investn.com.au

Hi,

I am new to Australia property market and came across this site investn.com.au and had a first meeting with them. They provide the services for investment properties - sourcing, lending and maintaining and they also co-invest with you. They pay the upfront 10% of the deposit during the purchase process and I will have to take care of the stamp duty, legal fees etc. Their revenue model is as follows, however the title will be on my name.
1. 10% of the rent that property will earn.
2. 0.44% of the purchase price annually as Annual Maintenance Fee (this is not Property Management Fee)
3. 10% of the sale price whenever we sell the property.

There are many other questions, however, before we move with those questions, I will have to pay $550.

Question: Has anyone seen this model of co-investing? Any reviews about investn.com.au? Appreciate your response

Thanks,
Kailash

 

If I understand correctly, you only own 90% of the property, they own 10%
They're selling brand new house and land packages or some other brand new property, potentially off the plan?

Do you need to co-invest?
Why not just buy your own investment property?

 

Yikes, run!
Sounds like a recipe for disaster:|

 

There are 2 reasons why this seems interesting:
1. They pay the 10% deposit
2. The loan and the title is still on my name

 

I tried to write a ballanced post taking into account the pros and cons of this but decided it was a bit long winded, so I'll just give a summary of my opinion.

I've seen some bad real estate deals. There could be some upsides to this, but it has the potential to be one of the worst I've ever seen.

The only upside I can see is you don't have to come up with the 10% deposit, but there are other ways around this. There is so much potential for the purchaser to be taken advantage of at multiple points, across a lifetime.

 

Thanks - This is what I asked them yesterday, about the control over property and the decision making authority - to rent out or not, the price or to sell whenever we would like to etc. And hence I posted this here and your below comment helps clarifying my doubt - Thanks.

• You have zero control over your investment (I mean that literally - the investment fund partner has full control over all decisions made - you have no say in it)

And absolutely agreed. I don't want someone to make all my decisions for me

 

Got it. Thanks @Simon Hampel

 

That's good of them paying the 10 percent deposit ,but nothing free in life from my experience .
If you intend to have anxiety free sleep at night or during the day , walk away and start reading within this site..good luck..

 

Don't think the OP realised they actually own 10% of the property

 

Be wary of any organsiation that offers to be a 'one stop shop' ie. sells you the property, arranges your finance and legal advice

 

I wonder how the lending would work. If they had legal title they would need to go on the loan and give a mortgage over the property. They wouldn't get far.
If they have a beneficial interest without being on title the lender would not like this and they would be taking a risk too of loss of priority. They prob do this and lodge a caveat at settlement - which would be a breach of the mortgage agreement under the standard residential contracts.

If you could get finance and settle there would unlikely be any potential to 'tap into' the growth down the track.

Also stamp duty and CGT issues to consider, not to mention estate planning.

 

Probably wouldn't be through a regular bank. Given they're organising the finance I imagine they've got some arrangements somewhere. The 10% ownership might be some sort of business structure and it might be taken out of regulated lending and not subject to NCCP. Just speculating here, but there are ways to finance residential property outside of NCCP. This could be a huge risk for the borrower as they would have minimal consumer protection.

 

I am wondering what ASIC think and whether there is a license or product approval required. All the providers are their partners. Their lender. Their property etc.
They control what property yet you are paying and surrendur 10% plus....plus....
I also question whether the fees paid to them are deductible. An ATO product ruling on their 10% etc and many aspects seems required.

It looks and smells "one stop shop" with many hands in the cookie jar eg valuers !! Smells like no independent legal advice too.
We work with several external service providers that assist us while managing the property purchase process, these include Mortgage Lenders, Fund Managers, Accountants, Real Estate Agents, Property Managers, Lawyers, Insurers, Builders, Building Inspectors.

What happens if they collapse ? Who owns the 10% ? And what happens if they call up that ? And where does the rent go ? To them ? So you could lose the income and be unable to service the loan. Who is the lender - one of their friendly parties who bails and demand it be refinanced ? Is there a "bail out" clause to buy them out ? How does duty work ?

I cant see too many benefits for all the concerns. It seems to also focus on vulnerable groups who may lack financial capacity and literacy. Case study 2 also looks highly leveraged v Kim originally planning one property. Wonder how a independent credit adviser would address that ?

 

Give them a miss mate, you have a "wiff" of suspicion so seek a second opinion - from someone who is not a one stop shop

Cheers Ivan

 

I am in the process of buying my first investment property with Investn and like to provide some clarity as quite a few facts in this post are incorrect.
1. Property title is solely in my name only.
2. Lenders for the finance was limited at this stage, they were fine if i could get finance elsewhere, but be a hard task.
3. Was told early, get legal advice on our agreement and I could use my own conveyancer etc.
4. They look after the property so the asking rent is realistic so the property does not sit vacant for weeks if i get the asking rent wrong, insurance is put in place to protect the asset.
5. Can sell at any stage, but told dont do it if your not investing for the long term which i am fine with. Yes, I can sell early if i want too.
6. As they are putting the 10% cash in, no reason they should be liable for my mortgage. Monthly cost if i do lose job no real issue, as the rent is covering all costs with fixed interest rate. Plus they insisted i set money aside for any unexpected expenses such as no tenant or maintenance so never in financial risk.
I do have to say was not a huge risk for me as its getting into the market with only $15k as small amount of money as i didnt want to wait a few more years to save more $$$ as the market goes up in value.

 

I'm curious, why would it be a hard task??