Fractional Property Ownership

While there are no guarantees in investments, real estate has historically been considered a viable option for potentially achieving higher returns compared to some other traditional investment avenues. In the case of real estate investments, returns can vary depending on various factors, including the location and price of the property.

The potential returns on real estate investments can range from 6% to 9%, or even higher in some cases. Properties situated in prime locations with strong market demand and growth potential tend to offer higher returns. Additionally, the initial purchase price of the property can also influence the overall return on investment.

It's important to note that real estate investments, like any other investment, carry inherent risks, including market fluctuations, economic conditions, and property-specific factors. Conducting thorough research, seeking professional advice, and diversifying your investment portfolio can help mitigate these risks and increase the likelihood of achieving favourable returns.

As with any investment decision, it's crucial to carefully assess your financial goals, risk tolerance, and time horizon before committing to a real estate investment. Additionally, understanding the local property market dynamics and seeking guidance from experienced real estate professionals can provide valuable insights to make informed investment choices.

Remember, higher returns often come with increased risk, so it's essential to strike a balance between your return expectations and risk tolerance to align with your overall financial strategy.

Once committed, your funds are typically locked into the investment. However, there is an option to sell your share, subject to certain conditions. The ability to sell your share may be dependent on finding a willing buyer for your portion of the investment.

The timeframe for selling your share can vary, but it's common for the investment agreement to outline a specified window for selling. In many cases, you may be able to sell your share up to 6 months after the settlement date of the original investment. This timeframe allows for potential fluctuations in the market and provides a reasonable period to find a buyer.

However, it's crucial to note that before settlement (the date when the property is officially transferred to the buyer and funds are exchanged), you will have a limited reconsideration period. Usually, upon signing up for the investment, you will have 5 working days to reassess the opportunity. During this period, you have the option to request a full refund of your investment if you decide not to proceed with the purchase.

In the event that you choose to pull out after the reconsideration period but before settlement, there may be some administrative fees associated with the withdrawal. Typically, 50% of the service charge or administrative fees may be deducted from your investment amount if you decide to withdraw your commitment during this stage. The specific terms and conditions related to administrative fees should be outlined clearly in the investment agreement or contract.

The actual term for this type of property investment is commonly referred to as "Property Development Investment" or "Property Development Syndication." In a property development investment, a group of investors pool their funds together to finance the development of a property. The property is typically purchased at a discounted or favourable price, and investors hold shares in the property based on their contributions. The development process involves constructing or renovating the property to enhance its value and rental potential.

The investment horizon for property development projects can vary, but as you mentioned, it is typically around 24 months. During this time, the property is developed, and once completed, it is either rented out to tenants or sold for a profit, as the case may be. We expect to potentially make a 15–25% profit on this investment. This profit is achieved by selling the property at a higher price than the total investment cost, considering the purchase price, development expenses, and other associated costs.

Yes, you have the flexibility to invest using both your superannuation (super) funds and personal funds. If you have a self-managed superannuation fund (SMSF), you can use the funds within your SMSF to make the investment. If you don't have an SMSF, the investment opportunity may still be available to you by assisting in setting one up.

Here's how it works: Using Superannuation Funds: If you already have a self-managed superannuation fund (SMSF), you can use the funds within the SMSF to invest in the property. Investing through your SMSF allows you to benefit from potential tax advantages and the ability to use your super funds to grow your wealth through property investment. However, it's crucial to comply with the superannuation laws and regulations governing SMSFs to ensure you meet all requirements.

Setting up a Self-Managed Super Fund (SMSF): If you do not have an existing SMSF but are interested in using your superannuation funds to invest in the property, the investment provider may offer assistance in setting up an SMSF for you. Setting up an SMSF involves adhering to legal and financial regulations and may come with certain costs and responsibilities. The investment provider can guide you through this process and help you establish the necessary structure to use your super funds for the property investment.

Using Personal Funds: In addition to utilising super funds, you also have the option to invest using your personal funds. If you have savings or other personal assets, you can use these funds to participate in the investment opportunity. Using a combination of super and personal funds allows you to diversify your investment portfolio and take advantage of the benefits that both types of funds offer. However, it's essential to carefully assess your financial situation, risk tolerance, and long-term goals before making any investment decisions. Seeking advice from a financial advisor or a professional specialising in superannuation can provide valuable insights to help you make informed choices about your investment strategy.

Rental returns are typically paid out to investors on a regular basis, following the settlement of the property. Here's how the process generally works:

Settlement of the Property: Once the property purchase is finalised and ownership is transferred to the investors, rental income generation begins.

Property Management: The investment provider employs a property management service to handle the rental property on behalf of the investors. The property manager's role is to take care of various aspects, such as advertising the property, finding tenants, collecting rent, and managing maintenance issues.

Finding Suitable Tenants: The property manager's first task is to screen potential tenants thoroughly and find the most suitable long-term tenant for the property. This process helps ensure that reliable and responsible tenants occupy the property.

Rental Payments: After the screening process is completed, which typically takes about 4 to 6 weeks, the chosen tenant moves into the property and begins paying rent. The rent collected from the tenant is then distributed among the investors based on their share of ownership in the property.

Monthly Payments: Rental returns are distributed monthly to every investor. The property manager collects the rent from the tenant and processes the payments to each investor according to their proportionate share. These payments are deposited into the investors' nominated accounts.

Ongoing Management: Throughout the tenancy, the property manager continues to oversee the property, handle any tenant issues, and ensure that the rental payments are collected and disbursed promptly to the investors.

However, rental returns depend on factors such as vacancy periods, property maintenance costs, and changes in rental demand. Besides, having a property management service in place helps to address these issues and provides a more hands-off experience for investors.

If the purchase of the property takes longer than expected, the investment provider will inform you about the delay and provide relevant updates on the progress. It's important to keep communication lines open, and they will strive to keep investors informed about any changes in the timeline. The delay in the property purchase could be due to various factors, such as administrative processes, legal procedures, or unforeseen circumstances. However, the investment provider may emphasise that the wait could be beneficial for investors in the long run for the following reasons:

Discounted Price: The investment provider mentioned that they are purchasing the property at a relatively discounted price. This means that investors have secured the property at a favourable price, potentially below its market value.
Improved Property Valuation: The delay might lead to a reassessment of the property's value. Since the property is bought at a discounted price, when the valuation occurs later, it may reflect a higher value. This appreciation in the property's value could result in instant capital growth for investors, even before the property is officially settled.

While the delay might be inconvenient in the short term, the potential benefits of securing the property at a discount and the possibility of instant capital growth could outweigh the waiting period. It's essential to keep in mind that property investments often involve some uncertainties and variables beyond immediate control, and it's the investment provider's responsibility to manage these factors to the best of their ability.

If the investment provider is unable to find other investors for the property, they have a policy in place to protect the investors' interests. In such a scenario, all the money invested by the existing investors will be promptly refunded. Ensuring the safety and security of the investors' funds is a priority, and the investment provider takes measures to honour this commitment.

However, the investment provider mentions that they do not foresee this issue of not finding other investors. They assert that the current economy favours this type of property investment, making it highly sought-after. Even in a stable economic environment, this form of property investment is considered very safe compared to other investment options.

The assertion of safety in this investment is likely based on various factors, such as the property's potential for capital appreciation, rental income stability, and the underlying demand for the type of property being invested in. Additionally, the investment provider's experience, track record, and network of partners may contribute to their confidence in successfully attracting other investors.

As an investor in this property opportunity, you will have the opportunity to view the property and the area it's located in, but this viewing will typically occur once we have successfully raised the necessary funds and finalised the deal with the developer. At that stage, we can provide you with detailed information about the property, arrange a site visit, or show you relevant plans and renderings.

Regarding your concerns about not wanting to invest in a particular area, we understand that individual preferences and considerations play a role in investment decisions. However, it's important to note that as an investor in this opportunity, you are participating as a small shareholder, contributing only 5% of the property's value. The primary objective here is to capitalise on rental returns and generate income from the property rather than seek personal use or emotional attachment to the property.

The investment approach is focused on the potential rental income and the overall financial performance of the property. You can benefit by pooling resources from other investors to share the rental income generated by the entire property while diversifying your investment risk across multiple investors.

We recognise that not all investors may be familiar with or have a preference for the specific area. Our team conducts thorough due diligence on the area and the property's rental potential before presenting the investment opportunity to our investors. We provide relevant data and analysis to support the investment case, helping you make an informed decision based on financial considerations.