short-term lender

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oom123
Member
@oom123
Join Date: 2006
Post Count: 2
November 23, 2006 - 1:37 am
I’m considering to invest with a finance company”oakland investment” They are specialised in lending money to short-term borrower.It will return 12.5% Company said it is secured by the properties. so,it’s quite safe. Hwr,I’m not quite sure about the company and how safe is it to invest with them. I’m new to this kind of investment.Any suggestions or comments would be appreciated
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
November 23, 2006 - 2:43 am
quite safe?
Not necessarily. These sorts of companies lend to people who have problems getting normal finance. It may be secured by property, but things can go wrong and there are shortfalls sometimes.
Does this company have a prospectus?
Terryw
Discover Home Loans
Parramatta
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oom123
Member
@oom123
Join Date: 2006
Post Count: 2
November 24, 2006 - 3:53 am
Yes, they do. They describe as first-class preference share. It’s said the company follows ASIC rules.
Mortgage Hunter
Participant
@mortgage-hunter
Join Date: 2003
Post Count: 3,781
November 24, 2006 - 4:11 am
Risk and return are inversely related.
Ask yourself why this company needs to pay 12.5% to raise funds.
ING Direct only needs to pay 6% to raise millions and millions.
Just because a company follows ASIC requirements (and every company is supposed to so it is not that special) doesn’t mean the company cannot shut shop on you. You will then be in a queue to receieve a % of your funds back from what the auditors can find left.
I personally wouldn’t touch it. I am in managed funds which earn more and are secured by the underlying stocks. So they can also enjoy CG. But that is my preference.
My last IP returns 9%pa plus it went up about 30% in the three years I owned it.
Your 12% is just yield – there is no upside for capital growth.
All the best
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.