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Solution / Product

Our solution combines multiple above concepts into one highly efficient solution: 

● Real Estate Crowdfunding - real estate loans as safe investments with good cash-on-cash ROI 

● Fractional Real Estate Ownership - real estate purchases as long term investments with great potential ROI 

● Using Blockchain Technology - allowing investors to actually own their investments 

Next we will explain the process in detail

Real Estate Crowdfunding 

With Real Estate Crowdfunding, micro investors offer short term loans (12 months) to real estate developers. This approach allows the general public to invest in real estate in a safe, easy way. Real estate developers benefit by gaining an additional source of financing. 

Normally, real estate developers go to the banks for loans, however there multiple reasons for which they would prefer real estate crowdfunding: 

● Much faster fundraising period - 1 month as opposed to up to more than 3 months 

● More flexibility when using the funds - real estate developers may use these funds for marketing and branding the properties for sale 

● Banks have a very rigid process(O'Connell and Mansa)

Step 1 - Opportunity Evaluation 

A real estate developer needs a loan for a short period (12 months) in order to finalize a project. He decides that real estate crowdfunding is the best way to finance it. 

First he sends all the required information required regarding his company (to be checked by Refracto), including financial statements. 

He then creates a proposal with the following information: 

● Size of loan and repayment plan 

● Proof of ownership of the location 

● Authorisations for constructing the project 

● Loan-to-Value 

● Project description 

● Risk analysis 

● Price analysis of location 

● Competitor Analysis 

● Sponsor / Responsible persons 

● SWOT Analysis 

● Business Plan 

● Cash Flow

Meanwhile, a third party real estate evaluator is sent to estimate the value of the property to be constructed, to be checked against the project proposal. 

After all this information is provided, the risk of the project is analysed. If the project is considered a safe investment, an interest rate will be calculated and the real estate developer will get the final offer. 

Once the real estate developer has accepted the offer, it will be posted on the platform and the crowdfunding campaign starts.

Step 2 - Crowdfunding Campaign 

The Project Proposal with full documentation is posted on the platform to be evaluated by all investors. The Loan is split up in many parts, represented by the project token, such that each token is accessible in price (not more than 100€). 

The Crowdfunding Campaign will last 1 month, but may be extended to 2 months if the minimum threshold has not been reached and the developer wishes so. 

Investors will purchase project tokens using stablecoins. After each sale, a legal contract (in PDF form) is automatically generated, using information from the investor KYC process. 

In case the minimum investment threshold is not reached by the end of the crowdfunding period, the investors will receive their original investments back, and the project will be cancelled. 

The crowdfunding campaign is successfully finished if: 

● The minimum investment threshold is reached and the allocated time is finished OR 

● The maximum investment threshold is reached 

Once the crowdfunding campaign is successfully finished, the following happens: 

● The project tokens are distributed to the investors wallets proportional with their investment 

● The Developer gains access to the loaned sum (in the form of stablecoins in his/her crypto wallet)

Step 3 - Project Execution 

The real estate developer will use the funds to cover costs relating to the construction and selling of the properties. 

He must pay back the loan in the form of stablecoins in the appropriate crypto wallet, respecting the payment plan of the project. These funds can then be claimed by the investors. 

For any delays paying back the loan, the developer must pay additional penalisations. In case of non-payment, legal action will be taken against the developer. 

Before the project finalisation, investors can freely sell their project tokens on the secondary market. The Buyer can then claim the funds associated with their investment.\

Step 4 - Project Exit 

Once the entire sum has been paid back, the developer has fulfilled his duties. Anyone holding the project tokens can turn their project tokens back into stablecoins, receiving back their invested principal, as well the agreed upon interest.

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