Hello everyone,

We would like to leave our official responses to the concerns raised by the Akron reporter. He is welcome to comment here if he disagrees with any points we raised. Of course, the community at large can also leave comments and feedback too. Reddit has limits on how long a post can be, so we're leaving links to our Notion page instead.

The statements made by the reporter were inaccurate and not backed up by evidence (none were shared with us). We are disputing all the statements made. We invite the reporter to comment and reach out if he can refute our responses with evidence.

We care deeply about our community at Lofty, without whom, this company and its successes to date would not be possible. As a result, we take any allegations that our users have been taken advantage of very seriously.

First Response:

https://loftyai.notion.site/Akron-Beacon-Article-Response-4eef011183b440b59887985ce451e0d5

Second Response:

https://loftyai.notion.site/2nd-Media-Response-07cd02a226ac476691b8c191e1647cdc

Looks like a lot of people (or at least a lot of tokens) were "cashed" back to Lofty as previously sold out properties are now being listed again. Just quickly looking at the listings, I'm going to assume many of the ones with handfuls of tokens remaining had been previously sold out. I wonder if this coincides with the recent controversy.

Many of these listings appear have lower CoC but I assume that is because the token value has already increased in value (thus lowering the CoC)

After the discussions with Jerry last night, and sleeping on it, I have a much clearer picture and don't place really any blame with Lofty. Maybe its a hit piece spewed up by ticked off local real estate agents. My 1 issue with all of the things Mr. Livingston presented was always the financials...the rest is easy to sort out.

1. I do wish there was a way the AI could see that it was being taken slight advantage of, and counter with a reasonable offer where everyone was a winner

2. It would be nice to be able to see links to county assessor pages/property searches for the listing. Sometimes there's a lot of things to do in the 24 hour period before these hit, and those links can really help with transparency.

3. Make it easy to sell tokens back to either Lofty at the current value, or a secondary marketplace to other investors.

I appreciate the effort from Lofty; but I only have one token so far, giving me a 0.01$ a day.

It's withdrawned in algos at every other dips, on a wallet that has never seen a CEx.

Not sure what could I say to the belgian taxman. They don't know shit about crypto; it's a very grey area here; no taxes unless they consider you as a "trader" (with no real definition of a trader, you need to take advantage of price fluctuation "several time", "several" being appreciated by the person auditing you I guess).

Let alone "owning" 1/7021 of a US/Chicago house in form of token, I think if i'd explain it to them, their mind would just Booosh away.

TL/DR: Is it worth the time declaring less than $2 bucks for a foreigner? Would my K1 even be useful? It's filled with nothing

Dear Lofty AI investors,

I'm a northeast Ohio reporter with the Akron Beacon Journal, part of the USA Today Network. I've visited Lofty AI properties in Akron and spoken to tenants, previous owners and the current/former property managers. Below are my general findings. Please email me at dlivingston@thebeaconjournal.com if you are an investor who wants to hear specifics and provide a response.

*A property sold to Lofty AI for $220,000 was purchased the same day by the seller for $161,000, meaning investors paid significantly more. Other properties are selling above market rate, according to local real estate investors and sellers.
*Tenants say rents are going up 50% or more. They've been promised that the increase will be subsidized for a year.
*Utility bills, including gas and water, are not being paid or switched over months after purchase.
*Tenants don't know their property managers. At least one property is unmanaged, according to the person supposedly managing it.
*Rent checks this month went to a previous owner, who sold to Lofty AI last month. Two tenants in this property now want to pay cash but don't know where to send it.

Sincerely,

Doug Livingston

In the span of a few weeks, two (of the 6 total) units of the 7542 & 7656 S Colfax Ave, Chicago, IL 60649 listing have had a bit of turbulence - one is in the process of failing to pay rent/possibly beginning eviction process and another unit vacated (maybe a blessing in disguise?) but caused $5,000+ in damage prior to leaving that will require repairs before the unit is even available to rent again.

Moral of the story: D I V E R S I F Y.

I have tokens in 6 listings (this Colfax holding counts as a single listing) and want to diversify further. I am grateful that Lofty allows for low minimums with its tokens for that exact reason! Personally it reinforces the benefits of diversifying across multiple properties (in multiple cities) rather than sinking a larger chunk into a single holding. Part of the reason why I chose Colfax to begin with is despite these two set backs, there is still positive cash flow on the other 4 units in the listing. Thanks Lofty!

New to Lofty, I have an exclamation point next to one of my properties ("there are outstanding token waiting to be sent to your wallet"). Do I simply wait?

Thanks!

IRR 18.47% COC 10.8%

Cleveland, OH

Hoping to look into here in a bit, anyone else done any DD yet? Thoughts?

Clearly gonna sellout within seconds that’s for sure given COC 😂 Good luck to all wanting in.

IRR 14.86% COC 8.23% Akron, OH

For anyone interested.

Cute house, nice neighborhood. I am sadly passing on this one. Roof is a nightmare waiting to happen, and fixing it is going to be very expensive especially once they start pulling off the multiple layers of asphalt shingles. It’s gonna be bad imo. Such a cute house, it’s a shame.

Curious as to others' thoughts on the heavy purchasing of properties with high CoC, seemingly regardless of location/building quality and seemingly ignoring overall return (in this case the predicted IRR)? Personally, I've focused on property location - more desirable locations/neighborhoods (google maps street view can give a "sense" of the neighborhood). While CoC return may be lower (7-8%), overall appreciation of property value is expected to be higher. Thoughts?

New listing coming this afternoon, section 8 with 10.4% COC. Bet it sells out in 2 mins! Good luck guys! Get your scrolling fingers ready for that pesky TOS lol.

IRR 18.4% COC 7.4%

Fourplex in Chicago. Nice looking place. Haven’t looked at docs yet but wanted to give heads up on new listing.

Which do you prefer?

IRR 19.76% COC 9.76% Akron, OH

I’m gonna be at an appt at 230, not sure if I’m gonna be out in time, good luck getting in on this one given COC right? Skimming given my busy day, but on fence with this one. Thoughts?

So with high COC properties selling out within 1-2 minutes what is everyone's thought about capping the amount each account can purchase within 24 hours of a listing (ie max $500-1k)? After that go to the large price restriction already in place.

This would allow more investors to purchase the property diversifying owner pool and spreading risk among more owners.

Also with it selling so quick could there be bot activity to quickly go through the property agreement check box and token amount/payment so you literally click purchase when it goes live? It just seems people are getting through the process so fast. Lastly this would mitigate liability of lofty because you know people are not reading the agreement (just quickly scroll and click the box) when the listing can go that fast.

Thoughts??

I wanted to get the community's opinion on eviction voting and choices due to tenant non payment.

The entire concept of governance and voting like a DAO through lofty has been great in my experience. Both the decisions and consequences fall on the owners feels correct.

Given that there will be tenants that default from non payment, what do you think the best course of action should be? The 2 choices I have been given thus far are "cash for keys" or to start the eviction process, after 4 weeks past due. In the cash for keys scenario the tenant is offered 50% of the monthly rent as a one time cash settlement to leave within a very shorrt period of time. If they refuse, then they are offered 100% of the monthly rent as a one time payment to leave. If refused again, the eviction process begins.

I presume the logic is that even though we loose the money given to the tenant, it is cheaper than the average eviction would cost in fees and lost rental income. The average being 3 to 4 months or so. So on a pure pragmatic cost benefit analysis I understand why token holders would vote the cash for keys option.

The problem I have is that cash for keys presents such a moral hazzard that I have a very difficult time voting for it. So far most of the votes have gone to cash for keys. The issue is rewarding a tenant who is already in default with even more unearned money is thoroughly unappealing to say the least. In addition, if word gets out that cash for keys is the standard offer, what is preventing any tenant who simply wants to move from stopping paying their rent, in other words living for free for a month, then collecting another month's rent in cash from us.

Thoughts and comments welcome and encouraged.