How is my investment protected?
With Fraction's Convertible Equity offering, 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 and so is motivated to improve the value of their property. If the sale price dramatically does not match market value, Fraction will investigate to ensure there is no foul play.
Further, Fraction does thorough checks on each property and property owner to ensure that the investment will be trustworthy initially. This entails credit report checks, title searches, property inspections and property appraisals.
Finally, Fraction will only allow homeowners to leverage a total of 50% 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.