25 June 2019

Real estate crowdfunding: the solution to facilitate real estate successions

By Laura

Succession can be difficult. In addition to the grief over the loss of a loved one, there are sometimes family quarrels over how to dispose of the inheritance.

Real estate crowdfunding, participative financing in co-ownership, appears to be an effective solution to the problems of inheritance of real estate or capital assets, when the heirs wish to dispose independently of their shares.

Invest in crowdfunding starting from CHF 25’000

Flexibility for real estate successions

Take the case where the inheritance consists of a building bequeathed to several members of a family. Often the solution is to sell the building in its entirety and distribute the proceeds. But sometimes some members may wish to keep their portions of the building in order to maintain a family heritage in real estate. These conflicting interests can lead to fratricidal disputes and result in a deadlocked situation where each party stands firm.

Real estate crowdfunding offers an innovative and adequate solution in such situations. It makes it possible to sell the building by dividing it into equal shares of co-ownership and thus offers the possibility of liquidating an asset class which, by definition, is not liquid. As a result, those who wish to do so can sell their shares to other investors. And those who wish to retain their investment in real estate can do so by keeping their units to remain co-owners of the building.

« The legal system of co-ownership is not new, and until now it has proven impractical in practice when it comes to involving co-owners from outside the estate at the time of partition because they could not be brought together. Opening up an eminently private and personal market to a very large public through real estate crowdfunding is particularly innovative, with the essential interest for heirs who wish to do so of being able to henceforth retain shares in a real estate that they might not have been able to assume alone in the event of the withdrawal of other heirs. In other words, such offers open up significant new perspectives in terms of estate distribution. » – Master Olivier Ferraz, notary and lawyer in Fribourg.

Investing family capital in real estate while maintaining a high degree of independence

Real estate crowdfunding also presents itself as the solution for heirs who wish to invest a patrimony in stone while keeping their respective investments distinct.

Participatory investment in real estate offers the possibility for each member of a family to invest in stone in their own name rather than investing a common sum. And while property often remains inaccessible to the majority of people, participatory investment makes it possible to lower the barrier to entry, thanks to a minimum investment generally set at CHF 25,000.

The heirs can thus buy shares in the same or different properties with their names entered in the land register and can dispose of these shares as they see fit, independently of the other heirs. The property is managed by professionals who offer a turnkey service, from transaction to management. What’s more, the rental risk is lower because the investor no longer owns an apartment but a share in the entire building.

« My family and I were looking for an investment with a very low risk, ideally in Swiss stone, in order to secure an inheritance and earn a return. Foxstone enabled us to avoid potential family conflicts because instead of investing a common sum, each member was able to invest in his or her own name » says Alexandre B., who invested an inheritance alongside several family members in a residential building in Concise (VD)

As with real estate or capital assets, real estate crowdfunding allows heirs to separate their respective shares and dispose of them as they see fit with great flexibility; this helps make decision-making easier and faster and avoids many conflicts.

Learn more about real estate crowdfunding

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