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FAQ - METTL. FIP
Want to know more about us? Read below FAQ
Investment with Mettl. is open to Indian citizens, Hindu Undivided Families (HUFs), companies, and Non-Resident Indians (NRIs).
The regulatory environment surrounding fractional investments in India is currently in flux, with distinct considerations for various asset classes:
Stocks: Unlike the US where fractional shares are gaining traction, directly investing in fractions of stocks isn’t permitted in India. The Companies Act, 2013 mandates that a share be the smallest indivisible unit of a company’s capital. While the Securities and Exchange Board of India (SEBI) has expressed interest in enabling fractional share ownership, legislative changes would be necessary to implement it.
Real Estate: Fractional ownership of real estate itself doesn’t have a dedicated regulatory framework. However, platforms facilitating fractional real estate ownership might need to adhere to the Real Estate (Regulation and Development Act) 2016 (RERA) by registering as real estate agents. Recognizing the potential, SEBI proposed regulating Fractional Ownership Platforms (FOPs) under the ambit of Real Estate Investment Trusts (REITs). This could establish a more structured framework with investor safeguards. However, the final regulations for SEBI’s proposal are still under development.
In essence, fractional investing in India holds promise, but there’s a lack of specific legislation governing it at present. SEBI’s proposed regulations for fractional ownership platforms operating in the real estate domain through REITs signal a potential shift towards a more structured approach that prioritizes investor protection.
Mettl’s fractional investment model revolutionizes investing by granting you access to high-value assets like commercial property without the burden of sole ownership.
Fractional ownership presents an enticing investment opportunity characterized by its favorable risk-to-reward ratio. While all investment models entail inherent risks tied to profit expectations, fractional ownership stands out for its comparatively low risk level, particularly when considering the anticipated returns. Mettl. leverages advanced technology to enhance transparency and accessibility, thereby mitigating these risks to the greatest extent possible.
Listing properties stands as a pivotal procedure within Mettl. Our approach entails a robust, data-driven selection process aimed at maximizing investor returns. Thanks to our rigorous due diligence and evaluation measures, a mere 2% of the properties scrutinized secure listings on our platform.
At Mettl, ensuring the security of our platform and safeguarding the privacy of your data is our top priority. We have developed our platform with top-notch security and privacy features in mind. Your data is securely hosted on cloud networks, and all sensitive client information is encrypted and stored using 256-bit SHA encryption.
The minimum investment required is *Rs. 10 lakhs. Kindly note that this amount varies with different projects.
We believe in full transparency. All property documents, rental agreements, tenancy details, title reports, due diligence reports, etc., will be accessible through the Investor dashboard.
No, Mettl. does not offer any guarantees on returns. While the rental yields for most opportunities listed on the platform are predetermined, there remains a risk that the projected yield and expected gains may not materialize. Our presentations, webinars, and discussions only provide estimations of potential returns. We advise prospective investors to exercise caution with any scheme that promises guaranteed returns.
REITs are publicly traded investment instruments where investors buy and sell units to receive dividends and capital gains. On the other hand, with Mettl, investors become shareholders of a Private Limited Company that owns the property, with Mettl managing the property on behalf of the Special Purpose Vehicle (SPV). Yields in REITs fluctuate based on entry price, while with Mettl, yields are fixed. REITs are subject to stock market volatility, potentially deviating from actual property value, whereas Mettl’s asset valuations remain stable, reflecting ground reality. Payout cycles in REITs vary and must distribute a minimum of 90% of net distributable cash flows. With Mettl, payouts are quarterly, distributing all distributable cash flows. Up to 10% of a REIT’s investment may be in non-revenue generating assets, while all assets with Mettl generate revenue (except lands). REITs cannot sell assets owned for less than 3 years, but Mettl can sell assets at any time (after the initial lock-in period) with shareholder approval.
Your investments are entirely secure, regardless of the status of Mettl. Here’s why: Your investment takes the form of equity shares and compulsorily convertible debentures in a Private Limited Company, specifically established to acquire and own the asset. As a shareholder in the Special Purpose Vehicle (SPV), you effectively own the asset. The SPV is obligated to adhere to statutory requirements such as holding general meetings and filing returns, overseen by third-party consultants. This structure ensures that investors retain ultimate decision-making authority. Therefore, even if Mettl becomes non-operational, your ownership and control of the asset remain protected.
To begin the investment process with Mettl, you’ll first need a KYC-verified Mettl account. The required documents include: • A copy of your PAN Card. • Address Proof such as Aadhar, Driver’s License, or Passport. • Bank statement or a canceled cheque leaf with your name printed. For NRI investors, an NRE or NRO account number is necessary. Non-Individual entities will require additional documentation. Once your documents are verified, a Virtual Account will be created, enabling you to invest in any open opportunity on the platform. Simply click the ‘Invest Now’ button and confirm your investment details. You’ll receive all pertinent property and SPV-related documents for review. If you decide to proceed and block your investment, you’ll need to electronically sign a binding Expression of Interest (EOI) and transfer an initial 10% token advance to your virtual account, accessible from your dashboard. Once 100% commitment is received from all interested investors, the opportunity is deemed fully funded. You’ll then transfer the remaining amount to your virtual account. Your investment will be routed through an escrow mechanism to the shared subscription accounts and ultimately to the SPV’s current account. You’ll be allocated equity shares and compulsorily convertible debentures (CCDs) in the Private Limited Company. Subsequently, the SPV will proceed to acquire the asset.
If, by chance, a property on our platform fails to meet its funding target, any funds committed by investors will be refunded to their verified bank accounts.
No, you do not need to physically visit the property. All necessary documentation will be signed digitally through a trusted digital signature provider.
If you choose to withdraw your initial investment or token advance, a termination fee will be applied according to the terms outlined in the Expression of Interest.
Certainly, there is an initial lock-in period of 1 year starting from the registration of the property. After this period, you are able to sell your holdings. However, it is advisable not to invest with Mettl or in real estate in general if your investment horizon is less than 5 years.
Apart from an initial acquisition fee, which varies depending on the opportunity, we have the following charges: • A 1% annual management fee, applied to the quarterly payout. Upon exit, there’s a performance fee of 20% on gains above a hurdle rate of 10% IRR. For instance, consider a scenario where a property sale occurs after 5 years. On a property value of Rs. 25,00,000, gains calculated at a 10% IRR after 5 years would be approximately Rs. 13,27,500 (Sale Value + Rentals – Cost of Investment). If the investor realizes gains of Rs. 14,00,000 on the property, we would charge 20% on Rs. 72,500 (14,00,000 – 13,27,500), which amounts to Rs. 14,500. For opportunities closed after May 1st, 2024, resale transactions will incur a 2% facilitation fee on the actual resale value. The facilitation fee is calculated as follows: Facilitation fee = (Actual resale value agreed upon with the buyer – Performance fees) * 2%. • The facilitation fee will not be charged in the following cases: If the seller has pre-arranged a buyer and only requires Mettl to execute the transaction. If the resale is for tax optimization purposes (e.g., transfer to immediate family members or to an HUF at the original purchase price). When the entire asset is being sold. In such cases, only a nominal legal fee and Stamp Duty of ₹1430 will be levied.
No, investors will not be charged any management fee as long as the property remains unoccupied.
Your investment is considered complete once the opportunity is fully funded, and your investment is privately placed in the SPV. Mettl typically aims to accomplish this within a timeframe of 90 days to ensure the property receives full funding.
Your returns on investment come in the form of interest on debentures, paid out quarterly. The interest rate on the debentures you hold is determined by the rents generated and interest earned on the security deposit. Returns are transferred to your bank account on or before the 10th working day of each third month, contingent upon receipt of rent from the tenant
Mettl. handles all aspects related to the asset.
We prioritize maintaining full financial transparency with our investors, ensuring that rental payments are disbursed quarterly as soon as they are received by the Special Purpose Vehicle (SPV) under which the asset is registered.
Certainly! As a fractional owner of the asset, you will receive ownership in the form of shares of the private limited company under which the asset is registered. These shares represent your proportionate ownership and can be traded with other investors on our platform, akin to how they would be traded on a stock exchange.
You can monitor the performance of your investment via our online dashboard. Please note that the Net Asset Value (NAV) of the property will be updated semi-annually.
You can exit your investment once the initial 1-year lock-in period is completed. There are three options available for exiting your investment: Asset Sale: If there is a favorable opportunity for selling the asset, Mettl, as the asset manager, will assess the opportunity. Following evaluation, Mettl will present it to investors through an online poll to determine whether to liquidate or hold the asset. If at least 75% of shareholders vote to sell, the liquidation process will commence. Mettl will provide all relevant reports and documents to aid investors in their decision-making. Upon sale of the asset, gains (after taxes and fees) will be distributed among shareholders and transferred to their respective bank accounts. If shareholders opt to hold, the investment will continue until the next poll, repeating the process. Private Sale: You have the option to sell your fraction or holding to individuals you know, such as friends or family. You will need to complete the necessary transfer documents for this transaction. Mettl can assist in determining the valuation of your holding if needed. Resale Market: Through Mettl’s online dashboard, you can list your fraction or hold on Mettl resale market at the recommended NAV. Similar to a private sale, you’ll need to complete the necessary transfer documents. Once a new investor acquires your fraction, gains (after taxes and fees) will be credited to your registered bank account.
For Indian residents, taxes are applicable on rental payouts and capital appreciation. Here’s how they are taxed: Rents: Rental income received from the property is distributed as interest on debentures. It is taxable in the hands of investors under “Income from Other Sources” at the applicable tax slab rate. Capital Appreciation: Capital appreciation is subject to capital gains tax at applicable rates, depending on the period for which the shares and debentures were held. • Short-term Capital Gain applies if shares and debentures are sold before 24 and 36 months respectively. It is taxed at the investor’s applicable tax rate. • Long-term Capital Gain applies if shares and debentures are held for more than 24 and 36 months respectively. It is taxed at a flat rate of 20%, regardless of the gain amount. Indexation benefits may be applicable for long-term capital gains (holding period > 2 years for shares and 3 years for debentures).
According to Indian income-tax law, NRIs are liable to pay tax on any income earned or sourced in India. If the income earned in India exceeds the basic exemption limit, NRIs must pay taxes in India based on the applicable slab rates. Rent Income: Rental income is distributed as interest on debentures and taxed at the applicable tax rate or the rates specified in the tax treaty, whichever is more favorable to the investor. Appreciation: Capital appreciation is subject to capital gains tax at applicable rates, depending on the period for which the asset was held. • Short-term Capital Gain applies if shares and debentures are sold before 24 and 36 months respectively. It is taxed as short-term capital gains at applicable tax rates for NRIs. • Long-term Capital Gain applies if shares and debentures are held for more than 24 and 36 months respectively. It is taxed at a flat rate of 10%, regardless of the gain amount. NRIs may explore benefits under the Double Taxation Avoidance Agreement (DTAA) with their respective countries, subject to the availability of a Tax Residency Certificate
Yes, there are. The SPV deducts a 10% TDS before disbursing returns to Resident Indians and 20.8% for NRI Investors. Resident Indians can submit Form 15G/15H, while NRIs can submit a Tax Residency Certificate (TRC) to reduce TDS. NRIs may also explore benefits under the Double Taxation Avoidance Agreement (DTAA) with their respective country, provided they have a Tax Residency Certificate (TRC).
For every asset featured on the Mettl Platform, a Special Purpose Vehicle (SPV) is established. Funds are raised within this SPV to acquire, possess, and oversee the property. Your investment contributes towards subscribing to the shares and compulsorily convertible debentures of the SPV, representing your fractional ownership. Mettl will offer asset management services to the SPV, handling accounting, secretarial duties, reporting, leasing, maintenance, and other operational tasks under the asset management services agreement with the SPV.
A Special Purpose Vehicle (SPV) is a legal entity formed, such as a partnership firm, LLP, or a private company, for a specific lawful purpose. Any investment opportunity listed on the Mettl platform will be owned by an SPV, which is a private limited company established specifically for this purpose.
Mettl. conducts legal due diligence on the property before it is acquired by the SPV. All legal processes related to investment and property are managed by Mettl. However, you are encouraged to seek advice from your tax and legal advisors to determine if the listed opportunity is suitable for you. If you engage any legal or tax advisor, we are available to address any inquiries they may have.
Initially, you’ll need to sign an Expression of Interest to confirm your commitment and remit 10% of your investment amount. Once the opportunity has received 100% commitment from all interested investors, a Drawdown Notice will be sent to you, following which you may remit the remaining funds for your investment. Subsequently, you’ll be provided with an Offer Letter for the private placement of securities and will execute a Share Securities Subscription Agreement (SSA) with the SPV. The SPV will also execute an Asset Management Agreement with Mettl, for which you will sign a consent letter. During the resale or liquidation of your holding in the SPV, you’ll need to execute securities transfer documentation, including a request letter for the transfer of securities, a deed of adherence to the SSA, and securities transfer forms. All these documents will be executed through an e-signing process, ensuring an audit trail and no physical copies will need to be signed. This streamlines the investment process, making it entirely digital, fast, transparent, and highly convenient.
Mettl employs an experienced team to conduct comprehensive technical and legal due diligence before listing any property on our platform. We collaborate with reputable Tier-I law firms to perform due diligence on the property title.
Yes, investors can view all asset-related documents, including the Lease/Rental/Tenancy Agreement or Deed, uploaded on their respective dashboards.
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