the FIA already when I joined the deal. Why do I have to sign the operating agreement (OA)? Aren't they the same?
The OA is a document that spells out how the LLC will operate (what its roles and functions are). It also gives power of attorney to Accutech Services to act on behalf of the LLC to execute the decisions made by the partners. We understand that the operations of the LLC may change due to the specific needs of each property; therefore, the members can vote to amend or modify the terms of OA as long as the voting results show unanimous approval.
On the other hand, the FIA confirms the commitment of the member to join a group to participate in the co-purchasing opportunity and to authorize Accutech Services to act on the group's behalf. This agreement will only be in effect when the group forms and prior to the establishment of the LLC. When the LLC is established, the FIA will be superseded by the OA.
+ I have already completed the joining process and e-signed the FIA. Why is my pledge not secured yet?
Completing the joining process and e-signing of the FIA signifies your commitment to join the deal. However, your pledge will only be secured when the pledged funds are received in the trust account.
You can elect to either: transfer the funds into another deal within Funding Realty's platform or get a refund (minus the wiring fees).
These Projects are aimed at co-purchasing a property to rent for a length of time before selling at the end of the term. The length of the term is set by the Visionary. In addition, the Visionary will select at least one property from a MLS properties list fulfilling the group’s criteria of price range, number of bedrooms and bathrooms, etc. The Visionary will also select a realtor to represent the group. Once the realtor and the target property are selected, the group's realtor will review the selection and ensure the properties meet the minimum feasibility requirements of the group.
When the realtor verifies that the proposed property meets all the requirements, the group will be called on to vote for a maximum offer price.
A flip is a short-term (usually 6 to 8 months) project where the flip specialist finds a dated or distressed property in a gentrifying area, renovates it, and sells it for a profit.
After the flip specialist receives information of proposed property/properties from real estate wholesalers, the flip specialist performs a thorough site inspection and financial analysis on the potential rehab property.
If the flip specialist's assessment is favorable, Funding Realty will verify whether the deal meets the minimum feasibility requirements and that the estimated project return is at least 5% to 10%. If all of the requirements are met, Accutech Services will authorize the flip specialist to pursue the project.
There are many reasons for pre-grouping in a hot market:
Opportunities in good location are in high demand; often, there will be multiple offers for these hot Projects.
By pre-grouping, we can have funds ready to immediately submit offers as soon as target properties become available.
Group members have ample time to understand and execute legal documents to protect their rights.
"MLS" is an acronym that stands for Multiple Listing Service, which is a database of properties that are for sale or for rent in the US. The information on the database is published by licensed realtors who would list properties per their clients' directions. While the MLS may seem like one large national database, it's actually a combination of approximately 700 regional databases.
+ What fees would I be paying if I use Funding Realty's platform to co-purchase an real estate investment property? How about fees for Accutech Services's service?
Funding Realty and Accutech Services will only charge fees when the group successfully closes a deal and purchases the property. After closing the deal, Funding Realty will submit an invoice to the group through the trust account for a one-time platform usage fee. The fee will be determined through a tiered structure based on the final sale price of the property. The fees for Funding Realty are as follows:
| Final Sale Price | Funding Realty Platform Fee |
|---|---|
| $100,000 - $199,999 | $7,500 |
| $200,000 - $299,999 | $10,000 |
| $300,000 - $399,999 | $15,000 |
| $400,000 - $499,999 | $20,000 |
| $500,000 - $599,999 | $25,000 |
| $600,000 - $699,999 | $30,000 |
| $700,000 - $799,999 | $35,000 |
| $800,000 - $899,999 | $40,000 |
| $900,000 - $999,999 | $45,000 |
| Above $1,000,000 | Per project-based proposal |
Since Accutech Services will provide services for property purchasing and LLC establishment during the intense start of the project as well as on-going non-member manager/controller services after closing of "Buy-Rent-Sell" Projects , Accutech Services will charge the LLC $100 per member per year, with a minimum of $500 per LLC. For a limited time, the Accutech Services service fee is waived for the first year. There is no Accutech Services service fee for "Buy-Flip-Sell" Projects. Services provided by Accutech Services include:
- liaison between the realtor and the group;
- LLC formation;
- liaison between the property manager for the first rental listing.
- on-going oversight of the LLC, including the property manager, insurance agent for home insurance, and accountant for tax return/K-1 preparation, and reporting to the group members.
SHL Law Group, a law firm based in California, manages and audits the trust account as a neutral third-party to guard your funding before the funds are wired to the title company for closing. The trust account fee is $500, which covers the cost of maintaining and servicing the trust account and legal matters. Please be aware that the bank may also charge fees to receive your electronic fund transfer; these will be charged against the funds aggregated in the trust account.
+ How will the co-purchasers be receiving rent payments? How much is withheld for property taxes, insurance and all other costs?
Rent collected from the tenants will initially be deposited into the Property Manager's accounts. At the end of each month, the PM will deposit the rent, after deducting the PM's fees and other expenses (if any) into the Property LLC's bank account. At the end of each quarter, Accutech Services will keep a portion of the rental income in the Property LLC's bank account in preparation for paying the annual property tax, insurance premium, and home warranty, as well as to keep a reserve in the bank account. The remainder will then be distributed to the property LLC members.
To keep members up to date with the financial situation of the Property LLC, Accutech Services will upload the Profit/Loss reports, balance sheets, and cash flow statements, as well as bank statements to Funding Realty's platform on a monthly basis.
The total profits from the sale of the property are split between the flip specialist and the investor group at a predetermined rate; the rate can be found in the flip specialist's pitch. Typically, this rate ranges from 50:50 to 40:60 (flip specialist : investor group), depending on the market’s going rate. When the property is sold, each member receives his portion of the proceeds.
Your flip specialist only makes money when you do!
Since all the LLC formation papers and tax documents will use your legal name for filing, it is imperative that you provide the correct legal name when you pledge the deal. If you have changed your legal name and need your LLC and tax documents to reflect your new name, please contact [email protected] Services.com and provide us with proof of name change so that we can process the change.
Accutech Services
Accutech Services is a wholly owned subsidiary of Funding Realty. Accutech Services will act as the non-member manager/controller for the group and its LLC regarding matters related to the property. Group members can feel at ease and confident that someone who knows the ropes is taking care of the mundane and tedious chores of owning an real estate investment property.
Accutech Services is designed to help group members easily transform into an real estate investment property owner. The service provided is time sensitive before and during closing, and that is why Funding Realty has streamlined Accutech Services's operating procedures to make everything smooth and relaxed. Therefore, for the first year, Accutech Services's service is mandatory. For subsequent years, members can elect to continue to engage Accutech Services or to manage the LLC by the members themselves.
With the powers bestowed by the group by executing the FIA and OA, some of Accutech Services's typical tasks may include (not all inclusive):
-
Liaising between the realtor and group. This includes the following:
- Negotiation of the offer price, based on the approved maximum offer price as voted by the group members
- Preparation of property for sale
-
Signing paperwork such as:
- offer document
- settlement contract, upon acceptance of offer price by seller
-
Calling for a vote in situations such as:
- the seller rejecting the maximum offer price and whether to terminate the deal or to adjust the maximum offer price
- minimum rental price
- whether to execute sale as set forth by the FIA or to extend the holding term at the end of the deal term
- Uploading all documents to Funding Realty's platform for the group's perusal
- Establishing the property LLC and applying for Tax ID from the IRS
- Opening and managing bank account for the LLC
- Working with the property manager to prepare the house for rental or flip, depending on the wishes of the group
- Managing the property manager, which includes keeping track of spending and reviewing property manager's ledger
- Preparing tax filing documents or engaging accountant to prepare tax filing documents
- Helping LLC purchase home insurance policy, typically a commercial policy not pegged to a specific member of the LLC.
- Negotiating to find optimal prices for professional services such as realtors, property managers, accountants, legal counsel, insurance, etc.
Accutech Services will act on the wishes of the group based on the voting results on major decisions. When a major decision is necessary, Accutech Services will call a vote on the platform for the members to participate in the decision-making. The OA gives power to Accutech Services to act on minor decisions, such as any required repairs that are less than $1,000, so that the members do not need to vote on every task.
Typically, Accutech Services will call a vote on the maximum offer price. Accutech Services will then discuss with the realtor to establish the initial offer price (an amount that the seller may consider) and convey this information to the Visionary. Accutech Services will then make counter offers if the initial offer is rejected and will continue to do so until the seller and Accutech Services reach a deal or the maximum offer price. If the maximum office price is reached, Accutech Services will call a vote to find out the members' decisions: whether to raise the maximum offer price or to terminate the deal.
Accutech Services is your Controller, who essentially is the overseer of the Property Manager (PM), making sure that the PM performs to the best of his/her abilities. We are named after the "kestrel", the sharp-eyed falcon that can hover to watch over the scene.
Based on the OA, Accutech Services cannot make major decisions without informing the members. Major decisions are ones that will cost more than $1,000. Of course, if there is an emergency that could affect the integrity of the property or the safety of the tenants, Accutech Services may need to act immediately and inform the LLC members as soon as time allows.
Selling
The co-purchasers will sell the property as a real estate transaction. Accutech Services will liaise between the realtor and the LLC members to effect the sale. Once the property is sold, Accutech Services will help the group distribute all its cash to the co-purchasers, close the bank account, and dissolve the LLC.
+ What if I want to sell the property before the end of the holding period or extend the holding period beyond the agreed-upon length of time?
A vote can be called to change the length of the holding period. The vote needs to be passed unanimously.
If a member wants to liquidate his/her partnership, according to the FIA and the OA, the partnership must first be offered within the LLC as right of first refusal. If there is no interest within the LLC, the member can sell the partnership as a block in a private placement after gaining approval from all other LLC members. At this moment, Funding Realty cannot help facilitate this sale; however, we are working on it!
Data Security
+ I have furnished a lot of my personal data. How does Funding Realty protect my sensitive information?
Customer data protection has been engrained in the DNA of Funding Realty since day one. We exercise due care and protect your data with commercially reasonable effort at all times. Your information will not be shared, rented, or sold to any third party. We use stringent security measures to protect your information from unauthorized users.
Data Transmission
Your data are fully encrypted using TLS (enhanced version of SSL) and strong 1024-bit key during transmission to our servers.
Data Storage
All data are stored in secured database and file systems. Data classified as PII (personally identifiable information) and/or sensitive data, such as full name, date of birth, and social security number, are encrypted using a strong industry standard AES (Advanced Encryption Standard) algorithm.
Design and Process
When it comes to application design, operating process, and application deployment, we constantly review and improve each facet internally as ratified by Certified Information Systems Security Professional (CISSP).
Facility Compliance
Our system is hosted by AWS (Amazon Web Services). Their top-tier datacenters meet various internationally recognized security compliance standards. AWS's round-the-clock monitoring and protection of physical and network security are governed by these standards:
- Service Organization Control (SOC)
- Payment Card Industry (PCI) 3.1
- ISO 9001, ISO 27001, ISO 27017 and ISO 27018
- Others such as HIPPA, NIST, FIPS, etc.
