In secured real estate investment (meaning the investment is ultimately backed by a security interest registered on land), keeping capital safe is the top priority. If your investment is through Fundscraper Property Trust, the average loan to value in the Trust’s aggregate portfolio is approximately 80%, meaning that there is a 20% equity cushion in the event something goes wrong. If you are participating in one of our posted equity investments sponsored by a third party issuer, though your equity investment is not “secured” the way a mortgage is, know our team of experienced professionals have worked diligently to source the best projects sponsored by proven real estate owners, managers, and property developers.
Author: Sobana Baskaran
Are there any risks?
Yes. Risk factors are generally described in every offering listed on the Fundscraper platform. With respect to offerings like Fundscraper Property Trust, an offering memorandum is provided and investors are especially encouraged to read the section of the offering memorandum entitled “Risk Factors”. Before you make an investment decision, work with a Fundscraper dealing representative to find out what is most suitable for you!
What actions does Fundscraper take in the event of a borrower default?
Fundscraper on your behalf takes the same actions as any other responsible lender. We first work with the borrower to assess what the obstacle to repayment might be. Once we understand the situation, we can work on a solution. If there is no reasonable solution, then we take steps to enforce the security. The value of the security is typically less than the value of the assets we have registered security against. Therefore, if we do have to enforce the security, it is our expectation that there will be sufficient valuable real estate to fully discharge what the defaulting borrower owes which include the expenses incurred enforcing the security.
Does the targeted net annual return include fees and expenses?
While each project is set to deliver a different projected net annual return, the projected net annual return that we advertise is after all expenses and fees have been paid for.
When can I expect to see a return?
a) For debt investments, cash will be distributed as principal and interest payments are collected on the debts, subject to normal processing periods (generally 1-3 days).
b) For equity investments, each project will have its own exit or return strategy and cash will be distributed as the returns or exit strategy comes to fruition, in the priority as stated in the offering documents and investment structure. Fundscraper plans to use a third party trust agent to process the payments, investments, and distributions.
How can I earn returns on my investment?
Every project comes with its own projected returns which typically range between 6-12% in targeted net annual returns. Our management fees will be between 1-2%, sometimes coupled with further participation in the profitability of the undertaking. For the investment term, it is project specific and depends on the projected hold period for each opportunity. On our platform, you will find a combination of both syndicated mortgage opportunities and access to real estate investment trusts (REITs) and like funds. Each fund is structured differently with different redemption rights and minimum investment periods. So, to illustrate what a projected return on a $5,000 investment would look like, assuming a range of 6-12% in net annual returns (net means the management fees have been deducted), you could earn anywhere between $300-600 in annual interest distributions. Added to your original principal, your investment could grow to $5,300-5,600 in the first year. This is just simply an illustration though. To understand how each investment opportunity works and what would be best suited for you, we recommend setting up an introductory call with one of our team members and of course consulting with your own professional advisors in due time.
When are dividends paid?
Dividends and target net annual return depend on the opportunity. In the project listing, we will disclose the dividend frequency and target net annualized return.
How do I invest with a Trust Account?
Part 1: Opening up your Self Directed Olympia Trust Account directly with Olympia Trust and not from the Fundscraper Platform
Step 1: Please note there are annual fees of $150 / year + HST plus a transaction fee of $75 for each transaction in your soon to be set up self-directed registered account.
Create an account here: https://rsp.olympiatrust.com/
Click on ‘New Client’
Step 2: Complete your profile and select which account type you are setting up, TFSA by clicking on the left side panel, ‘Online Transactions’.
Step 3: Review and agree to the Declaration of Trust and Terms & Conditions.
Step 4: Click ‘sign document’ and submit and your self-directed account will be activated.
Step 5: Access your account details by clicking ‘Accounts’ on the left side panel.
Part 2: Funding your self-directed registered account
Step 6: Log in to the Olympia Trust Portal: https://portal.olympiatrust.com/login.
Step 7: Select ‘Online Transactions’ from the side bar menu via web portal.
Step 8: Select ‘Transfer-in’ if you are transferring TFSA funds already in an existing registered account.
Step 9: Complete the contribution / transfer-in specific details including:
Search for the relinquishing institution (where your registered funds are currently at)
Enter account number at that institution (not your Olympia Trust account number)
Select Partial Account Transfer (“cash balance only” or “In-Cash and/or In-Kind as per the below”);
- Transfer Type: select In-Cash (please ensure funds at your other institution is already in cash and not held currently held in investment securities)
- Transfer Details: select NET Amount
- Quantity: enter in the amount of dollars
- Name: enter in the account name
- Select your appropriate Olympia Trust account to receive the funds
- Select ‘Investment Product’ for the Associated Third Party
- Click ‘I accept the terms and conditions’
- Click ‘Submit Transfer-In’
Step 10: Sign the required electronic funds transfer authorization, click ‘Submit’.
Part 3: Purchase Instructions
Step 11: Click on the left hand menu: “online transactions”.
Step 12: Click on “purchase investments”.
Step 13: Search for the Issuer.
Step 14: Enter the number of securities “2,358.490566” = $25,000.00
Step 15: Select your applicable registered account type.
Step 16: Click “Sign document” and sign the document on the screen.
Step 17: Click “Buy”.
What if a project does not raise the intended amount of capital?
Funds are held in trust and are deployed to the project only after a minimum threshold of capital has been raised. If a minimum threshold of capital is not achieved, then all funds will be fully returned to investors, plus any interest that may have accrued, less any expenses.
What happens if a project I invested in doesn’t complete on time?
- In the due diligence process, Fundscraper’s Investment Committee will source projects that will have a projected buffer built into the project timeline so that there are allowances in scheduling to keep the investment horizon on pace.
- Preferred equity investments will continue to earn a preferred rate of return.
- Some project investments will have an outside date where the sponsor company is obligated to complete the project and allow the investors to exit the investment. Should this not occur, the sponsor company will be able to exercise its option to extend the project duration or will raise additional capital to allow existing investors to exit.
- Debt investments have a fixed maturity date and few options to extend without penalty. Therefore, the sponsor company will be responsible for paying the interest and principal on time, or else be in default of the loan.
- In any event, you should consult the particulars of any offering as detailed in the offering as posted on the Fundscraper platform or any posting supplement.