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Does it make sense?
Frequently Asked Questions
What problems do I solve by using HutFund ™?
Rent or Buy Decision
: No doubt, it's Buy. Purchase the home you love now at a fraction of a cost. Your monthly housing cost could even be less than your current rent. Then, when you're ready, buy blocks of equity over time until you own the home 100%. Makes perfect sense.
: Paying your landlord when renting never helps you build wealth. With HutFund ™, simply pay down your mortgage (your monthly payment may even be lower than your rent) and build equity over time with home ownership.
High Mortgage Debt
: Own a home but behind in your mortgage? Invite investors to co-own your home. Pay-off your mortgage. You keep your home, you keep the bank happy.
: Own a home but would like to cash out? Invite investors to co-own your home. Reduce your mortgage. Diversify investments. Use cash for some other purpose.
Taxes on Gain
: Just sold an investment property? Use 1031 Exchange funds to co-invest in HutFund ™ properties and be free ot taxes. Convert excess cash boot into a smart manage-free property.
1031 Replacement Deadline
: If you are doing a 1031 Exchange, and have not yet found a replacement property, co-invest in properties before your 1031 Exchange period expires and be free of taxes.
With HutFund ™, one of your co-investor occupies the property and is responsible for repairs, maintenance, upkeep, and property taxes. And yes, plumbing and toilet, too.
Placed all your money in one lousy investment property? It's always smart to diversify your funds into small but multiple investments. Investment 101: Never Put Your Eggs In One Basket.
What roles do members have when using the website?
Three basic roles. First Role: the Buyer, or the member (or family household) who wants to acquire a property with the purpose of occupying the property as their primary residence. Ideally, you have a credit score of at least 700, and if you are currently a renter, your landlord can provide us or your investor an excellent record of your lease payment history, as well as someone you know can provide personal references for evaluation purposes.
Second Role: the Investor, or the member who will commit to fund a pledge made to the family household to help in funding the property selected. Ideally, you are someone, or someone representing an institutional investor, who believes in safer and long-term investment. You are someone who understands that your investment is with a small and manage-free single family residence, occupied by credit-worthy, and responsible household co-owner. You understand that you are buying a property, not for cash flow, but for appreciation, that a long-term investment provide a much safer investment, with fair and stable return.
Third Role: the Seller, or the member who will list U.S. or Canadian properties for sale on the website. You may be a Real Estate Agent, a Broker, or a For Sale By Owner. Other roles would include someone who already owns their current home, but would want to relinquish part of their ownership to outside investors.
As a member, you actually may take on any or all roles at any one time. For example, you may be both a Seller and an Investor. You may also be a Buyer, and also be an Investor to a Buyer other than yourself. of course, you may also invest in your own property.
I am an investor, do I send my funding commitments to you?
No. We never hold investor funds and we will never ask you as an investor to send your funding commitments to us. You will be instructed to send funding commitments to the agreed Closing Escrow or Closing Attorney of the property.
OK, so how does it work, briefly?
: create your household profile, indicate your preferred area of residence, and your funding goal.
: specify your investment criteria in your profile.
: add properties you love to your wishlist, then invite potential investors, your family or friends to fund.
: endorse, pledge, and commit to fund properties of deserving family households.
Step 3. When funding goal is reached, Lock-In a property in your wishlist so HutFund can take over and complete the acquisition.
What is Equity Sharing?
With Equity Sharing, or Shared Ownership, or simply Co-ownership. each individual owns a share of a single property. Let's say you were able to get 10 investors to fund your dream home. There will be 11 owners (including you, as the Buyer-Occupant) for one single property and, depending on the funding commitment of the investors, each would own an undivided interest in the property.
How is the real estate transaction structured?
It is structured through a Delaware Statutory Trust (DST) or Tenant-In-Common (TIC).
A DST structure is recommended if there are more than two owners up to 500 owners. It is essentially a trust, a separate legal entity formed to own the property in which each owner has a beneficial interest. The IRS imposes no limitation as to the number of investors under a DST. Under certain rules, ownership through DSTs do qualify as a replacement property if you are doing a 1031 Exchange. While we will help you structure the deal, you are strongly encouraged to please contact your Tax professional or Real Estate attorney for the advantages or disadvantages of a DST.
A TIC is recommended if there are at least two owners on the property up to 35 owners. While each TIC owner has right of possession of the entire property, each owns an undivided percentage interest on the property. Only the Buyer-Occupant has the right of occupancy.
What is the difference between an investor's pledge and an investor's commit?
A pledge is a promise (which unfortunately may be broken) to fund a certain amount of money to the household, while a commit is a firm commitment by the investor to fund the household with the amount pledged. The investor's seriousness is determined as soon as he or she provides a small deposit (between 5% to 10%) prior to fulfilling the commitment. The amount of deposit is due and payable at time of commitment, and will be treated as a partial credit. The deposit is however non-refundable should the investor fail to send the remaining balance of the commitment by a certain agreed period of time before the close of the real estate transaction.