Questions about Home Price Movement agreements

How is a Home Equity Contract different from a home loan?

A Home Equity Contract allows us to share in the current and future potential increase in the value of your home in exchange for releasing some of the value that is locked up in the equity in your home today. There is no loan, interest charges or monthly payments associated with this arrangement. QuantmRE becomes a ‘silent partner’ with the owner of the property, and shares in both the appreciation or potential depreciation in the value of the property over time.

How does a Home Equity Contract affect me as a homeowner?

A Home Equity Contract is a good way to get immediate value out of your home’s existing equity without the need to take on new debt (i.e., a 2nd loan, HELOC, or reverse mortgage). It also displaces some of the risk of depreciation in the event property values decline during a certain period of time. In return, you agree to share with QuantmRE an agreed percentage of the current value as well as some of the appreciation or depreciation in the value of the property over time. This means that if the property appreciates in value over time, you’ll realize less of that appreciation in value when you sell, as a portion of it will be paid to us.

Are Home Equity Contracts a new concept for owner occupied housing?

Home Equity Contracts as a way of financing personal housing have been around informally for a long time. The sort of traditional approach in doing this has been for family members of the home buyer, or private or government institutions trying to support homeownership in high cost living areas, to share equity with the primary homeowner occupant. QuantmRE is formalizing what had been an informal arrangement by bringing to market a standardized, legal and market framework for home price movement financing through our Home Equity Contracts. Our business approach includes the ability for investors to trade their interests without impacting the home owner. Our agreements are also available to non-owner occupied single family homes that are held as investment properties.

How is a Home Equity Contract different from a reverse mortgage?

A QuantmRE Home Equity Contract agreement is not a loan or a reverse mortgage. As a homeowner, you do not bear the typically high costs associated with a reverse mortgage, nor do you have to be 62 years or older (our Home Equity Contracts are available to all qualified property owners regardless of age). QuantmRE pays you in US$ for the rights to a share of the current value and potential future appreciation of an agreed percentage of the value of your home, and records a lien on the property as evidence of the transaction. However, since there is no new loan on the property, there is no accruing interest building up. Instead, QuantmRE is now a partner, in effect, with the homeowner, participating in either the upside appreciation of the property, or the downside depreciation according to the terms of the agreement. When the property is eventually sold, QuantmRE will be paid back its original investment plus our agreed share of the appreciation/depreciation in the value of the property.

This sounds too good to be true for the homeowner—is it?

A Home Equity Contract could be the right solution for someone who wants to get cash out of their property without taking on additional debt and incurring monthly interest payments. The homeowner can stay in their home for up to thirty years (depending on the contract terms). At the time of sale of the property, the homeowner repays the original investment paid by QuantmRE, plus the agreed share of the gain or loss in the value of the home during the time of the Home Equity Contract. It is important to remember, though, that by sharing in the equity in your home, you will likely receive less in the sale of your home than if you did not enter into a Home Equity Contract.

How are you going to register the legal ownership of the house?

Homeowners are listed as owner on title. QuantmRE will record with the county recorder’s office a lien on your property that protects our interests, but is not a loan, security or swap instrument. Our agreement with the homeowner is simply a consumer contract that memorializes our investment in the property.

Will the property owner need to take on additional debt ?

Since a Home Equity Contract is not a loan, there is no additional debt associated with it. The homeowner pays QuantmRE, upon sale of the property, our original investment plus our agreed percentage of the appreciation or depreciation of the value of the home. As the terms of Home Equity Contracts can vary, this is a broad definition only.

How does a Home Equity Contract affect me if I want to remodel my home?

A homeowner may remodel and improve their property as they desire, as long as the planned improvements do not detract from the value of the property, nor entail taking on additional debt that could harm QuantmRE’s interest in the property. All we ask is that the homeowner does an appraisal before and then a follow up appraisal after doing the improvements, in order to measure the increase in value to the property, if any, due to the improvements. This equity value increase will not be part of the equity that QuantmRE later shares in upon sale of the home.

What if I want to repay the Home Equity Contract before I sell my home?

This is fine. The repayment amount will be based on the value of the home at time of the proposed repayment, within certain provisions in our agreement to ensure that QuantmRE does not unnecessarily take a loss on equity in the event that market conditions are not favorable at that time.

Who decides when to sell my home?

You, as the homeowner, always remain in control of your property and can decide to sell your home anytime you wish. When your Home Equity Contract reaches its agreed term, which may be from 10-30 years after the date of the initial agreement, you will need to sell your home, buy out QuantmRE’s interest, or apply for an extension of the agreement.

Questions about investing and EQRE tokens

How does your investment offering work?

The homeowner sells a percentage of the future potential increase in value of their home to QuantmRE. In exchange we pay the homeowner with US$. This real estate asset that we have purchased from the homeowner, goes into a pool with other investments made in other homes. Our EQRE tokens represent an equity ownership in this pool of assets. Proceeds received from the sale of our EQRE tokens will be used to fund the purchase of additional Home Price Movement Agreements in single family residences.

What are the advantages to being an investor in EQRE?

For an investor, EQRE represents an equity ownership interest in a pool of Home Price Movement agreements with the owners of single family residences across the US. As managers of this pool of real estate equity assets, our objective is for the EQRE tokens to appreciate in value based on the appreciation of the underlying real estate assets. Of course, as with any investment, there are no guarantees of future performance, and the value of the real estate assets, and therefore the EQRE tokens, could also decline in value over certain periods of time.

How do you protect against one of your homeowner customers taking on too much debt and compromising the security of your share of their home equity?

We use very strict underwriting criteria before entering into any Home Price Movement agreement. Part of this underwriting includes making sure there isn’t too much debt on the home already. We limit the amount of equity we’re exposed to, and we ensure there will be enough of an equity “cushion” in the property after our shared equity release transaction to reduce as far as possible any opportunity for loss on our part. We also have terms and conditions in our agreement to ensure that the homeowner does not accrue additional debt in a manner that could jeopardize the value of our ownership interest.

What advantages does investing in Quantm RE tokens offer over other real estate or alternative investment assets?

The value and appreciation of single family residence (‘SFR’) real estate can be more consistent than other real estate investments. The values of typical income generating types of real estate, apartment and commercial buildings, for instance, can be more closely tied to interest rates, quality of tenants, and can be more expensive to acquire and finance and require expertise to manage. SFR’s values are usually easier to determine. This is due to the volume of activity of homes compared to other investment real estate classes, and because comparable property sales are usually more readily available to estimate valuation for SFRs, whereas commercial properties may be determined by existing leases and desirability of the building for new tenants, as opposed to comparing to other commercial properties. By enabling our EQRE token holders to invest in a pool of fractional equity interests in SFRs, the investor gains access to an asset class previously not easily accessible.

How have SFRs as an asset class performed historically?

Since post WWII, SFRs have appreciated on average of about 4.3% per annum, which is slightly above long-term inflation. There have been periods of volatility over the last 100 years along, notably as seen in the recent financial crisis, but ultimately house values have usually recovered and continued on their steady slightly higher than average-inflation clip. Since most homes are financed, the application of financial leverage amplifies returns, which can lead to double digit returns.

What are the advantages of investing with QuantmRE real estate tokens compared to REITs, Limited Partnerships or real estate crowdfunding sites?

Most of the more traditional real estate investment structures, such as REITS, usually focus on a particular market segment or type of real estate, whether commercial and industrial, retail and apartment buildings. Returns are usually driven by income, or “yield”, although capital gains can be a factor when a property in an investment portfolio is sold. The largest class of real estate in the US, single family residential property (SFR), estimated to be worth upwards of $31.8 trillion, has generally been an individual property proposition, focusing on appreciation/capital gains on the initial investment. QuantmRE makes this estate market available to practically any investor. Since the owner of the home is responsible for maintenance and servicing any associated mortgage debt, our investors do not have to deal with these headaches that typically come with being an active investor in real estate.

How will I be able to know the value of my investment tokens with QuantmRE?

QuantmRE will regularly assess the value of each investment in our portfolio using current market data, and then update the net asset value of the fund and each EQRE token accordingly. In addition, we will be monitoring for any changes in each of our homeowner’s status’s (e.g., delinquent payments, liens on the property, etc.)

What are the potential risk factors for the investor?

A major benefit of real estate over other asset classes is that it is physical asset with tangible value. Of course, as with any investment, there are risks associated with investments in real estate. These include a potential decline in market value and foreclosure risk. Please refer to the Private Placing Memorandum for full details and risk disclosures.

What kind of liquidity can I expect with my EQRE tokens and how would I monetize my investments with QuantmRE?

Our goal is to enable the EQRE token holders to enjoy liquidity independent of the subject properties being sold or refinanced. Although we anticipate that there will be a marketplace where you will be able to buy and sell our EQRE tokens, note that no secondary marketplace for EQRE currently exists. The EQRE Fund will gain liquidity when homeowners refinance or sell their homes, or through new investment money replacing earlier investment money at then-current market values.

How do you decide what areas to invest in?

QuantmRE will identify areas with healthy real estate markets and potential for growth. We underwrite each opportunity using specific homeowner and property data and structure our investment for a targeted return using independent third-party house price movement forecasts.