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Frequently Asked Questions

This section provides answers to frequently asked questions.

What is Homebase?

Homebase is a platform that enables users to invest in tokenized residential real estate for as little as $100. Using blockchain technology, Homebase provides investors the ability to purchase tokenized single family rental properties with one click, and transact with USDC, cutting the time and cost incurred by legacy systems.

Why does Homebase have DAO in its name?

For context, a DAO, or decentralized autonomous organization, is an emerging form of legal structure that has no central governing body and whose members share a common goal to act in the best interest of the entity. The properties we bring on-chain and fractionalize are managed via an LLC where token holders have voting rights over the property, similar to how members vote within a DAO. Homebase is the de-facto property manager and will manage day to day operations, but LLC members will be able to vote on changes or proposals directly with their tokens if needed.

How much can I invest?

Users can invest with as little as $100 in each property offering.

When do I start getting rental income?

Users start receiving rental income starting the month after a property fully sales out and closes. Homebase will then start managing the property and distribute out rent monthly.

Why put real estate on the blockchain?

By using blockchain technology, Homebase users and investors will also have access to transparent and traceable sources of data to all homes tokenized on the platform to showcase things like month-to-month price changes, transaction history, and legal documentation. In addition, blockchain allows for greater ownership, utilization of existing payment rails, and expansion into new financial tooling in the future.

What is an NFT?

An NFT, which stands for non-fungible token, is a unique unit of data employing technology that allows digital content—from videos to songs to images—to become logged and authenticated on the Solana blockchain. Once content is logged onto the blockchain, every transaction from transfers to sales is recorded on-chain, creating an easily accessible ledger of transparency and traceability. The main impact of NFTs is making it easy to own and sell an asset on-chain, such as real estate.
For more information about NFTs, see our Crypto Basics guide about NFTs inWhat is an NFT? and always feel free to send any questions to [email protected].

What does fractional ownership mean?

Fractional ownership refers to a form of shared ownership in a property where multiple individuals each own a share of a home, and collectively own the entire thing. Being a fractional owner of a Homebase property means that you will benefit from that property's future appreciation and cash flow, but won’t have to worry about any of the property management.

Why fractionalize real estate via tokens?

Real estate price growth has outpaced wage growth for the past 10 years. At a median price of $400,000+ in the US, we think it’s necessary to fractionalize real estate in order to give more individuals the opportunity to capture the upside from capital appreciation. We chose NFTs to fractionalize real estate because unlike other physical assets, real estate transactions don’t require any physical interaction with the property, only a transfer of document ownership.

How does this structure work legally?

After a detailed sourcing, selection, and due diligence process, Homebase puts the residential property under contract and sets up an SPV (Special Purpose Vehicle) to hold the asset. Using that SPV, Homebase issues a private (e.g. Reg D) or public (i.e. Reg A+) fund via the so-called STO (Security Token Offering) process. After the filing (and/or approval) with the SEC (the U.S. Security and Exchange Commission), Homebase issues non-fungible security tokens using the Metaplex NFT standard, and ensures that certain guardrails and functions are available to these tokens to enforce the laws governing these securities

Are Homebase legally compliant?

Absolutely! Homebase tokenizes high quality rental homes via security tokens, which are tokens regulated by securities laws. Token investors can have the peace of mind that their investments are safe, legal, and secured by blockchain technology.

What is a security token offering?

A Security Token Offering (STO, i.e. tokenized IPO) is a type of public offering in which tokenized digital securities, known as security tokens, are sold in security token exchanges. Tokens can be used to trade real financial assets such as equities and fixed income, and use a blockchain virtual ledger system to store and validate token transactions.

What are security tokens?

Security tokens are digital assets that represent transferred ownership rights or asset value to a blockchain token. The concept is the same as buying shares of stock on a traditional stock exchange. These tokens are regarded as securities by financial regulatory authorities. and are subject to regulation, just like ordinary stocks and bonds.

How are homes sourced?

Homebase sources the best properties and deals with partnerships through our real estate network, which includes real estate professionals such as agents, brokers, and investors. Our team of experienced investors sources and underwrites deals with particular focus on stable, cash-flowing properties in great neighborhoods.

What happens after a home is sold on your platform?

After a property is fully sold, Homebase goes through the closing process which means transferring title from the home owner, to the LLC acquiring the property. After, Homebase begins to manage day to day operations of the property. They do this by hiring local property managers to manage the home, and collect and distribute out rental income monthly to all owners.

Who can participate in the home offerings?

At this moment, only US investors are able to invest in our home offerings. In addition, the investment is limited to 35 non-accredited investors and 250 accredited investors. We plan to switch to Reg A offerings at a future date that will let anyone, regardless of accreditation status or country, participate in the property offerings.

Does Homebase take a stake in the house as well?

Homebase acquires 1% of the property value for each home sold on the platform to align our incentives to our users.

How are properties acquired? Is a mortgage utilized?

All homes are acquired with 100% equity, no debt is involved in the financing process. This is so that there is no risk of the property ever being foreclosed by the bank if monthly payments aren’t maintained and so that fractional owners can decide themselves if they’d like to take on debt by collateralizing their property tokens. At a future date, we plan to partner with on-chain debt providers to allow for users to stake their tokens to take out debt.

What happens to the deed of the house and property title after the sale of the home?

The title of the home is transferred from the owner selling the property, to the SPV that Homebase created to acquire the home.

How are rents distributed?

Rent is distributed proportionally each month to each owner based on the percentage of the home owned via tokens. Each month, holders can go to the Homebase platform to redeem their portion of the rent and rent can be withdrawn to the wallet which holds the ownership token, similar to how dividends are distributed for stocks. For instance, if you own 10% of the home, you will receive 10% of the net cash flow each month (rent minus costs).

How does an investor sell their tokens when ready to exit?

At launch all homes will be issued via Reg D security offering. Under the current Reg D structure, investors are required to hold their investment for at least a year. After that one year hold period, investors are free to sell when they’d like directly on the Homebase platform. Homebase acts as the market maker to these sales, which we buy at fair market value as dictated by 3rd parties (HouseCanary, Tophap, etc).

How do property taxes get paid?

Homebase manages the payment of property taxes on behalf of all investors.

How do investors deal with their own personal taxes?

Homebase delivers each investor a K1 at the end of each tax year.

What is required to trade on your platform?

To participate in home offerings, users need to:
  • Make an account
  • Verify their identity (which we’re required to do to comply with Know Your Customer laws required with security offerings)
  • Confirm accreditation status if they are accredited
  • A Solana Wallet to purchase tokens with USDC

What happens if a user’s wallet gets hacked or if tokens get stolen?

Homebase has protections and processes to protect our users from any sort of crypto hack or leak. Each home token ownership agreement allows for reissuing of assets to the original owner upon proof of hack.

What happens if major capital is needed for repairs or a voted resolution of improvement?

When the home is initially fractionalized and sold, a capital expenditure reserve of 5% of the home price is included in the final sale price. This money is drawn as needed to fix major repairs in the home and is replenished via rent collected from landlords. Capital calls from fractional investors is the last resort.

What happens if Homebase goes out of business?

Each of our offerings are registered as their own independent LLC. If Homebase would go out of business, users are protected in that the LLC would be able to operate as an unaffected entity. In that case a new manager would need to be voted in to manage the property or members can vote to sell the property in the open market and distribute out funds received from the sale.

How are properties acquired? Is a mortgage utilized?

All homes are acquired with 100% equity, no debt is involved in the financing process. This is so that there is no risk of the property ever being foreclosed by the bank if monthly payments aren’t maintained and so that fractional owners can decide themselves if they’d like to take on debt by collateralizing their property tokens. At a future date, we plan to partner with on-chain debt providers to allow for users to stake their tokens to take out debt.

Does Homebase take a stake in the house as well?

Homebase acquires 1% of the property value for each home sold on the platform to align our incentives to our users.

Who decides if/when to sell the property?

Each individual owner can decide to sell the property on their own terms. The beauty of fractionalizing the property via security tokens is that each individual has the capability of selling their shares when they’re ready without relying on group approval or for the entirety of the property to be sold in the open market.

How does Homebase calculate fair market value?

To make sure investors get the best price when selling their tokens, we partner with 3rd party data providers who share what the fair market value of the property is which we update directly on the property page each month.

How will you handle major securities regulation changes?

Homebase will be staying up to date with changing legal regulation to ensure that our processes follow all relevant laws, and will change when appropriate.
If you have any additional questions, you are always welcome to email us at [email protected].