ArmChair Developments?

To keep the funds of armchair investors protected, a developer must keep the investors’ funds in a separate investment company. These funds can only be utilised for authorised and invoiced expenses incurred in building the development. The minimum capital requirement to be an armchair investment is typically between $25,000 and $30,000. Of course, these figures may vary between development companies, the size of the project and the maximum number of investors that the development company wants to take on.

In terms of returns, bigger projects like townhouse developments and apartment buildings will typically have larger profits. With these projects, however, there is more risk that the development will be delayed or subject to budget overruns due to all the moving parts in a large development. Some investors may choose to use their returns to purchase property in the development or use that equity for other investments. This will depend on the investor’s unique situation and the agreement between the developer and armchair investors.

Like any investment, there are risks associated with armchair development. You should always do your own due diligence and make sure an investment is right for your unique situation before putting your capital towards an investment.