Leading Investment Proposals
Carlos Trevino avatar
Written by Carlos Trevino
Updated over a week ago

⚠️ All proposal creators must schedule a call with Fractional before creating an investment proposal. This is to ensure that you are aware of all responsibilities and upcoming tasks.

📝 Proposal stages

There are 4 proposal stages:

Stage details:

💡 Interest: gather initial interest from members Members can join the proposal with their anticipated investment amount, though showing interest does not guarantee a spot in the proposal.

Interested members will join a conference call to:

  1. learn details about the proposal (location, financial analysis, investment strategy, etc)

  2. discuss the terms of an operating agreement (rights and responsibilities of each member, how decisions are made, etc)

The proposal will officially launch once the call has been completed.

💸 Funding: finalize purchase group Members who want to secure a spot must send in an earnest money deposit that is 10% of their committed investment (ie: $500 deposit for a $5,000 investment).

Fractional works with the proposal creator to draft and send the purchase and sale agreement at the end of the funding stage.

🤝 Under contract: offer is accepted by the seller Members must pay the remaining investment amount and sign the partnership operating agreement three business days before the closing date.

Fractional will set up the group’s LLC and business banking.

🏡 Closed: members are now official owners! Once all payments and documents have been received and signed, the group and LLC will close on the property and become the official owners of the property on the closing date.

Details on the entire process can be found here: offer and acquisition process.

💪🏽 Working with Fractional: Expectations & Responsibilities

Leading a proposal may seem like a daunting task, but our Fractional Concierges are here to work with you every step of the way.

☎️ Please note that during certain stages, you are expected to take initiative and set up a call with our concierges to move the process forward.

  1. ☎️ Schedule an initial consultation with Fractional: Even if you are a verified proposal creator, initial consultations are useful to discuss mortgage financing options, your project details, and how you can leverage our partner network.

  2. Create a complete proposal: You must provide all required property and investment information. Please reach out to us with any questions if you cannot complete the investment proposal properly.

    ✍🏼 View our proposal creation guide here

  3. Run a proposal discussion meeting: This is optional, but is highly encouraged. An initial meeting will be a great way for interested members to ask questions, and for you to clarify proposal details, and upcoming expectations and deadlines.

    💬 View suggested proposal discussion agenda and discussion points here

    If you decide not to set up a meeting, you will still need to choose a Launch Date for the proposal.

  4. Launch and start funding proposal: The launch date is when the proposal will begin funding and taking deposits from interested members. Members are only guaranteed a spot after they put down a deposit (10% of their committed investment). You will need to set a deadline for the funding so members will know when they need to submit their deposits.

  5. ☎️ Draft and send an offer and purchase agreement: Once your proposal reaches full funding, set up a call with us to work on drafting and sending out the offer and purchase agreement.

  6. ☎️ Finalize and customize operating agreement: Once your property is under contract, set up a call with us to finalize the operating agreement. Fractional’s team of real estate and SEC lawyers have made co-owner legal agreements that protect and align all co-owners on how they want to operate their project. You’ll save thousands of dollars and time by not needing to find your own real estate attorney.

    💬 View our operating agreement guide here

    When the property is under contract, members will need to pay the full investment amount three business days before the closing date.. They will also sign the operating agreement once it is finalized.

  7. LLC, Banking, Payment Portal, and Bookkeeping: Your group’s LLC entity and EIN will be filed by our team immediately after all members sign their co-ownership legal agreement. Fractional creates a business bank account for the LLC in a matter of seconds. Cash-flow distributions and capital calls from each owner’s individual accounts are automated and triggered directly inside the platform. You’ll be able to see the full ledger of categorized expenses and income related to your property.

  8. K1s and Taxes: Fractional will issue a K-1 tax form for each investor, based on each investor's percentage ownership in the LLC’s profits or losses. We make appropriate depreciation deductions to decrease and defer your taxable rental income.

  9. Voting portal: Vote directly on the platform with fellow co-owners to collaborate on issues such as raising rent, refinancing, changing the investment strategy, selling the property, etc.

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