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Do developers regularly look for investors?

Discussion in 'Development' started by Mario Llige, 15th Feb, 2016.

  1. Mario Llige

    Mario Llige Member

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    If they do, how do they go about it? How do they find people willing to invest?
     
  2. Cactus

    Cactus Well-Known Member

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    They do, but it depends on the scale.

    Some of the big boys like PEET run syndicates you can invest in directly.

    Or you can invest on the asx in the development company.

    Some medium sized groups like Open Corp do syndicates.

    And some smaller groups pop up from time to time. The group I work with are small and used to syndicate 30-60 lot developments. But was hard work finding wholesale investors.

    As for really small stuff like 2-6 units this would need to be a private syndicate of investors as it's unlikely anyone is going to have an AFSL.
     
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  3. thydzik

    thydzik Well-Known Member

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    a recent startup is CrowdfundUP https://crowdfundup.com/
    "CrowdfundUP offers a range of premium property investment opportunities to our investors"
     
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  4. larrylarry

    larrylarry Well-Known Member

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    Have you dealt with Open Corp? How are they? They're promoting H and L packages in Melbourne atm.
     
  5. Cactus

    Cactus Well-Known Member

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    No I haven't. I used to know someone who worked their.

    With H&L packaged do the research on what it costs to put the package together yourself to see whether or not your paying a premium or getting a discount. This is hard though, land is pretty simple but housing is full of smoke and mirrors.
     
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  6. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    I checked them out a couple months back, they didn't have any projects back then and still don't have any now.
     
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  7. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Do you meant to invest in them as a business, or to buy their properties?

    If the latter, if the project is of a reasonable scale, they'll engage project marketing companies who help arrange advertising/marketing and have a juicy database of "astute investors".. one email = 50% sold in a week.
     
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  8. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Yes, you pay a premium for these 'marketing companies'.. but if presales is a biatch..then the premium fee is worth it, from the developer's POV.
     
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  9. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    @Leo2413, yep.

    In truth, half the stuff the marketing companies spend on is a waste, but they're still the ones with the databases and ability to sell. Well worthwhile for a developer needing presales for finance to keep moving etc.
     
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  10. thydzik

    thydzik Well-Known Member

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    this was an email I got in November 2015;

    Unique Land Development opportunity
    We are thrilled to announce our newest investment opportunity is now live on theCrowdfundUP platform!

    An opportunity is available to retail and sophisticated investors to invest in a mixed use land subdivision in the Perth suburb of Byford. This investment opportunity is offered by CrowdfundUP's property partner Megara; their second project to be listed on the CrowdfundUP platform.

    A defined portion of the $4.8m equity Class A Preference Shares have been secured for CrowdfundUP investors, with a projected distribution return of 23% by February 2017 (estimated).



    VIEW THE INVESTMENT
    Highlights of the investment opportunity:

    • The project site is in an excellent location; adjacent to 3 schools, a major employment node (town centre) and primary transport (train station)
    • Experienced development team with a strong history of delivering successful projects
    • Well placed end product which will appeal to affordability levels of WA first home buyers market
    • All necessary approvals to proceed currently in place allowing for immediate progression of project upon fundraising being finalised
    • Priority return of 15% to CrowdfundUP investors (Class A shares)


    We are also pleased to welcome three new premium property partners to theCrowdfundUP platform; 360 Capital (NSW), Heathley (NSW) and Diploma Group (WA). We look forward to offering our investors an opportunity to invest with these groups shortly.



    For more details and to view the investment opportunity, please visit www.crowdfundup.com

    If you have any further questions, please feel free to contact CrowdfundUP on (08) 6558 0355 or derek@crowdfundup.com
     
  11. Cactus

    Cactus Well-Known Member

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    Yes currently paying $20k on a $335k unit x4 but a regular agent would only get me $325k and would struggle to sell OTP. A necessary evil.
     
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  12. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @Caltan agree. Often the decisions we need to make as investors can be a little tough and confronting. But thats the nature of the game.
     
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  13. Mario Llige

    Mario Llige Member

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    Some really interesting point here. Thanks for your thoughts.
     
  14. Mario Llige

    Mario Llige Member

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    Sounds like the developers still need to wait for investors to find them mostly. You said it was hard work to find wholesale investors... What steps do you currently take to find investors? What does a typical interaction with a prospective investor look like?
     
  15. GoOnAndTell

    GoOnAndTell Well-Known Member

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    the crowd fund thing looks interesting. It is a little slick in the way its written and i imagine they are set-up carefully so that the parent company/company running it/what ever they call it charges a fee and gets a level of profit during the process and gets the slice at the end.
     
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  16. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @Mario Llige developers also often develop stock targeting the non investor markets too.
     
  17. Mario Llige

    Mario Llige Member

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    @Leo2413 , do you mean for retail sale?
     
  18. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Some do. We regularly put together unregistered managed investment scheme compliant structures for developers. 20 people/ 2 mill cash limits, typically a unit trust structure. Costs for that sort of structure tend to be $10k, (sometimes closer to $20k if particularly complex and the whole 20 people used). If you need to exceed that level then you need to go registered and the disclosure and compliance requirements make it much more expensive. But a $2m cash injection allows for some pretty decent development finance.
     
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  19. darrenonsnow

    darrenonsnow Member

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    Does the injection of equity by the developer count towards the $2mill, and if raising funds from both sophisticated and retail investors - Does funds raised from the sophisticated investors count towards the $2mill and the 20 investors?
     
  20. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Yes, to people looking to buy their PPOR.
     
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