Development funds: Folkestone Opencorp etc

Discussion in 'Other Asset Classes' started by Swamp, 18th Sep, 2016.

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  1. Swamp

    Swamp Active Member

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    Hi all, I am looking at investing in these development funds in my smsf (was looking at direct property but still accumulating outside of super and dont want to take the hit to my serviceability). Seems very attractive with Openwealth acheiving 32% annual return on projects to date?
    Development Funds - OpenCorp
    I have read all the old threads but they mainly discuss their BA type service. Some comments in the what are you doing with your smsf thread sparked my interest. Any thoughts? Any risks I should be aware of? Anyone confirm experiences with the returns? I have submitted an enquiry but have not heard back as yet so any feedback is mu h appreciated.
     
  2. FullRun689

    FullRun689 Member

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    Hi Swamp,

    how did you go?
    i am looking at SMSF investing in property development funds as well.

    opencorp, oliver hume, peet are what i am looking at.
     
  3. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Private Lender Business Member

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    Personally wouldn't invest in a Wholesale Development Fund due the inherent risk especially in my SMSF.

    I invested in Australian Secure Capital Fund but this is a Retail Fund that does not invest in Development.

    I prefer the fact that the funds are held by a 3rd party custodian and it is Audited each year.

    Everyone to their own but i guess i remember such development funds during the GFC.

    Cheers
     
  4. FullRun689

    FullRun689 Member

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    Hi Marietta,

    Thank you for your insight!

    I also looked at ASCF and think their risk profile is largely OK. However, when I looked at their interest rate on loans to borrowers (14-33%), i felt that the spread is too high! They are too greedy. they are generally lending to people in property development, who need working capital, etc.

    Did you check out other such lenders, eg. funding.com.au, arguspartners.com.au?

    i was looking at Opencorp, Oliver Hume and felt that they have a good track record in project delivery in recent years with return generally between 12-30% pa, some even exceeding 30%..

    Despite the inherent risk in property developing, i think if you get 20%+, the risk reward proposition is better.

    Thank you!
     
  5. FullRun689

    FullRun689 Member

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    they give us 9.09% pa for 24 months, the highest rate for 1st and 2nd mortgage loans. vs 14-33% from borrowers.
     
  6. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Private Lender Business Member

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    Hi Full

    You obviously didn't read the PDS as they are not allowed to lend on property development and they are not greedy as PI Cover for a retail fund is over 100K per annum.

    With Opencorp you have no custodian whilst ASCF use IOOF as their custodian and Grant Thornton as their Auditor. High return means higher risk and I would rather invest with someone with a good long term track record even if means a lower annualised rate of return.

    I met all of the Directors and they clearly have their investors interest at heart and were very transparent.

    I know many borrowers on the Forum here have used ASCF for financing short term.

    Cheers
     
  7. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Private Lender Business Member

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    Brisbane
    Big difference is it is a pooled retail fund so you receive an Annual return even if their funds sit in cash.

    Cheers