Frequently Asked Questions

1. Regulation & Security

Foxstone is an online crowdfunding platform allowing potential investors and buyers to get in touch with property or real estate development projects owners.

Foxstone is neither a financial intermediary, nor a real estate investment fund. The platform solely acts as a link between investors and sellers or property developers.

Yes, 100%. Our team worked in association with legal partners for more than two years to calibrate our business models to the professional practices approved by the highest Swiss legal authorities. Two legal opinions reviewed and approved by regulators confirm these models.

Yes, the platform uses state-of-the-art encryption technologies (SSL 256 bits) to assure a high standard of safety throughout the whole system.

Foxstone uses the IT infrastructure of a Swiss data center, in compliance with FINMA’s requirements as per the federal act on data protection and certified ISO 27001:2013. All the sensitive data is hosted in Switzerland.

2. Co-ownership – Residential Buildings

General

Co-ownership is the direct acquisition of a fractional part of a building. The investor’s name is entered in the land registry along with all the other co-owners. Properties offered in co-ownership are existing rental buildings.

The co-owner collects the net rental income, in proportion to his participation each quarter, during the holding period, and makes a potential capital gain when the property is sold. The holding period of this type of investment is usually seven years. However, investors have the possibility to offer their participation for sale before the end of this holding period on our secondary market.

The rigorous vetting process of the properties is made through a first filter which eliminates all opportunities that do not meet the investment directives established by Foxstone. Then a financial, technical and legal due diligence is performed at the end of which only the properties having the best yields and the best structural quality are retained. Furthermore, an independent valuation is performed by a third-party real estate expert. Finally the bank providing the mortgage performs a third valuation. At the end of the process, we propose approximately only 5% of the scrutinized buildings.

Once the acquisition of the building is concluded your name is entered in the cantonal land register. The inscription to the land register is a formality which is necessary to certify the co-ownership of the property. You can find a copy of this registration in your account on your online dashboard. You can also get a certified copy of your co-ownership registration directly from the cantonal land register.

Co-ownership implies that the names of the co-owners are entered in the land register. This safety is very important for the investor who thus owns a real right on the building. There is no dependence on Foxstone which is only the administrator. In case Foxstone comes to disappear, it would therefore have no consequence on the co-ownership shares. The management would have to be taken or delegated to another company.

The co-owners collect the excess cash flow of the property quarterly. This excess cash flow consists of the rental revenues after deduction of the operational expenses, capital expenditures for the improvement of the property (typically the renovation of the apartments) and mortgage expenses.

Each investment entails risks which can strongly impact the yields. Foxstone advises every investor to read the Risk Factors document, which summarizes some of these risks, and to consult a financial expert and a tax advisor for each investment. No guarantee whatsoever is given as for the reimbursement of the principal and the payment of dividends.

In order to guarantee the maintenance and the renovations, which are necessary during the holding period of the building, the co-ownership agreement requires the delegated administrator to establish a guarantee account for the co-owners community. The percentage of the revenues taken for this guarantee account is determined beforehand in the co-ownership agreement.

This account is used in case renovations would be necessary and for the payment of the bank in case the rents would no longer cover debt servicing. Thus, the co-owners are all the more protected from an eventual subsequent call for funds. When the co-ownership’s property is sold, the investors get the balance of this account back in proportion to their participation.

The guarantee account, comprised only of cash, is the property of the co-owners. Thus, the participation of each investor in the guarantee account is calculated in proportion to his co-ownership share. Generally, the value of this participation is added up to the value of the co-ownership share when the property is sold.

Contrary to real estate funds, co-ownership is a direct investment the value of which fluctuates only slightly in connection to financial markets (low correlation).

You profit directly from the revenues of the property and you decide on your asset allocation by selecting the properties you are interested in. Moreover, you have a voting right at the co-owners general assembly which takes the important decisions concerning the property.

The revenues and expenses are completely transparent; you have a right of scrutiny on the property current account and you can thus monitor all the revenues and expenses related to the property management. There are no hidden fees.

No, for obvious logistic reasons we generally do not organize private visits of the buildings before buying them. However, you can access the photos as well as the technical and structural details of the property summarized in the offering brochure of each investment proposal.

No, an investment in a co-ownership does not entitle to the usufruct of the property, contrary to condominium ownership. The co-owners invest with the aim of collecting revenues and not for the purpose of living in the building. However, a co-owner can, if he wishes to, rent an apartment at the market conditions – always in keeping with the maximization of all the co-owners’ profit. He has a priority over the other potential tenants, on the condition of meeting the solvency criterion established by the estate agents.

Holding Period & Sale

The holding period is generally 7 years. Indeed, the tax rate on real estate earnings is decreasing with the holding period. Furthermore, a 7-year time horizon allows to maximize the rents and the property’s value.

Co-owners can put their shares for sale on our secondary market at any time. The price and the execution will then depend on the supply and demand. Since the tax rate on real estate earnings is decreasing with the holding period, we advise to hold the investments for 7 years.

The property is sold at the end of the holding period provided in the co-ownership agreement. The mortgage is settled, the real estate taxes are paid, the potential balances of the current account and the guarantee account as well as the product of the sale are distributed to the investors in proportion to their participation. The names of the co-owners are removed from the land register. The co-ownership comes to an end.

In case the building is acquired by a new community of co-owners, the existing investors can consider not selling their shares and holding their investment in the property by joining the new co-ownership agreement.

At the time of the sale an independent valuation is carried out by a recognized real estate expert. On this basis, Foxstone takes care of offering the property for sale with the aim of maximizing the co-owners’ interests. Foxstone represents them in front of the notary. The co-owners do not need to go to the notary themselves.

The co-owners have the power to set a sale date of the property different from the one initially provided in the co-ownership agreement. In order to do so, the co-owners’ qualified majority, as specified in the co-ownership agreement, has to be reached. Thus, the co-owners can decide to sell the property before the end of the scheduled holding period or to arrange a date of sale later after the end of the holding period.

Mortgage

In Switzerland, the debt ratio on residential buildings can generally reach 80% of the building’s value. For reasons of financial sustainability of the investment and in anticipation of future increases of interest rates, we generally prefer to borrow between 50% and 60% of the property’s value.

Foxstone is in relation with several renowned Swiss banks with which agreements were concluded in order to make the investment in co-ownership through the platform as fluid as possible. Each investor has to have completed beforehand the investment form supplied by Foxstone at the time of his subscription. These forms are transmitted to the bank in order to verify the origin of the funds and the investor’s solvency.

Foxstone usually fixes the interest rates to the same time horizon as the building’s holding period. By doing so, Foxstone protects the investors against the potential interest rate hikes which could damage the returns on the investment.

As the delegated administrator of the property, Foxstone takes care of the payment of the interest and the settlement of the debt. These payments are made with the rental income of the building. In case the rents would not be sufficient to honor the debt servicing, the security fund is used.

No, every investor is responsible for the mortgage in proportion to his participation. Indeed, contrary to the current practice, the mortgage responsibility is separated. By decreasing the operation’s debt ratio, Foxstone decreases the risk of default on the payment of interests and reimbursement of the debt because the property is financed with large safety margins. This credit structure allows the bank to waive the joint and several liability on the mortgage. Thus, the investors can take part in the operations without having to bear the responsibility for the total mortgage amount.

Property Management

The collection of the rents and the daily management of buildings are delegated to established and renowned estate agents with which Foxstone concluded agreements that are advantageous for the co-owners, enabling them to benefit from preferential rates in all Switzerland. The co-owners community delegates the renovation decisions and the payment of the debt to Foxstone.

The co-owners are free to choose the property manager and to revoke Foxstone’s management mandate. In order to do so, the co-owners’ majority, as provided in the co-ownership agreement, has to be reached.

The expenses of the eventual maintenance and renovation works are taken directly on the rental income; if this one is not sufficient to honor the debt servicing, the guarantee account is used.

3. Co-investment And Mezzanine Debt – Real Estate Development Projects

Co-investment consists in the acquisition of shares of a company which holds a real estate development project.

The investor’s returns are realized when the construction is completed and the building is sold.

Each investor becomes the owner of shares of a Swiss legal entity. He signs a shareholder agreement which is certified by a notary and his name is entered in the company’s shareholders register.

The return on investment consists of the principal and the capital gain realized at the sale of the real estate development project.

In case Foxstone came to disappear, this would have no consequence on the co-investment. You are still the owner of the shares of the company owning the real estate development project entered in the land register in the name of this company.

Mezzanine debt is a loan granted to a real estate developer in order to fill the need of equity to start the project.

The mezzanine debt is materialized by a debt contract issued by the borrowing company which owns the development project.

In case Foxstone came to disappear, it would have no consequence on the mezzanine debt. You are still the holder of the debt contract issued by the company owning the real estate development project entered in the land register in the name of this company.

The holding period ranges between 1 and 4 years. It is the time necessary for the construction and the commercialization of the building.

Investors can put their shares on sale on our secondary market at any time. The price and the execution will then depend on the supply and demand.

The construction contracts are of the kind “general contractor agreement”. These contracts are slightly more expensive than the kind “total enterprise contract”, but they reduce the risk of delay and budget overrun because the company is responsible for any discrepancy. Thus, any overrun of the agreed construction budget is the responsibility of the construction company and any delay from the delivery deadline is penalized.

The real estate developer supplies quarterly reports (according to the project) on the project’s progress with pictures of the construction site. Foxstone synthesizes these reports and publishes them on the investor’s online dashboard for a facilitated consultation.

4. Investment

Foxstone seeks investment opportunities with price ranges varying between CHF 5 and 50 million for the properties offered in co-ownership and between CHF 2 and 30 million for the projects financed by co-investment or mezzanine debt.

For the time being, we concentrate only on residential properties, which are subject to the federal law on the acquisition of real estate by persons abroad (LFAIE). Therefore, only Swiss citizens and holders of residential permits B and C are authorized to invest in this type of offers.

Yes. However, the majority of the company’s beneficial owners have to be Swiss citizens or residents. The applications will be treated on a case-by-case basis.

Depending on the size of the transaction and the regulation in effect for the type of investment in question (co-ownership, co-investment, mezzanine debt) the minimum amount can vary. It usually starts at CHF 50’000.

All the information, the documents and the contracts are available at any time in your secured account on the platform. You can see them, download them or print them. You receive an activity and management report containing detailed information on the evolution of your investment quarterly. Moreover, you can monitor your portfolio and calculate your exposure by types of investment, location, liquidity and many other financial ratios on your professional online dashboard.

Taxes vary according to the type of investment and the particular taxation of each investor. Each investor is invited to consult his own tax adviser before considering an investment.

No. All the information displayed on the Website and through the platform as well as in all the investment documents is for information purposes only.

Each investment entails risks which can strongly impact the yields. Foxstone advises every investor to read the Risk Factors document, which summarizes some of these risks, and to consult a financial expert and a tax advisor for each investment. No guarantee whatsoever is given as for the reimbursement of the principal and the payment of dividends.

The capacity of an investment offer is allocated on a first-come, first-served basis. An investment is registered once the investor fills all the documents, is approved by the bank and transfers the funds on the escrow account.

We encourage you to diversify your portfolio. This is why we propose buildings with various usages, in diverse geographical areas with a panel of financial instruments offering an optimal diversification and allowing to limit the systematic risk.

If the amount to be raised is not reached, funds already transferred on the escrow account opened for this purpose are returned to the investors.

For the time being, Foxstone does not invest in the opportunities offered on the platform. However, in a near future, an entity owned by Foxstone will co-invest in the proposed offers in order to insure a perfect alignment of interests with the investors.

5. Fees

Foxstone takes the following fees:

  • Co-ownership: 3% of the gross asset value once the transaction is closed and management fess of 0.25% to 0.5% of the asset price, degressive according to the amount of the deal.
  • Co-investment: 3% of the raised amounts to the investor and 3% of the raised amount to the real estate developer.
  • Mezzanine debt: 3% of the loan to the investor and 3% of the loan to the real estate developer.

The amount of your subscription in an investment includes all the transactional expenses. These include the notary’s fees, the bank charges, the technical, financial and legal audit, the independent valuation and Foxstone’s fees.

The investor has to bear the fees of the advisors he hired for the purpose of an investment besides the notary costs for the certification of his signature.

6. Legal

Each investor showing an interest for an offer receives the investment package containing:

  • the investment brochure,
    • Co-ownership: the brokerage and management mandate, the co-ownership agreement, the deed of sale and the credit contract
    • Co-investment: the shareholder agreement
    • Mezzanine debt: the debt contract
  • the subscription bulletin,
  • the powers of attorney,
  • the request of accreditation by the mortgage provider – KYC form,
  • the document for the notary.

These documents are required by the bank providing the mortgage and by the notary.

In order to simplify the acquisition process, the investors sign a power of attorney which allows our legal partners to represent them in front of the notary for the finalization of the acquisition in co-ownership or co-investment. This allows the investors not have to go the notaries in the various cantons.

A KYC (Know Your Customer) is the form used by banks to verify the compliance of the customers with the anti-corruption laws and to prevent identity theft, financial fraud, money laundering and the funding of terrorism. This form is required by the bank, independently of Foxstone, to accredit the investor before he transfers funds on the bank account dedicated to the transaction.