FAQs – General Questions
FracAssets is a FinTech and RealTech Crowdfunding Platform for Fractional Real Estate & Equity. We enable investors to own Fractions of Residential Real Estate & Unlisted and Startup Investments. FracAssets is registered in the Dubai International Financial Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA).
Crowdfunding is a term used to describe when a number of investors join together to invest in a real estate or equity asset so that all of them can benefit from a share of the income that the asset generates, and any appreciation in the value of the real estate.
Becoming an Investor on FracAssets is simple and free!
Step 1: Register on FracAssets platform by filling out your details and completing our KYC & AML process.
Step 2: Browse through our investment opportunities and choose the ones that match your goals.
Step 3: Start investing!
FracAssets is required to abide by the Know-Your-Customer (KYC) and Anti-Money Laundering (AML) processes as required by the Regulatory Authorities. This is why, all investors registering on the FracAssets platform must submit a proof of identity (passport and/or national ID) and proof of residence (e.g., utility bills, bank statements, etc.) along with their employment information, source of wealth, and current net assets.
Investments on the FracAssets platform starts from as low as AED 500 (USD 136). You can visit the pages for Real Estate Crowdfunding and Equity Crowdfunding to find the product specific minimum investment amount.
If you are classified as a “retail client,” then you will be restricted to USD 50,000 over a year. According to the DFSA, an individual is classified as a Retail Client if they cannot meet the Professional Client criteria or if they opt to be classified as a Retail Client.
Commitment period means the time period specified by FracAssets for certain property or start-up opportunities, during which the clients can commit to invest in that particular property or start-up opportunity.
Retail Client: If you are classified as a “retail client,” then you will be restricted to $50,000 over a year. FracAssets classifies all users as Retail Client unless the user requests to be classified as a Professional Client.
According to the DFSA, an individual is classified as a Retail Client if they cannot meet the Professional Client criteria or if they opt to be classified as a Retail Client. These clients are also offered more protection because they are deemed to have less net worth, experience and understanding of relevant financial markets than a Professional Client. We are required to provide Retail Clients with certain disclosures and risk warnings that we may not necessarily provide a Professional Client. Furthermore, we will handle Retail Client complaints in accordance with specific requirements as defined by the DFSA.
Professional Client: If you are classified as a “professional client,” then you will have no limitation on how much you can invest using our platform. A professional client is one who has prior experience and understanding of relevant financial markets, and a net-worth of USD 1 million from their previous investments.
According to the DFSA Rule Book, COB Section 2.3.7, an individual is a professional client if:
a) The individual has net assets of at least USD 1 million, excluding the value of primary residence. Assets that are indirectly owned can be included in the calculation and
- Within the previous two years, the individual is, or has been, an employee in a relevant professional position of an Authorized Firm or a Regulated Financial Institution; or
- The individual appears, on reasonable grounds, to have sufficient experience and understanding of relevant financial markets, products or transactions and any associated risks.
FracAssets will need to confirm the above information in order to classify you as a professional client.
You can top up your FracAssets Wallet via Bank Transfer or Debit Cards. Clients are not allowed to use Credit cards while making payments on the platform.
A User is not registered on the platform (KYC and AML not done at this point). As a User you will only have access to very basic information such as what do we do, what is real estate and equity crowdfunding, FAQs etc.
A Client is one who has registered and completed our KYC and AML processes. As a Client, you can access the investment opportunities and any related documents such as valuation reports, investment memorandum, business plans etc.
FAQs – Real Estate
For each investment, a Special Purpose Vehicle (SPV) is created in which funds are raised to own and manage the property. As an investor you will own shares of the SPV holding the property that represents your investment.
A Special Purpose Vehicle (SPV) is just “a separate new entity” – it’s no different than setting up a new business. An SPV is a distinct company created for a specific purpose with its own assets and liabilities. Properties are owned in newly formed SPVs and the customers are shareholders/partners of the SPV. SPVs only purpose is to hold the property on behalf of the customers and no other operational activities are carried out in them.
You own the investment through the SPV. For example, if you invest AED 2500 in a AED 1M property, you own 0.25% of that property through such an SPV and are the ultimate owner and beneficiary of the property, proportionate to your share in such property. The remaining 99.75% is held by other investors like you.
The dividends and rentals are distributed proportionately as well. Collectively, you all earn dividends through the property. Through this mechanism, not only can you invest in an affordable manner, but you can also reduce your risk because you can spread your capital across multiple properties and asset classes as compared to only one. FracAssets does not own such shares but acts as a facilitator.
The investors own such shares in the property and are the ultimate beneficiaries.
Investors can benefit from returns in two ways:
- Rental Income: The annual yield generated from rental income can range between 6-10% subject to the micro and macro environment and market conditions.
- Capital Appreciation: Any appreciation in the underlying property accrues to investors and is realized at the time of sale.
With our unique expertise in the real estate industry, we strive to maximize the capital gains on behalf of our customers at the point of sale. However, we do not guarantee any returns on the assets listed on our platform. We do not guarantee or give assurance for any returns on the investments.
Rents are transferred to you monthly, quarterly or annually depending on the property you choose to invest in.
We shortlist properties after examining various factors like Location, Developer, Asset Quality, Micro and Macro Market Indicators, Robust Lease Agreements and Scope of Capital and Rental Appreciation through a detailed cash flow analysis to name a few. Our Investment Team identifies projects and secure deals which meets our strict investment criteria. To further mitigate the risk we do not launch any under-construction properties on our platform.
As with any real estate transaction, owning a property carries inherent risks and potential loss of capital. Please read through our Real Estate Key Risks & Disclosures to understand the risks in detail.
Yes, you can list your property on our platform and get the best pricing for your asset by tapping into our large network of investors. If you wish to list your property feel free to write to us at [email protected].
As an investor you can own maximum 24.99% in a single property, to ensure that a single investor does not own a majority interest. However, the maximum amount that an investor can invest, depends on whether you are a Retail Client or a Professional Client. You can check your Dashboard - My Profile to check the type of client you are.
FAQs – Equity
Investors receive equity or shares of the Special Purpose Vehicle (SPV) of the businesses in which they invest.
The proposals facilitated through FracAssets go through our stringent due diligence and screening criteria. The proposals not only pass through our in-house screening process but also undergo third-party due diligence. However, it is important that you conduct your own due diligence as you would with any investment and check if the particular proposal meets your investment goals. The more research you do, the more rewarding your investment will be.
The due diligence check ensures that businesses applying to raise funds on FracAssets are legitimate and exist.
FracAssets works both internally and with third-party compliance firms to assess if the company is incorporated, the duration of operations and that all necessary corporate and legal documents are in place.
Additionally, background checks will be done on the team and founders to ensure that there is no history of fraud or other relevant criminal activity. However, you must only invest after understanding the risk associated with such investments and taking in consideration your asset allocation. You must consult your financial advisor prior to making any investments.
When you make an investment in any proposal, all you are doing is making a commitment to invest your funds held on account with FracAssets.
Your money is held within our segregated client account and is only paid out once the minimum or funding target has been hit and we have completed the share issuance process. In case the funding target is not met, your money will be refunded to you in your designated account.
You will receive your share certificates after our legal team has completed the necessary processes from their side. This takes some time and, in normal circumstances, we aim to provide you with the share certificates within 6-8 weeks of the conclusion of the campaign.
As with any equity transaction, investing in Unlisted & Startup businesses involves high risks, including loss of capital, illiquidity, lack of dividends and dilution, and it should be done solely as part of a diversified portfolio. No investment decision should be taken without a clear understanding of the risks involved. Please read through our Equity Key Risks & Disclosures to understand the risks in detail. You must consult your financial advisor prior to making any investments.