How is my investment protected?
With Fraction's financing, the risks of investing are mitigated by debt. A share's value is determined to be the greater between the equity value at time of conversion (maturity date or home sold), and the original principal value of the share.
What this means for investors is that if a property owner de-values an asset, or tries to sell it for less than it is worth, they still have to pay back at least the initial value of the investment. The value of the home at the end of the term is determined either by sale price of the home, or appraisal - whichever is greater.
Further, Fraction does thorough checks on each property and property owner to ensure that the investment starts on solid ground. This entails credit report checks, title searches, property inspections and property appraisals.
Finally, Fraction will only allow homeowners to leverage a total of 40% of their property. This is up to 20% below the industry average, and is done to protect investors from the various risks associated with investing in a property.