Download Overview & Case Studies

Frequently Asked Questions 

What Is Fiterra?
FiTerra is a finance partnership tool designed for single family rental investors. It provides an institutional level capital structure that historically has only been available to the largest commercial investors. This structure benefits your deal by lowering the cost of capital, increasing leverage, and boosting returns.
  • FiTerra serves the tens of thousands of investors who focus on single family and small multifamily (1-4 unit) rental properties. Our structure works equally well for long, medium, and short term rental strategies.
  • Historically, the financing options for these types of properties have lagged far behind what is available for larger commercial investors. This increases cost, reduces profitability, and unfairly penalizes those wanting to concentrate on this asset class.
  • We increase capital efficiency for these investors. The result: less time and money spent to acquire deals. We turbocharge the returns and tax benefits of each individual deal, which causes the entire portfolio to grow more quickly.
FiTerra deals are structured using something called a Real Estate Purchase Partner or “REPP”. It is created by:
  • Dividing the asset into two parts of ownership. This is done at closing through title.
  • The investor brings the down payment and purchases their portion (normally between 50%–60% of the total).
  • FiTerra purchases the other piece on behalf of our investor.
  • A REPP agreement is signed that outlines the rights & responsibilities of each party.

Investor

  • 100% control of the property, and is able to make all operational & financial decisions.
  • Receives all market appreciation and rent increases.
  • Receives 100% of the depreciation created through ownership.

Investor

  • Non-controlling/non-voting ownership position that is in place for an initial term of 99 years.
  • Ownership position is able to be bought at the discretion of the investor for a preset amount.

The REPP structure optimizes deals in 3 significant ways:

  • Increases investor leverage
  • Lowers the cost of capital
  • Optimizes tax savings & depreciation
  • Increased Leverage
Conventional financing options typically require a down payment of 20%–35% of the purchase price. However, with FiTerra, an investor is now able to purchase a smaller portion of the deal, while still maintaining control. This lowers the down payment and equity requirements beyond what is traditionally possible.
Example Conventional FiTerra
Purchase Price
$250,000
$250,000
(-) FiTerra
$0
$125,000
(=) Investor Share
$250,000
$125,000
80% LTV
(-) Mortgage
$200,000
$100,000
(=) Downpayment
$50,000
$25,000
View interactive Example

Traditional Mortgage

FiTera

View interactive Example
  • Downpayment
  • Mortgage
  • FiTerra
  • Lower Cost of Capital
FiTerra’s fees are lower than the payment on an equivalent mortgage, so increasing leverage has low to no marginal effect on the holding cost.

In this example, you can that even though the downpayment has been reduced by 50%, the Investment/Debt ratio has also been reduced by 52%. This means your dollars have more levaraging power, Which increases your ROI.

Saving $25,000 on your downpayment only costs an additional $45/mo, which is the equivelant of a 2% APR interest rate!

Example Conventional FiTerra
Purchase Price
$250,000
$250,000
Total Leverage
$200,000
$225,000
Mortgage Pmt
$1,264
$632
FiTerra Fee
$0
$667
Total Payment
$1,264
$1,309
(÷) Downpayment
$50,000
$25,000
(=) Investment/Debt Ratio
3.29
1.59
View interactive Example
In this example, FiTerra’s structure has decreased the down payment by 50% while also slightly lowering the monthly payment.
That’s $25k this investor can to put toward another deal, use for renovations, or spend on furnishings for a short term rental.
Your dollars have twice the power with FiTerra.
View interactive Example
  • Optimize Tax Savings
Depreciation on property improvements is one of the most important savings when in investing in real estate. Improvements on non-commercial assets, such as a single family rental property, depreciate over a period of 27.5 years. The value of the land cannot be depreciated. This means you never get the full value of your investment returned from tax savings alone. However, with FiTerra, 100% of your investment is structured as improvement ownership and is subject to complete depreciation.

In this example, you can see how you can
depreciate your entire investment. When look at the depreciation savings compared to the cash investment, we can also see that you can get your cash investment back 30% faster compared to a conventional structure.

Example Conventional FiTerra
Market Value
$250,000
$250,000
Improvement Value
$175,000
$175,000
Land Value
$75,000
$75,000
Depreciable Basis
$175,000
$125,000
Annual Depreciation
$6,364
$4,545
Downpayment
$50,000
$25,000
Breakeven (yrs)
7.85
5.5
In this example, you can see how you are able to depreciate your entire investment. When looking at the depreciation savings compared to the cash investment, we can also see that you get your down payment back 30% faster compared to the conventional structure.
View interactive Example
You are totally in control and get to always decide what to do with your deal. If you sell, your buyer can acquire just your ownership, or buy the property in totality (including FiTerra’s piece). FiTerra has a preset buyout structure, so you are always able to determine the value of your ownership and take advantage of market appreciation at the perfect time.
FiTerra’s buyout stays well below average appreciation. While market appreciation trends between 3%–10% annually, FiTerra starts at just 1% of the purchase amount and stops after 15 years of ownership.
View interactive Example
  • Monthly Fee
FiTerra is paid a monthly fee alongside your mortgage. The fee is set at closing and adjusts annually at a marginal 2% increase. The example below shows the base cost and annual increases for a house valued at $250,000 with a REPP of $125,000 (50% of value):
This fee is intended to increase at a much slower rate than market rent growth. In this example, only increasing by $15/mo each year!
View interactive Example
  • Buyout Fee
This fee is only realized if the investor wants to remove FiTerra from the deal. FiTerra does not impose any timeline for a buyout; it’s totally at the investors discretion. Similar to the monthly fee, the buyout also increases by 2% per annum. But, unlike the monthly fee, the buyout starts decreasing in year 8; and, at year 15, the buyout stops increasing completely. The example below illustrates buyout costs & annual increases for a house valued at $250,000 with a REPP at 50% ($125,000) of the total:
The buyout is intended to increase at a much slower rate compared to market appreciation. FiTerra just earns a small capped fee if the investor chooses to execute on this option.
View interactive Example

We generally see two other finance options available to investors who work with FiTerra:

  • Bank loans with lower leverage points and similar interest rates: This type of finance is good if you have near unlimited equity at a very low cost.
  • Private loans with similar leverage, but much higher interest rates. This type works if you are only going to own the property for a very short period of time.
  • Private investments from friends, family, or investors. This works if you are comfortable giving up some control of your deals, and paying your partners around 40% - 70% of the rents and appreciation.

FiTerra was created to be a ‘best of both worlds’ solution. Low-cost financing at a reasonable interest rate, that
doesn’t require you to give up control or share market appreciation.

FiTerra was built to create a win-win for everyone involved in a deal. We believe whoever is doing most of the work should receive the majority of the upside. 

We believe lenders and investors should be compensated proportionately to the risk they are taking and the time they are investing. This premise led us to optimize the Finance stack in single family rental transactions and align risk and reward with more integrity; giving everyone more of what they want from a deal.

FiTerra is an example of what’s possible when you look beyond how ‘things have always been done’, and dare to introduce something new. We hope you’ll join us in creating a new world of optimized residential real estate
Finance

Copyright © 2023 FiTerra, LLC. All rights reserved.

Copyright© 2023 FiTerra, LLC.
All rights reserved.