FAQ’s

Frequently asked questions about real estate tokenization and Bonfire.

About Bonfire

  • Bonfire is a technology platform that transforms income-producing real estate assets into asset-backed tokens that get sold to a community of buyers who own the tokens in a LLC.

  • Bonfire saw that younger investors (millennials and Gen Z) are unlikely to accrue the generational wealth that occurs from owning real estate that many members of their parents’ generation achieved due to things completely out of their control such as crippling student loan debt, large corporations buying significant amounts of the single family housing supply, and interest rates doubled. We looked at every investment platform that existed and found that they didn't provide easy access to great commercial real estate opportunities at low price points.

  • Each asset is owned as a Wyoming Limited Liability Corporation (LLC) and a Bonfire subsidiary called Bonfire Vendor Solutions, LLC acts as the Managing Member of the LLC.

  • Members of the Bonfire Investment Club (e.g. people who have created accounts) are required to conduct “know your customer” (KYC) verification once and integrate their payment choices (e.g. ACH, wire transfer, crypto). Once they have completed this process, they receive an email telling them about the investment opportunity and be given time to conduct their own due diligence before purchasing the asset.

  • We choose assets with great potential to derive 15%+ IRRs with proven sponsors and experience executing on the specific business plan.

  • Your investment is in a LLC that owns a portion of a real estate asset and is irrespective of Bonfire (aka Terrapin Homes Inc.) being in business or not.

  • A separate LLC known as “Bonfire Vendor Solutions” is the Managing Member and has a fiduciary responsibility to each participant in the LLC to ensure that the LLC is properly managed, including ensuring distributions occur in a timely manner.

  • Bonfire Vendor Solutions, LLC.

  • We charge an upfront technology/due diligence fee as described below based on cumulative amount invested on our platform and a 1-1.50% annual AUM fee for tax compliance (e.g. issuing K1s) and other legal and administrative work.

    <$100K = 3%

    $100-$500K = 2.5%

    $500K-$1MM = 2%

    $1MM = 1.5%

  • Minimums are established on a per-deal basis.

  • Yes, subject to two conditions. First, any non-US investor can participate (assuming they are not from countries that are anti-money laundering lists from the US government) and second, that the issuing sponsor is okay with having non-accredited investors in the deal and we can rely upon an SEC exemption that enables us to facilitate non-accredited participation in the investment.

  • In the unlikely event of a capital call, investors will be required to post their pro-rata share of the capital call. If they are unable or unwilling to provide the capital and other Members of the LLC have to cover their investment, they will be subject to significant dilution.

  • Real Estate Investment Trusts (REITs) are corporations that purchase large amounts of real estate in a specific strategy, such as office, multifamily, or retail. As an investor in a REIT, before you receive any distribution, you are paying the operating expenses of the corporation, including the CEOs salary, use of a private jet, and expensive offices. Bonfire is completely different; we provide direct access to real estate opportunities on a deal by deal basis.

  • Several of our competitors are more akin to a private REIT whereas they are acting as a fund and take a percentage of the profits of the investment. Bonfire is different in that each of our deals is a standalone investment. We also do not take fees fro the Sponsors/Real Estate Operators we work with

  • Successful real estate investing is a combination of many factors: Market (such as Chicago vs. Miami), Submarket (e.g. specific neighborhoods with growth potential), and the specific Asset. Bonfire uses AI to screen factors related to the market and submarket and our experienced team of underwriters analyze each asset’s business plan and sponsor. We recognize that $1T of commercial debt will be “rolling over” in the next few years which will result in foreclosures and haircuts in valuations. Simultaneously, someone’s pain will be someone else’s gain and we intend to capitalize upon opportunities that arise even if they are contrarian in nature.

  • Not at this time.

  • Here is a good piece that gives an overview of how we are deploying AI: https://medium.com/@joshua_46668/using-ai-to-pick-real-estate-28e6fe1f1f49

  • An individual sets up an account on the Bonfire platform and receives quarterly distribution through the financing channel they used to fund the account (e.g. ACH, wire, crypto, etc)

  • Typical hold times are 3-5 years though we are actively building a secondary marketplace to facilitate faster liquidity.

Getting Started & Account Management

  • Yes, Bonfire assumes that all assets sold on our platform are securities and are subject to US securities law.

  • Yes, but we require all Members of the Bonfire community to adhere to anti-money laundering laws and you will be subject to “Know Your Customer” rules that require us to review a government-issued identity card. Additionally, there are certain countries that are ‘blacklisted’ by the US Internal Revenue Service that we are not allowed to process funds from.

  • A subsidiary of Bonfire known as Bonfire Vendor Solutions, LLC is the Managing Member of each LLC and handles K-1 taxes.

  • To participate, members will need to go through accredited investor, anti-money laundering ("AML"), Know Your Customer ("KYC"), and Office of Foreign Assets Control ("OFAC") checks as defined under U.S. law and as discussed further below. A joining member will need to deposit a sufficient amount of Ether from the member's Ethereum address in order to complete the membership process. A member will also need to submit sufficient information to verify the potential member's identity for AML, KYC, and OFAC checks, including:

    uploading a passport or a state issued license;

    providing a social security number or Tax ID; and

    providing proof of the member's primary residence.

  • Terrapin Homes Inc. is a Delaware registered C-corporation. Terrapin is the owner of the technology behind Bonfire and is in charge of facilitating a marketplace and platform. For this, Terrapin charges a ‘gas fee’ on every transaction. Bonfire is the name of our collective brand.

  • To cancel an account and remove all associated data, users can simply send an email to help@bonfire.capital. We value user privacy and will honor such requests within 60 days from the initial formal request date, ensuring the complete deletion of account-related information.

  • Bonfire fully supports investment activities by individuals, LLCs, and Trusts. Users have the ability to create accounts for entities, providing essential business information along with controller (owner) details for the purposes of Know Your Business (KYB) compliance, tax requirements, and banking purposes. Once the KYB verification process is successfully completed and approved, users are free to make investments using their registered entity. It is important to note that each Bonfire account can only be associated with a single entity, meaning that users would need to create separate accounts for different entities they wish to manage investments for.

  • Unlike other platforms, we do not have a publicly-facing marketplace. Instead, new opportunities are directly emailed to Bonfire Members and they are directed to the deal page.

  • Not at this time but it is on our product roadmap.

  • Once you have created an account, you will be emailed a highly-curated real estate opportunity (targeting 1-3 per quarter)

    There will be a period of time to review sponsor documents, watch a webinar about the asset, and conduct your due diligence

    Once this period is over, commitments to the deal will be allocated on a first-come, first-serve basis

    Upon being given an allocation into the deal, you will have 48 hours to sign documents and fund your investment

    After you have invested, you will receive quarterly distributions (if applicable) and quarterly updates and you can easily track the growth of your portfolio through our platform.

  • Currently, investor minimums are $1,000 per token.

  • Email us at help@bonfire.capital

  • Visit https://www.bonfire.capital/terms

  • K-1s

  • State tax returns depend on a variety of factors When a taxpayer owns an indirect interest in real estate through a partnership (including an LLC classified as a partnership for tax purposes), it may result in a state income tax filing obligation for such taxpayer in the state where the real estate is located (even for nonresidents). The requirement to file state income tax returns varies widely, depending on the investor’s state of residence and/or the state where the LLC’s property is located. For example, many US states: Have no state income taxes (i.e. Washington, Texas), Allow LLCs to file on behalf of members through composite returns (i.e. Utah), and/or Have minimum thresholds that determine if investors are required to complete a state tax filing. Please consult with a tax professional on your particular situation.

For Sponsors and Real Estate Operators

  • No.

  • No.

  • We charge our members a deal acquisition/technology access fee and 1-1.5% management fee per year.

  • Proven sponsors with a compelling project that has high-likelihood of leading to IRRs in excess of 15%. We are agnostic to asset type and geography though we are going to gravitate towards projects in areas with good growth prospects and a very favorable acquisition price.

  • Fill out an initial form explaining some high-level details of the project and providing an OM or prospectus (if applicable)

    Bonfire reviews the deal and determines if it is a quick “no”; if it is a maybe, we will derive a detailed list of questions we will send to the Sponsor ahead of a call

    Bonfire and Sponsor have face to face or zoom call

    If Bonfire wants to pursue the deal, we will request more detailed information (financial analysis, entity documents, etc) and will review them

    Bonfire and Sponsor sign LOI clarifying that Bonfire will be given an allocation that we will attempt to fill on a best-effort basis within a mutually agreed timeframe

    Bonfire blasts the deal to our network and solicits interest.

  • Once we have underwritten an asset, we put it on our platform and give our members up to a week to indicate interest. Once they have committed to the deal, they have up to 72 hours to fund and then we can wire funds to a Sponsor’s account immediately after.

  • It depends on the project. Some sponsors have a limitation as to percentage of the asset they are allowed by their mortgage lender to tokenize. If you have questions, please contact assets@bonfire.capital

  • We have a network of accredited and unaccredited investors. Depending on the structure of the deal and the Sponsor’s appetite, we can ensure that all investors are accredited or a mix.

  • Currently, investor minimums are $1,000 per token.

  • Email us at help@bonfire.capital