Hi All,
I have been research many different aspects of property investment and one idea that has popped up is that of Property Funds. You buy into the fund, the operator of which then spreads the investment over a broad range of property. The problem is you never own the property being invested in, but this can also lower the risk (I know risk is good!). However one such fund (in the UK) has given returns of up to 58% over 5 years!!
My question is has anyone ever looked into this sort of investment and if so what is your feedback? If you have looked into it as an investment but decided against it, why?
Cheers
Adam
[8D]I cant really answer your question but I can offer a similar project Real Estate Guru Dolf deRoos, a RichDad Advisor, is backing/organising in NZ
http://www.propertyventures.co.nz/
I know it doesnt really help you Gatebe7 but it is another similar avenue people can look into..
Pete.
Hi Gatbe7
if you buy into a property fund you miss a lot of the advantages of direct property ownership
1. leverage – with 50k you can invest 50k in a property fund or purchase an IP worth $250k at 80% finance. Do the figures if they both appreciate at 10% and see how far ahead you will be.
2. you can not improve the value of the fund, whereas direct ownership you can ie paint, carpet etc.
see Dolf De Roos book “Real Estate Riches” for a better explaination
This fund in the UK with 58% return over 5 years is that per Annum if not then that is not very impressive, most places in Oz should have doubled over this time. If you put 10k into a 100k property and this property doubled in value in 5 years your property is now worth 200k your 10k is now worth $110k ISN’T THAT 1000% return in 5 years.
regards
westanHi Westan,
I do agree that $50,000 would be better put to use in your own property as you will get a better return if you do the right research and buy wisely. If you don’t have the knowledge to purchase wisely and create a good deal, you may be better investing in a fund with a 12% return as is will be better than losing 20% per year because of a bad purchase.
I think it is a little optimistic of you to say that “Most places in Oz should have doubled over this time”. To say that most of Astralia has a growth rate of 20% per year every year is a bit misleading don’t you think? While over the past few years, certain areas have experienced extremely high growth, this is not the “norm” and has caused an artificially inflated property market in my opinion.
Cheers,
Mathew.
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