Frequently asked questions
What are the financial benefits of owning real estate vs something like stocks?
While investing in stocks is essential and should be part of everybody's investment portfolio, investing in real estate has several benefits that stocks do not provide. These include: 1️⃣ Passive income + appreciation - Not only does real estate increase in value over time, but it also provides passive income in the form of rent every month. A well-managed property can generate enough revenue to cover the mortgage, insurance, etc., and produce a profit every month. 2️⃣ Lower taxes - When you sell a stock, you need to pay capital gains tax on any profit you make (up to 20% + in some states). Unlike with stocks, real estate taxes are deferred if another property is purchased after the sale (through something called a 1031 exchange). That is not all, though. Expenses like maintenance costs and insurance can often be deducted from your tax liability. In addition, real estate benefits from the ability to lower your tax bill through something known as depreciation. You can read more about that here. 3️⃣ Hedge against inflation - This one is a bit more complicated to explain, but this article by Forbes does a good. job. Check it out! 4️⃣ Ability to leverage - Putting $25,000 into stocks buys $25,000 in value. The same investment in real estate could buy ~ $125,000 in property with a mortgage and tax-deductible interest. 5️⃣ Ability to use - Last, but not least real estate can actually be used! For example, a property you own in Lake Tahoe can be rented most of the year but you can also choose to use it a few times a year if you would like.
What is wrong with the traditional process of buying real estate?
There are many reasons why the traditional process of buying real estate can make you want to pull your hair out. Just some of these include: 1️⃣ It Being Expensive - The first issue is a structural one. Real estate is costly. The median cost of a home in the US is $350,000, making it almost impossible for the average American to buy into real estate. With Foundation, nobody is priced out because you can buy fractions of a piece of real estate. 2️⃣ Getting A Mortgage Sucks - Getting a mortgage can be traumatizing. It often involves applying for a mortgage at a bank, sending over tons of documents (credit checks, proof of income, assets, etc.), and then takes weeks to process. Not only that, but you often have to do this many times with different banks since you may get rejected or want to shop around for the best rate. With Foundation, once you are signed up, we will collect some financial information from you 1x, connect with you with one of our lending partners and get you approved. You can then purchase as many properties as you would like - up to the limit that our lending partners gave you. 3️⃣ Negotiating & Closing Is Tricky - In the traditional buying process, you can typically take two routes when making an offer and closing a deal. The first is finding and hiring a real estate agent who does it all on your behalf. Real estate agents can be great because they are pros at negotiating and navigating the complex closing process (scheduling inspections, etc.) - but they are expensive. On the other hand, you could do it all yourself. This often saves you the cost of hiring a real estate agent but is very risky if you are not a pro at negotiating and closing a deal. With Foundation, we take care of all of this for you. You and your co-investors just let us know the price range you are willing to pay for a property, and we will negotiate and close on your behalf. All you will have to do is digitally sign a few documents along the way.
What type of properties can Foundation help us purchase?
We can help you purchase any residential property in the US whether that be a home, apartment building, a piece of land, etc. If you are interested in purchasing a property that is located outside the US, send us an email at help@foundation.homes and we will see what we can do.
How many people can co-own a property together?
Theoretically, there is no limit. For now, though, we are limiting it to 99 until we can provide more scalable methods for large groups of people to make decisions (whether to hire a property manager, etc.) about the property they co-own.
Do I need to be hands-on in the day to day management of the property?
Nope! One of the great things about Foundation is we give the ability to be as hands-on as you would like. There are generally three levels of management you can choose with Foundation. 1️⃣ Hire a property manager - If you would like to be hands-off, you and your co-owners can hire a property manager. Property managers can take care of day-to-day tasks like finding renters, setting rental prices, etc. Foundation will recommend some great property managers in your area. 2️⃣ Choose a delegate - If you and the other owners trust a particular owner, you can delegate day-to-day responsibilities to them. They just have to keep you updated on critical decisions and why. If the group does not agree with the delegate's decisions, a majority vote will remove and replace them. 3️⃣ Vote - The most hands-on approach uses Foundation's propose, deliberate, and vote features to make decisions. Each owner can make specific management proposals (what the rent should be, whether to renovate, etc.), the group discusses, and then a vote is made. If the majority agrees, then the proposal is approved and executed! With this management model, you will also choose a specific co-owner who will be responsible for dealing with absolute emergencies (calling an electrician if there is a power issue, etc.).
How is it that I can legally own a fraction of a piece of property?
Great question! We create an LLC (type of company) that owns the property. You and all other co-investors then become partial owners in that LLC. This gives each investor the greatest legal protection while allowing additional investors to join and current owners to sell.
How are costs like maintenance, insurance, property taxes, etc. handled?
This is handled in two ways. First, when we are collecting deposits from investors to acquire a new property - we set aside a few percent to create funds for maintenance, insurance and property taxes. Second, we withhold a small percentage of each month's rent to continue and keep these funds full. If at any point these exceed what is reasonably needed to cover maintenance, insurance, etc. costs - extra funds will be redistributed back to owners.
Do I need to already have a group of people I want to co-own with?
Right now we are focused on helping existing friends & communities (DAOs, etc.) co-invest together. In the future, we will be building ways for you to meet other like minded people you may want to co-invest in a property with.
So I funded an investment proposal...what happens next?
Congrats! Once and if a proposal to acquire a property reaches 80% funding commitment we will send you an email to deposit 20% of the amount you committed. Once a proposal has reached 100% funding, Foundation will begin trying to buy the property for you and will notify you every step of the way. We will assign a team member to reach out to the current property owners, make a competitive bid, negotiate, and then go through the closing process if accepted (creating a bank account, LLC, etc.). All you will have to do is sign a few documents along the way.
What payment methods can I use to invest?
You can invest using credit card, debit card, direct bank deposit or even crypto! If you choose to invest using crypto, we will instantly swap that crypto to USD to protect against volatility.
Do I need to bring my own mortgage before investing?
Nope! Once you create an account on Foundation, we will ask for some information to get you pre-approved with one of our lending partners. You can also buy in cash or bring your own mortgage provider.
How many properties can I co-own with Foundation?
As many as you would like! There is no limit.
If we decide to rent out our property - how often will I receive rent?
Every month! We will send your portion of the rental revenue every month. The proportion of rental revenue you get every month is equal to the proportion of the property you own.
Do I need to be an Accredited Investor?
Nope! Everybody is welcome!
How does Foundation make money?
Foundation makes money in 3 different ways. 1️⃣ 3% For Acquiring Property* - if we can successfully acquire a property on behalf of a group of investors - we charge a 3% fee of the total value of the property. 2️⃣ 2% - 8% Of Monthly Rent* - we charge between 2% - 8% of the rent fee. 2% is the base fee and then 8% is if you want us to manage the property for you (be the point of contact in case of emergency, find renters, etc.) 3️⃣ 2.5% Trading Fee* - we charge a 2.5% trading fee if you decide to sell your ownership in a property through our secondary marketplace . *Please note that these fees are subject to change in the future. We are a new company and still figuring out the best fee structure that is fair to our customers and allows us to run a profitable business.
Frequently asked questions
What are the financial benefits of owning real estate vs something like stocks?
While investing in stocks is essential and should be part of everybody's investment portfolio, investing in real estate has several benefits that stocks do not provide. These include: 1️⃣ Passive income + appreciation - Not only does real estate increase in value over time, but it also provides passive income in the form of rent every month. A well-managed property can generate enough revenue to cover the mortgage, insurance, etc., and produce a profit every month. 2️⃣ Lower taxes - When you sell a stock, you need to pay capital gains tax on any profit you make (up to 20% + in some states). Unlike with stocks, real estate taxes are deferred if another property is purchased after the sale (through something called a 1031 exchange). That is not all, though. Expenses like maintenance costs and insurance can often be deducted from your tax liability. In addition, real estate benefits from the ability to lower your tax bill through something known as depreciation. You can read more about that here. 3️⃣ Hedge against inflation - This one is a bit more complicated to explain, but this article by Forbes does a good. job. Check it out! 4️⃣ Ability to leverage - Putting $25,000 into stocks buys $25,000 in value. The same investment in real estate could buy ~ $125,000 in property with a mortgage and tax-deductible interest. 5️⃣ Ability to use - Last, but not least real estate can actually be used! For example, a property you own in Lake Tahoe can be rented most of the year but you can also choose to use it a few times a year if you would like.
What is wrong with the traditional process of buying real estate?
There are many reasons why the traditional process of buying real estate can make you want to pull your hair out. Just some of these include: 1️⃣ It Being Expensive - The first issue is a structural one. Real estate is costly. The median cost of a home in the US is $350,000, making it almost impossible for the average American to buy into real estate. With Foundation, nobody is priced out because you can buy fractions of a piece of real estate. 2️⃣ Getting A Mortgage Sucks - Getting a mortgage can be traumatizing. It often involves applying for a mortgage at a bank, sending over tons of documents (credit checks, proof of income, assets, etc.), and then takes weeks to process. Not only that, but you often have to do this many times with different banks since you may get rejected or want to shop around for the best rate. With Foundation, once you are signed up, we will collect some financial information from you 1x, connect with you with one of our lending partners and get you approved. You can then purchase as many properties as you would like - up to the limit that our lending partners gave you. 3️⃣ Negotiating & Closing Is Tricky - In the traditional buying process, you can typically take two routes when making an offer and closing a deal. The first is finding and hiring a real estate agent who does it all on your behalf. Real estate agents can be great because they are pros at negotiating and navigating the complex closing process (scheduling inspections, etc.) - but they are expensive. On the other hand, you could do it all yourself. This often saves you the cost of hiring a real estate agent but is very risky if you are not a pro at negotiating and closing a deal. With Foundation, we take care of all of this for you. You and your co-investors just let us know the price range you are willing to pay for a property, and we will negotiate and close on your behalf. All you will have to do is digitally sign a few documents along the way.
What type of properties can Foundation help us purchase?
We can help you purchase any residential property in the US whether that be a home, apartment building, a piece of land, etc. If you are interested in purchasing a property that is located outside the US, send us an email at help@foundation.homes and we will see what we can do.
How many people can co-own a property together?
Theoretically, there is no limit. For now, though, we are limiting it to 99 until we can provide more scalable methods for large groups of people to make decisions (whether to hire a property manager, etc.) about the property they co-own.
Do I need to be hands-on in the day to day management of the property?
Nope! One of the great things about Foundation is we give the ability to be as hands-on as you would like. There are generally three levels of management you can choose with Foundation. 1️⃣ Hire a property manager - If you would like to be hands-off, you and your co-owners can hire a property manager. Property managers can take care of day-to-day tasks like finding renters, setting rental prices, etc. Foundation will recommend some great property managers in your area. 2️⃣ Choose a delegate - If you and the other owners trust a particular owner, you can delegate day-to-day responsibilities to them. They just have to keep you updated on critical decisions and why. If the group does not agree with the delegate's decisions, a majority vote will remove and replace them. 3️⃣ Vote - The most hands-on approach uses Foundation's propose, deliberate, and vote features to make decisions. Each owner can make specific management proposals (what the rent should be, whether to renovate, etc.), the group discusses, and then a vote is made. If the majority agrees, then the proposal is approved and executed! With this management model, you will also choose a specific co-owner who will be responsible for dealing with absolute emergencies (calling an electrician if there is a power issue, etc.).
How is it that I can legally own a fraction of a piece of property?
Great question! We create an LLC (type of company) that owns the property. You and all other co-investors then become partial owners in that LLC. This gives each investor the greatest legal protection while allowing additional investors to join and current owners to sell.
How are costs like maintenance, insurance, property taxes, etc. handled?
This is handled in two ways. First, when we are collecting deposits from investors to acquire a new property - we set aside a few percent to create funds for maintenance, insurance and property taxes. Second, we withhold a small percentage of each month's rent to continue and keep these funds full. If at any point these exceed what is reasonably needed to cover maintenance, insurance, etc. costs - extra funds will be redistributed back to owners.
Do I need to already have a group of people I want to co-own with?
Right now we are focused on helping existing friends & communities (DAOs, etc.) co-invest together. In the future, we will be building ways for you to meet other like minded people you may want to co-invest in a property with.
So I funded an investment proposal...what happens next?
Congrats! Once and if a proposal to acquire a property reaches 80% funding commitment we will send you an email to deposit 20% of the amount you committed. Once a proposal has reached 100% funding, Foundation will begin trying to buy the property for you and will notify you every step of the way. We will assign a team member to reach out to the current property owners, make a competitive bid, negotiate, and then go through the closing process if accepted (creating a bank account, LLC, etc.). All you will have to do is sign a few documents along the way.
What payment methods can I use to invest?
You can invest using credit card, debit card, direct bank deposit or even crypto! If you choose to invest using crypto, we will instantly swap that crypto to USD to protect against volatility.
Do I need to bring my own mortgage before investing?
Nope! Once you create an account on Foundation, we will ask for some information to get you pre-approved with one of our lending partners. You can also buy in cash or bring your own mortgage provider.
How many properties can I co-own with Foundation?
As many as you would like! There is no limit.
If we decide to rent out our property - how often will I receive rent?
Every month! We will send your portion of the rental revenue every month. The proportion of rental revenue you get every month is equal to the proportion of the property you own.
Do I need to be an Accredited Investor?
Nope! Everybody is welcome!
How does Foundation make money?
Foundation makes money in 3 different ways. 1️⃣ 3% For Acquiring Property* - if we can successfully acquire a property on behalf of a group of investors - we charge a 3% fee of the total value of the property. 2️⃣ 2% - 8% Of Monthly Rent* - we charge between 2% - 8% of the rent fee. 2% is the base fee and then 8% is if you want us to manage the property for you (be the point of contact in case of emergency, find renters, etc.) 3️⃣ 2.5% Trading Fee* - we charge a 2.5% trading fee if you decide to sell your ownership in a property through our secondary marketplace . *Please note that these fees are subject to change in the future. We are a new company and still figuring out the best fee structure that is fair to our customers and allows us to run a profitable business.
Foundation
