Frequently Asked Questions

What is SmartOwner?

SmartOwner is an online marketplace that enables you to participate in highly curated real estate investment opportunities in the fastest-growing areas of the world.

Why real estate?

Real Estate is the largest asset class in the world. It has significant advantages over other asset classes when it comes to providing high-returns in a predictable manner and it is also good at making your portfolio inflation-proof. It combines the security of a physical asset, the advantages of leverage, and the high returns of both yield and asset appreciation, making it an attractive asset class.

How do you select assets?

We have a team of experts who specialize in various types of real estate investments and they carefully evaluate each opportunity that comes to us. Only about 1% of projects that we evaluate make it through this curation and reach you.

Who can invest in SmartOwner’s opportunities?

We have opportunities in multiple countries and clients in many countries. The specific opportunity that you will be able to participate in will depend on the location of the real estate opportunity (as some countries have restrictions on ownership) and the regulations with respect to your country and investing abroad. Please visit our opportunities page to understand the eligibility criteria for the opportunity of interest to you.

What is the duration of the investment? When will I get my money back?

Each opportunity has its own duration characteristics. In general, you can think of opportunities as either self-liquidating, such as a new development in which properties will be sold to buyers, or as long-term, in which long-term rental income is the goal. With self-liquidating opportunities, we provide the expected duration during which you can expect an exit. For the long-term opportunities that generate rental income, you will be able to list your stake for sale through our site if you choose to liquidate your interest. You will have access to an online control panel, and the SmartOwner Anywhere app, through which project updates, milestones, and performance metrics are regularly communicated so you always know what is happening with your investment and are empowered to take decisions about your portfolio.

What kind of returns can I expect?

Our opportunities are in real estate assets that either generate income or provide a growth-based upside at the end. The returns will depend on the type of opportunity that you invest in and its performance over the succeeding years. While future returns are impossible to predict, over the last few years, SmartOwner's clients who have invested in emerging markets have enjoyed an annualized return of between 16-24%, and we have consistently delivered a return that significantly beats the inflation rate and competing asset classes.

What are the risks?

As with any asset, there is inherent risk in any investment. At SmartOwner, we subscribe to the famous quote by Warren Buffett - “Risk comes from not knowing what you’re doing”, and actively seek to mitigate these risks. Our deep domain expertise, backed by our cutting-edge analytics, minimize market risk by careful selection of the markets and opportunities that we bring to you. We have a stringent due diligence process before the property is even selected, as well as a structured, data driven approach to property management once operational, thus minimizing the property risk through professional revenue optimization methods.

How does SmartOwner help with diversification?

We help our clients diversify their portfolios in two ways. First, adding real estate to an asset portfolio is not easy. It requires a lot of expertise and access to information that is typically difficult to obtain and a lot of hands-on management. You get all of this at the click of a button. Second, within real estate, we offer a range of diverse offerings across the world, like a coworking office space in the heart of India’s corporate hub, an ultra-premium residential high-rise in the fastest growing housing market in Asia, and a luxury short term rental portfolio focused on the hottest tourist destinations in the world.

How are SmartOwner's offerings different from real estate funds or an REIT?

In a REIT or private equity fund, the investor invests in a fund that has fund managers who decide how the capital is deployed. SmartOwner, on the other hand, is a marketplace that connects you with specific investment opportunities in real estate, along with providing a marketplace for you to exit your investment should you choose to do so.

How much does SmartOwner charge for its services?

SmartOwner’s fees depend on the specific opportunity. Please visit the opportunities page for the opportunity of interest to you to get the relevant details. Our service agreement for each project also provides particular fee details.

What kind of transparency can I expect from SmartOwner?

Transparency is one of the key pillars of our service and value proposition. When you become a client, you will receive a private account through which you can access a control panel where details about your investment and the project are regularly updated.

What is the proof of investment?

Your receipt (for each payment you make) and your purchase confirmation (once you have fully paid for your investment) will be made available on your control panel. The legal agreement that you execute at the time of your investment will govern the terms of your investment. Additionally, you have complete visibility to your investment through your control panel and our mobile app.

I’m worried about online security. Is your platform safe and secure?

Our investment opportunities are in real estate, an asset class that is not susceptible to digital risks. All transactions on our website are secured through SSL encryption. We also take our clients’ privacy very seriously and do not share client data with external parties who may wish to market to our clients. Please see our privacy policy for more details about how we handle your data.

Can I reinvest my earnings directly into another SmartOwner project?

Our investment opportunities have specific minimum investment amounts and, at this time, there is no direct way to invest rental income or profits from one investment into another.

Who is an Accredited Investor?

If you are an investor from the United States of America, we check for your Accredited Investor status, without which you will not be able to participate in our offerings. You meet the criteria to be an Accredited Investor if you:

  • Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expect the same for the current year OR
  • Have a net worth over $1 million, either alone or together with a spouse (excluding the value of your primary residence)

For more information about whether you qualify, how to get verified, and what documents you can submit as proof, please speak to our asset specialist. This SEC Bulletin is also a useful resource for more information.

What are the parameters used to select a developer?

SmartOwner's core team is very familiar with the top developers in territories in which we offer deals and we deal only with developers who have a strong track record and reputation for professional conduct. In addition, our deals are carefully structured to ensure that we have appropriate protections before developers get access to client funds.

Why do builders offer such good deals through SmartOwner?

Real estate development is a high value-add activity where raw land is converted into valuable residential or commercial properties. Developers are able to share a portion of this value add with our clients in return for being able to raise funds through our platform.

What kind of returns can I expect?

While it is impossible to predict future returns as they would depend on future market conditions and the nature of the underlying real estate opportunity, our past early stage real estate transactions that have exited have earned annualized returns ranging from 16% to 24%. Our goal is to offer opportunities that significantly beat the inflation rate and returns from competing asset classes.

Is there any property insurance on the property?

The type of insurance depends on the underlying real estate opportunity. For example, developers will have insurance on their construction whereas a rented office building will be insured by the SPV that owns it.

Who decides exit timing and pricing?

Early stage opportunities are typically self-liquidating. These opportunities are meant to fund the development of a new real estate project which, when completed, will be exited through sales of inventory to end users.

What is the minimum holding period?

This is specific to each investment and tends to vary based on the type of project, the investment model, and in some cases the size of the development. For instance, some of our residential projects are moderately liquid and allow you to sell your unit on our platform once you have completed a minimum duration ranging from 18-30 months in a project whereas certain other residential projects require a 3 to 5-year project period. Our opportunities page will give you more information about the expected duration of the specific project you are interested in.

What do I need to do to initiate my exit?

This is again specific to each project. In certain projects, no action is required of you for your exit. You will automatically be exited on completion of the project period. In some other projects, if you have completed a minimum period of investment, then you will have the option to initiate resale of your stake through the control panel. All of this can be managed on the go on the SmartOwner Anywhere app as well.

What if I need my money back urgently?

Our remarketing efforts are optimized to market properties within the project duration and are not designed for an immediate liquidation. To make the most of your investments, it would be prudent to plan your commitments considering the entire project period.

People I know have been able to double their money in the last few years. Will I be able to do the same?

SmartOwner is extremely selective in ensuring that the right projects from the right developers at the right price are chosen. The core values of our company are to ensure safety and transparency and to avoid risky or speculative deals. To put it in perspective, the 16-24% annualized returns that our clients have enjoyed in the last few years would be the equivalent of doubling their money in 3-5 years.

What are coworking spaces?

Coworking spaces are shared workspaces that offer affordable office space, flexible workspace sizes and timings, and access to top class infrastructural facilities that are inefficiently expensive to independently procure and maintain.

Why are coworking spaces so popular with companies?

Coworking spaces first became popular among small companies and entrepreneurs who could not compete with large companies for office space. The flexibility offered by these re-imagined workspaces quickly became a godsend for companies that wanted high degree of flexibility and state of the art facilities. Eventually, this trend has expanded to include the entire corporate workforce. Large employers have long been experimenting with productivity improvements through fluid open-plan workspaces like Steve Jobs at Pixar, and co-working spaces have brought with them increased networking opportunities, a much desired collaborative culture, as well as reduced costs.

What makes coworking spaces so popular with investors?

For investors, coworking spaces can be an excellent investment opportunity. Market demand is booming, and it provides access to a much larger customer base than traditional commercial leases. The median rents are higher than commercial leases on average, and there is a lot of flexibility when it comes to finding lessees and managing the underlying assets. The growth opportunity is quickly being identified by the top funds, and WeWork reaching a valuation of more than $20 billion in just 7 years is a prime example of the prospects for this industry.

Is this just a passing fad?

There is nothing about the core proposition of coworking that can be called a fad. It is simply the transformation of offices to a business model similar to hospitality where the tenant does not have to manage all the services that make a Grade A office functional. Initially, coworking was associated with open-plans and low privacy, but that is not the case now. They come with private offices and closed off spaces that minimize disturbance and confidentiality risks. The proposition allows a wider tenant base and higher overall rental yield, making this a long term attractive investment backed by a fundamental shift in the way corporate workforces are prioritizing efficiency, productivity, and profitability over traditional ways of working. We see from the market trends that the business model enjoys superior flexibility and returns, and so this phenomenon is likely to pick up a lot of steam with investors in the coming decade. Having said that, each coworking opportunity must be examined on its merits for location, costs, vacancy rates, etc. In other words, although we believe this industry segment has excellent prospects, we believe that traditional commercial property selection criteria must still be applied to it.

Do I get rental income from these properties?

Each coworking opportunity will have its own economic model and the income stream will depend on the nature of the underlying transaction. Please review the information pertaining to the coworking opportunity of interest to you to understand how this works better.

What if a large company wants to lease out the entire space?

While coworking is designed with the idea of flexible office spaces, many large companies find the serviced aspect of these facilities attractive, so it is entirely possible that an office will be leased out to a single large tenant.

Where are these projects situated?

We choose the most profitable markets by carefully analyzing rents, vacancy rates, expected supply, absorption growth and other factors in selecting the specific coworking opportunities to offer on our platform.

Do you develop and own the real estate for these buildings?

No, we have a contractual relationship with one of the best-managed and most profitable coworking companies based out of South Asia to offer their opportunities on our platform.

How do I invest in the STR opportunity?

Our short term rental opportunity is region-specific, with the first one being our Asia Pacific opportunity. If you wish to participate in this opportunity, you will do so by investing in the SPV for this project and you will receive the documents evidencing your ownership stake.

How will I exit my STR investment?

The STR series of opportunities are rental properties meant to be held for the long run. As such, this is not a self-liquidating opportunity that will exit on its own. Instead, if you wish to exit your stake in an STR portfolio, you may list it for resale through the control panel. The resale option on this secondary market will be available six months after the date of your transaction. In addition to using the secondary market to resell your stake, you may also use it to add to your stake at any point. The market will perform like any normal secondary market with bid and ask prices and a matching mechanism to consummate transactions. SmartOwner provides information about the underlying portfolio to enable both buyers and sellers to arrive at a fair price.

How will the rental pricing be determined?

Short-term rentals, as you may be aware, are listed through several platforms such as Airbnb, Homeaway, Booking, and Tripadvisor. In addition, such rentals are also let through independent travel agents and travel companies. The STR portfolio will utilize all these revenue channels and the pricing will be based on demand, supply, occupancy rates, the prices charged by the hospitality industry, etc. This type of dynamic pricing is typically done through sophisticated software algorithms. The algorithm will both be able to react to market conditions, accept manual inputs - for example in the case of a corporate tie-up - and learn from past behavior.

Where will the SPV be located?

Since the underlying properties and our clients are located in a number of jurisdictions with varying tax rules, the SPVs are generally located in a tax neutral jurisdiction so that clients do not have a tax loss regardless of their place of residence.

What will the international arrangement of the deal look like? Where will money be transferred from and to?

Clients will transfer money to the SPV’s bank account.

How will you manage the properties?

All properties will be managed by professional property managers and property management companies with deep expertise in STR listings and a proven track record in successfully managing such listings.

Who will own the properties?

The exact ownership of the properties will depend on the property ownership of the jurisdiction in which the property is located. In most cases, the properties may be directly owned by the SPV but in some cases, the SPV will own the property or the economic interest in the property through a local entity set up in the jurisdiction in which the property is located.

Will we be able to see the costs and expenses of the apartments?

Clients will have access to a control panel that will provide them with the relevant performance details of the portfolio of properties so that they will be able to understand how their investment is performing and also to enable them to make informed decisions about their stake in the STR portfolio.

Will the returns be paid in USD for all clients and clients?

The SPV will use USD as its currency to enable sharing of information with clients in a uniform manner. All numbers will be converted into USD for reporting purposes and all clients will receive cash flows into their designated bank accounts in the currency of choice for that account.

When will the disclosure of the properties be made to the investors?

This is a dynamically managed portfolio of properties. Clients will be able to see the current holdings through the control panel.

The investors will receive a share certificate. Do they have to execute any other document?

There will be documents to be executed for the issuance of shares and in the event of a transfer of shares and there will also be agreements with SmartOwner for its services.

What is a cap rate?

A cap rate, in commercial real estate, is the initial year’s cash flow yield of a property relative to the purchase price of the property. For example, if the cash flow from a property is $8 and the property’s price is $100, the cap rate is said to be 8. In this context, the cash flow, in industry parlance, is referred to as the net operating income, which is the gross rent minus the various costs associated with maintaining and managing the property.

What is net operating income?

Net operating income equals all revenue from the property minus operating expenses. NOI is a before-tax figure which excludes principal and interest payments on loans, capital expenditures, depreciation and amortization.

Many emerging markets, such as India, have high bank interest rates. Why should I invest in the STR portfolio when I have access to high interest rates?

It is not possible to compare very different assets in this manner as each has its own characteristics. For example, the STR portfolio is in hard currencies, whereas most emerging market currencies have depreciated over time against hard currencies. Furthermore, fixed income instruments and bank deposits do not have an inflation hedge, and the real rate of return after taxes and inflation is often very low.

How will taxes work?

Your tax rate will depend on your country of residence and its tax rules. The STR portfolio is managed with the goal of maximizing the after-tax return based on the jurisdiction in which the property is located, and each client will have to pay taxes depending on their country of residence and the rules applicable to them.

What if there is a market downturn?

It is important to note that the STR portfolio is an actively managed portfolio, which means that our asset experts will be managing the portfolio of assets with a view to maximizing long term total returns. If a particular city is experiencing suboptimal returns, the portfolio manager may liquidate the inventory in that city or country and invest the proceeds in another location with better economic characteristics within the geographical remit of the portfolio.

What kind of upside can I expect if I resell in 1 year? 2? 5?

While it is not possible to predict future prices, our portfolio managers will be allocating funds into properties expected to offer the best total returns, which is the rent yields plus appreciation potential.

How exactly will you generate income?

Income will be generated from short and medium-term rentals.

How is the market value of the shares determined? Is it the sum of the market value of all the properties owned by the SPV divided by the total number of shares?

The market value will depend on pricing in the marketplace. SmartOwner will provide data with respect to the underlying properties and the cash flows of the properties to enable buyers and sellers to arrive at a fair price.

What is the average occupancy rate for arriving at the projected return? What is the upside if 100% occupancy?

SmartOwner does not project returns or cash flows as these would depend on future occupancy rates, average rents, and other economic factors. For the same reason, we cannot predict the future upside of a property or set of properties.

Why did you choose Dubai as the focus city for the first launch, STR-APX-ONE?

Dubai is among the most attractive investment destinations in the world. It was recently ranked as the #1 tourist destination globally in terms of dollars spent, and the Emirate’s overall approach to governance is designed to make the city as economically dynamic as possible. The upcoming Expo 2020 is expected to significantly boost tourism and demand for STR properties, which is why Dubai is one of the focus areas of our Asia-Pacific portfolio.

Where in Dubai will these properties be located?

This is an actively managed portfolio, so one wouldn't need to be fixated about specific locations. The portfolio will be continually optimized for STR rentals by focused investing in tourist hotspots that offer the best rental yields.

Is this only available in Dubai?

STR-APX-ONE is a dynamic portfolio of properties across the Asia-Pacific region, where Dubai is one of the initial focus areas, but the portfolio will include properties in multiple cities and countries. Each portfolio will be actively managed to maximize total returns considering the prevailing macroeconomic and STR aspects of each location.

What compliance/regulatory requirements are there in Dubai? How will you satisfy those?

The STR portfolio will invest in cities that have a stable regulatory environment from an STR perspective. In this context, it is pertinent to note that Dubai has STR regulations that govern this segment of the hospitality industry.

What are the requirements for an investor-visa in Dubai? Can I invest directly into the property to qualify for this visa?

The STR portfolio is designed purely from an investment perspective and is not designed with visas and residency in mind.

What methodology will be applied to get the foreign exchange rate?

The STR portfolio is a US Dollar denominated portfolio. Regardless of the location of the properties and the currency in such locations, all rental revenues and capital gains will be converted to USD as of the reporting date. Investors who receive their income into non-USD bank accounts will have the payment sent to them as USD payment, which will be converted by their bank into the local currency based on its exchange rate applicable to such transactions

How will the pricing work at the time of resale?

Any future resale price will depend on the price at which buyers and sellers are willing to transact. This, in turn, will depend on the performance of the underlying properties and Smartowner will provide the underlying property portfolio's performance information to both buyers and sellers so that pricing is fair to both parties.

Can I transfer my stake to another client (possibly a friend / family member), if need be?

Clients are free to sell their shares to whomsoever they wish on the SmartOwner platform, as long as the potential buyer's credentials have been verified according to legal requirements.

Who is an Accredited Investor?

If you are an investor from the United States of America, we check for your Accredited Investor status, without which you will not be able to participate in our offerings. You meet the criteria to be an Accredited Investor if you:

  • Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expect the same for the current year OR
  • Have a net worth over $1 million, either alone or together with a spouse (excluding the value of your primary residence)

For more information about whether you qualify, how to get verified, and what documents you can submit as proof, please speak to our asset specialist. This SEC Bulletin is also a useful resource for more information.