Co-founders' Paul Jacobs and Kurt Settle's associate company, Houseshare Management, which will manage the properties, charges investors an annual management fee of up to 1.5 per cent of the property value.
The Ownery charges investors an up-front fee of 4 to 5 per cent of money put in. Mr Settle said the exact figure for the up-front and the annual management fees is still to be decided.
When property prices fall, no additional funds would be required of shareholders but debt will be used to cover any short-term shortfall until the property can be sold and any proceeds distributed to shareholders.
No bank debt will be used by house-share companies to purchase the houses but each constitution will allow borrowing of up to 20 per cent of the property's value for buying back shares of those exiting and other big ticket items not covered by insurance.
The money invested will be held in trust until each property is bought and refunded if the sale falls through.
One property each month will be advertised on the company's website and all the properties will be at the cheaper end of the market, below the median price in Auckland, said Mr Jacobs, to ensure good rental yields.
The annual management fee will be deducted from rental income along with other expenses such as rates and insurance and a small dividend may be paid to shareholders.
Mr Settle said there are no plans to operate in other parts of the country such as Whangarei for at least one year "but if the demand is there we will consider it".
