What is everyones opinion on Property Syndications? I invested about $40k in the May Holman Building Property Trust in Perth which is earning 11.5% Net. I find it quite easy to find syndications offering around 9.5% to 11.5%.
Why is it better to invest in houses/units that are +ve Cashflow geared rather than Property Syndications?
Please help me as I am a little confused as to the advantages of each? [
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Cheers
Thayer$ 40 K won’t get one very far.
The reason to invest in a house rather than in a syndicate is because you haven’t got any control as to how your money is spent.
Who knows whether the people in charge know what they are doing.
Who knows whether the investors get a fair shake.
The ideal situation is to place one’s equity at work in many different locations so as to provide a greater security than if one’s money is tied up in one larger property.
Pisces
Hi Thyer,
You can buy with $40k, $400k worth of properties by putting 10% deposit. (just rough calculation). And if the properties are +ve you will get that extra money and if $400k property increase in price by just 5% that will be $20k. Now you got return of 50% in one year. With property there can be other advantages also.
Cheers
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PropertyGuRu
I want to be billionaire! [] Thanks Property Guru & Pisces133. That has helped my thinking a great deal. Sometimes all you need is for someone to put things into perspective.
Ciao for Now
Thayer
We specialize in a form of property syndicate [equity-based limited partnerships] which enable our clients to invest in often higher yield/shorter term transactions than they could have independently.
These people generally do not have the time to research an investment in-depth nor are they interested in any ongoing management. They are simply seeking a return on investment often as part of a diversified portfolio.
From this perspective, property syndicates can be advantageous. But, as with any investment, adequate due diligence should be conducted to ensure your funds are being appropriately distributed and managed by an experienced team.
I would not consider 9.5-11.5% yields to be worthwhile, although this may reflect a secured investment with a very low risk factor.
Whether it is “better to invest in houses/units” depends entirely on your knowledge in acquiring real estate assets, and time commitment. Do not focus solely on the “potential” capital gains.
— Michael
I fully agree that syndicates can well serve one’s needs.
The kind of deals that come to us via advertisements offering 15 to 30% return could be dangerous to one’s health if one’s money is used as a deposit to enable the builder to raise a 80% loan.
In other words your money will be used as the risk money, also sometimes named mezzanine finance.
It means that the risk is all yours.
Fine if things work out, bad luck if they don’t.Builders, developers DO go broke sometimes.
I draw specific attention to Michaels wise words : “But, as with any investment, adequate due diligence should be conducted to ensure your funds are being appropriately distributed and managed by an experienced team.”
Pisces133
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