Childcare Property Investment ?

Hi Guys
Has anyone here invested or developed a childcare centre ?

My other question, has anyone here started or managed a property investment fund ? it would be really good to chat with someone who has .

Cheers
Robert

 

Hi Robert

There are a lot of childcare centres going in Brisbane at moment. I know of 3 that went into liquidation on the Gold Coast and sold recently.

We setup managed investment schemes on behalf of clients.

A lot of them are unregistered MIS - as in 20 people or less.

You can go wholesale MIS as the next most difficult (we do these in conjunction with a specialist in this space)

Retail MIS is the most costly and difficult (also in conjunction with a specialist)

An unregistered is a great way to start.

 

I have one that's going in for DA some time early next year. 120 kids/places. We're just waiting on some rezoning

It's not in a managed fund though

 

Hi RPI ,
Yes there are a lot of centres on the market at the moment more leaseholds than freeholds , I think a few of the bigger players are dropping the non performers in their portfolio's , an unregistered MIS sound like it could be a good option , how to you generally structure the holding entity ? a pty ltd Co. and a unit trust ?
Cheers Robert

 

Hi Westminster ,
Is you first childcare centre or have you been involved in others ?
We have one through the design and DA process ( took 12 months) starting construction next year , hopefully that will be quicker than the DA process.

 

Hi @Robert Wilson,

So on the topic of managed investment funds the "typical" vehicle chosen is a unit trust. Depending on the number of investors you may be deemed as any of the following (plus a few more) Property Syndicate, Participating property syndicate, small property syndicate, unlisted property trust or fixed term property trust. Each have their own requirements and "conditions" that need to be met.

I would point out that I haven't (sadly) set up a property investment fund (yet...) but would love to assist/provide insight were possible (I manage a few properties that are owned by "small property syndicates")

Maybe I should post something about the differences of each as per ASIC's definition

 

Hi @ComPropAgent ,
Yes some information on the different vehicles and the limitations of them would be great , I was thinking maybe a simple unit trust would work for a group of friends but unsure if it able to be legally to be promoted as an investment opportunity to to the general public .
Cheers Robert

 

We went down the less risky path of buying into an childcare REIT.

We bought securities in Arena REIT. It has just under 200 childcare centre, with the majority being in Qld, NSW and Vic. One can sell down one’s ownership almost as soon as you want the cash.

Our first purchase was in November 2007 and our latest purchase was September this year. Over the last 10 years, we have received a total return of 13.1% pa, being growth of 9.6% pa and income of 3.5% pa.

 

Hi @kierank ,
Thank you for the info , you've had some good returns with Arena . We're trying to create something similar to arena or folkstone as we work in the sector we find it less of a risk to invest in something we run understand rather than someone else's fund .

 

@Robert Wilson ,

You are right a simple unit trust would be more than sufficient for single property "syndicate". There is a method of fundraising know as the 20/2/2 rule which allows for you to make a "private" offer to 20 potential investors and the maximum that you can raise is 2 million dollars in a 2 year period.

However if you wish to make "public" offers you would most likely need a Australian Financial Services Licence. So in your situation if you, have less than 20 investors and need to raise less then 2 million then you're good to go.

Before anyone gets any ideas of creating multiple "property trusts" of 2 million dollars and less than 20 investors note that ASIC also look to see if there is a promoter involved. A promoter being loosely defined as someone who sets property trusts up regularly.

Also as I understand it if you make an offer to someone to invest and they reject it you are down to 19 offers remaining

 

@ComPropAgent
Cheers, I thought that was the case with the trust being limited to 20 investors ( didn't know about the only 20 offers rule though) I was hoping there was another vehicle to use that didn't require obtaining an FSL.

 

So many methods of fundraising are pretty tightly controlled, hell even crowd funding is over regulated IMHO. Although by being so regulated a lot of people are protected (particularly those that have no understanding of "investment products"