Lofty Fractional Real Estate Investing - Invest in U.S. rental properties for just $50 in 5 minutes

@pmdbt Thank you to Jerry and the Lofty team for helping me achieve my passive income dreams. Currently I am vacationing in Thailand with my family and using my rental income earned through Lofty to make payments on my credit card. At about $24 per day in rental income it doesn't cover all of my expenses but it sure helps a lot. This is on a $110,000 investment and my goal is to bring this to half a million soon.

@pmdbt love love the platform. Have invested in the company and in 15 properties.

@pmdbt How do I claim my rewards? I have upvoted, registered and invested.

@antgarcan Thanks for reaching out Antonio, you can read our blog here about how the rewards program works and if you need to take any actions on your end. https://www.lofty.ai/blog/summer...

@rrhoover Hi Ryan, great question! On the surface, all the real estate investing platforms sound similar on the surface, but here is what makes Lofty unique: 1. Marketplace business model. Most of the other platforms function like REITs or private investment funds, where the company goes out to acquire assets and then resell those assets to users or users directly invest in a fund, which is managed by the company. Lofty is a pure marketplace, so our users are directly buying from property owners. As a result, one does not have to be an accredited investor in order to use our platform, which truly democratizes real estate investing for those who traditionally didn't have access. 2. Self governance. Because Lofty isn't a fund you purchase into, we do not make management decisions for you. Instead, all the properties have a huge amount of documents and information including appraisal reports, inspection reports, deeds, tenant leases (with name and personal info redacted) etc. Users can perform their own diligence and choose which specific properties to buy that makes sense for their own risk tolerance and investment goals. Once a property is closed through a traditional escrow process. There is a 3rd party property manager that's hired by the ownership to manage the day to day tasks such as finding new tenants and collecting rent. However, all major decisions that require owner consent are voted on by the token owners/owners of that specific property through a governance program. Unlike the other platforms where one would just passively invest money and have no say, Lofty users have ALL of the control, but without having to do any heavy lifting like calling contractors or doing any manual work/labor. This is very useful for new real estate investors, because it allows them to learn how real estate investing works and what types of issues might arise from operating a rental property without committing huge sums of money to buy their own rental property. There have been over 100 voting sessions at this point for various properties. Votes have ranged from replacing specific property managers to offering a tenant a payment plan, given their specific circumstances, instead of moving towards eviction right away when the tenant stopped paying rent. 3. Low fees. Given how our marketplace model works, we charge a very transparent one-time fee at the time of token purchase. Lofty does NOT charge additional management fees or take a percentage of your profits. As a result, if you invest and hold tokens over a long duration on Lofty as well as other platforms, you'll end up paying less money in fees with Lofty relative to those other platforms. 4. Higher liquidity and no lockup period. Given how the tokens are structured, there are very little restrictions on trading them. This means that if you chose to sell your tokens 5 mins after purchasing them, you can without incurring any additional penalties or fees. Some other platforms force you to lock in your investment for 5-7 years and penalize users who want to sell before that duration. There is also higher liquidity, tokens are constantly being traded on the secondary market. To date, we've handled ~8M USD worth of secondary transactions. Right now, the selling process is a bit manual, but next month, we will launch our automated peer-to-peer exchange, so users can sell to and purchase tokens directly from each other. We believe that democratizing real estate investing means making both the purchase process and selling process at least 10x better. However, most other products focus exclusively on the purchase process. We're the one of the only, if not only, product that is focused on making both sides of the market more efficient and easier for consumers. Let me know if you have any other questions :)

@pmdbt appreciate the detailed reply! Very helpful. I've been considering diversifying into rental homes (ideally STR which tend to have higher returns, although more work) although I don't have enough liquidity to dedicate right now to do it right. Marketplaces like Lofty are attractive but inevitably I'm losing out on a meaningful % of the cash-on-cash returns and/or investment appreciation (someone in the middle has to make money!). Ultimately I'd need to have confidence that the investment would lead to at least 10% annual returns (but ideally closer to 15%+) with relatively low risk.

@rrhoover This is precisely why users love our platform. We really don't charge high fees, so you do keep close to all of your returns. You do pay a 5% fee upfront to Lofty when you make a purchase, but it's a one time fee. When the automated secondary market launches, you will also need to pay a 0.5% fee when you sell your ownership. But these are the only fees you will ever pay Lofty. We don't a cut of your appreciation value or your rental income etc. Given historical returns for most of the properties in our marketplace, you'll easily offset the 5% fee if you hold onto a property for a year through the CoC collected and appreciation. There are even some properties where the tenant is from the Section 8 housing program and the government is paying 100% of the monthly rent, which severely reduces the risk of non-payment. If I recall, that property was yielding above 10% CoC. CoC projections on Lofty also take in account all the fees such as property management and insurance. So the CoC you see is net all the fees. If you were to go out and purchase your own rental property and used the exact same property manager or insurance company, you would actually see higher fees. Lofty users get discounted insurance fees and property management fees, because our platform has economies of scale, so vendors charge less. Hope this helps and we'd love to see you own some property tokens down the line :)

@pmdbt good to know! That's an attractive pitch. I'll look into this closer. :)

@rrhoover @pmdbt Every time Jerry writes a more detailed response like this, answering user questions in more depth, I get more impressed. It feels weird that Lofty is the first horse in the tokenized real estate race I have bet on and it always places 1st over other contenders. Winner's going to win!

@bradley_schaufenbuel Hi Bradley, thanks for your feedback. This is something our team is actively working on. The reason you get separate K1s is because every property is held by an independent entity. If all the properties were under a single Series LLC or a single entity, then you would receive a master K1 instead. We are looking into the 1099-DIV route, but that would require each LLC to file to convert to be taxed as a REIT, which is doable and all the LLCs should be complying with REIT rules for tax purposes, but this requires audits from accountants and governance votes from all property owners for the conversion to successfully take place. But we are actively working on this, so you should hear an update from us before end of year on how tax filing might change in the future.

@johnny_cryptomonkey Hi Johnny, sorry to hear you haven't had a great experience with the platform so far. We are a marketplace, so no, we do not ever own any of the properties, either now or previously. The properties are sold by independent sellers. We are not in control of how often it has sold in the past and how much people sold it for in those transactions. Our users are protected because they are able to do research and look at comparable sales in the neighborhood to determine if the property's listed price makes sense to them from an investment perspective. Additionally, appraisal reports are also attached for the property when it is initially launched, so users can have an additional data point if the listing price makes sense. This is how a healthy marketplace with supply and demand is supposed to function. Properties that do not resonate with users don't get funded and the property is taken off the platform by the seller. This has happened 4-5 times already, so clearly our users have a strong opinion on what makes a property worth it for them. The IRR is a 1 year forecast based on rental returns (your cashflow) as well as potential appreciation. The cashflow portion is known at the time of sale already as the tenant is paying rent and the lease has been verified. The appreciation is not forecasted by Lofty, but is forecasted by House Canary, which is a well known and reputable AVM provider in the real estate industry. Their reports are fairly detailed and I urge you to read through one of them. We do also explicitly state on the site that the IRRs are forecasted values and that you should take into consideration potential tenant delinquencies etc. So far, many of the properties have been repriced by House Canary and the total returns after 12 months match the IRRs listed (some have even beaten the IRRs listed), so the values do not appear to be misleading. We don't know exactly where the real estate market is headed, but what you stated about secondary markets performing worse than primary markets during downturns is not supported by data. If you look at the data for various markets between 2007-2009, you would see that secondary markets like Baltimore actually appreciated on average by 5% while primary markets like LA saw substantial decline. This is because unfortunately when people cannot afford to own homes because of some economic shock, they have to downgrade and either purchase more affordable properties or rent in more affordable neighborhoods. This drains demand from premium markets and boosts demand in more affordable markets. Lastly, we do not manage anything for the users, which is why this isn't a security. The SEC has written in their own paper on how they apply the Howey Test to digital assets. They stated that when analyzing the "efforts of a third party", they would analyze if the efforts were a managerial nature or ministerial nature. When you are voting in the governance program, you are, as a member, voting for how the LLC/holding entity should be managed. The holding entity does nothing but own a single property with a single vendor--the property manager contracted to manage the property. So, when you are voting, you are managing the LLC and how its asset should be managed. We have data to prove Lofty has never made a management decision on behalf of users. Instead, our job is to simply build the technology and facilitate voting for the members, which involves writing up the governance votes from information the property manager provided and then telling the property managers how the membership voted. This is not managerial in nature and is purely ministerial in nature. We are simply relaying information between owners and the property managers. The ownership of the tokens are on the blockchain, so you do actually know exactly when someone buys or sells out of the ownership. You can also see a breakdown of ownership distribution etc. Lofty does not control who buys in or who sells out of the ownership. We don't have the power to restrict purchases and sales other than to comply with anti-money laundering laws etc. However, we do agree with you that people should do their own research on all potential investments. This is why when a property is initially launched, there is a countdown timer and users can't actually invest yet. This is to ensure that users have plenty of time to read the documents available to them to make their own judgement, so people don't just invest in something because of hype. Again, this is not a REIT or a private fund to passively park your money. We've just taken the process that an individual would face when investing in their own rental property and scaled it to make it easier and more efficient for people.

@pmdbt - thanks for your response, it is always nice to hear from a founder. Regarding your point about House Canary --- I have been in real estate a long time and I am very familiar with House Canary and how easily it is to manipulate the value of the appraisals depending upon the assumptions you put in. The fact that you are suggesting that House Canary reports are objective gives me further pause about your credibility because 99% of your customers are not going to know how easy it is to jigger House Canary's reports to get a number that you want. (note - I encourage everyone on this thread to go to House Canary and put in the address you live in. They give you one free report. You can see for yourself how easily it is to get the 'valuation' that you want) Regarding the SEC point, has the SEC confirmed your interpretation of the distinction between managerial vs. ministerial? Do you have a legal opinion you would be willing to share with the community or are we just expected to take your word? You realize that there would be significant implications for us, your customers, if the SEC doesn't take such a sanguine perspective. And given how harsh the SEC has been recently on crypto projects, it would probably give all of us a lot of comfort if you were willing to back up these claims with some sort of evidence that the SEC agrees with you. Thanks.

@pmdbt @johnny_cryptomonkey If they were to ever get involved, I'm sure the SEC will "protect" us investors from Lofty as well as they have for XRP holders. Note the sarcasm in that comment. In my opinion, and this is my personal opinion only, here's the true litmus test to see if Gary Gensler and his cronies will take action against Lofty; does Lofty threaten the current banking infrastructure of J.P.Morgan Chase, BOA or Goldman Sachs? NO. Then I'm sure Lofty will be safe from litigation.