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Land Syndicates

Discussion in 'General Property Chat' started by stumpie, 28th May, 2016.

  1. stumpie

    stumpie Well-Known Member

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  2. big max

    big max Well-Known Member

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    Not sure about the one you mentioned but in general be careful. Bigger ones like Waltons Landbanking are basically scams (do some google searches to see what they do).

    On the other hand if you can form your own syndicate with a group of friends this might work well.
     
  3. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    I have share in a land holding. It is about 40acres and I own about 1/8 of this. My family uncles/auntys set up a company and bought it like that.

    The plan is for it to be rezoned from rural to resi. We will then sell it to developers.

    It has a house on it that is rented. The money goes into an account and expenses are taken out.


    Cons - I had to come up with a big deposit I could have used for other houses
    - it's hard to get out of this sort of deal. I would have to sell my share to someone else.
    - I can't lend against it. The cash is basically stuck there

    Pros - are if its rezoned we will make a good profit and that's about it
     
    JohnPropChat and big max like this.
  4. Newfast

    Newfast Well-Known Member

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    Hi @stumpie , i am from NSW and looking to invest in Victoria. Please do let me know if anything else you found out!....i did read the report but this seems different than just investing in an IP.
     
  5. sanj

    sanj Well-Known Member

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    your example of a land banking syndicate does indeed have some downsides but a syndicate set up to specifically develop is a slightly different proposition imo.

    eg there will usually be a targeted end date to crystallise projected profits so even if that's inaccurate at least investors know the end game is to sell out, cash in and distribute profits accordingly.

    with land banking there are much more unknowns, ie could it be 5 years? 10 years ? etc

    like you said though potential profits are huge.

    a couple of decades ago a group of people in perth put a syndicate together to buy some land down south, from memory 50k or so

    in the end 1 guy kept his block for about 15 yeas and it was worth close to 10m.
     
  6. stumpie

    stumpie Well-Known Member

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    @sanj
    Have you had any previous dealings with development syndicates e.g. Builton or Match ?

    I see their marketing literature quoting 20 to 24% annualised returns on capital do you know if they actually achieved these figures?
     
  7. dabbler

    dabbler Well-Known Member

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    Demand for existing houses is pretty strong, you can probably do your own cecks on how many new houses sell in the area and close by, most new ones are small blocks or 300 or so odd m2
     
  8. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    Potential profits are big or might not happen. It is setup as a trust/company and we have each bought shares in it. I don't expect anything to happen soon. But an investment firm did invest a lot of money buying vacant land so they have the same idea. Could be another 5 years until it is rezoned and then have to sell it which could take longer depending on the economy and other factors.
     
  9. RPI

    RPI Property Lawyer, Town Planner Business Member

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    The JV's my clients setup run one of 2 ways:
    1. Straight Profit Share
    2. Set Return On Capital

    Number 2 comes in around 12% if
    1. no loan to acquire property; and
    2. loan to develop not allowed to start until pre-sales of 100% finance cover are met.