Real estate trust investment Quantum

Hello,

I recently got to know about the real estate fund where they invest in new projects and provide upto 16% return.

Has anyone used this option or similar options with projects developer.
Attachment is a presentation, go to page 17 for details.
Is the capital protected? Is this a better investment then buying own land or house?
https://www.quantumgroup.com.au/downloads/pdf/QReal/SL_Class_presentation_march_2018.pdf

 

Nope.

 

Buy what about a situation when the investor doesnot have enough funds to buy land or house and instead can only invest say $50k.

 

This is providing the equity slice of a development, and they cap your return at 15. You think that has the same risk as buying a house? If you are the equity slice, you eat any cost overruns and losses. You should get the actual profits.

 

Just because you can't afford a certain sort of investment, doesn't mean you should throw away what money you do have on a subpar one.

Avoid imo.

 

Being an unsecured investor has a 100% risk of loss. Being a fractional direct owner has a fractional risk.

Investing in a managed fund is NOT buying property.

 

Thanks everyone for highlighting the risks. But for someone who is young and has risk appetite and is waiting to enter the property market and doesnot have enough deposit or has first property but does not have enough serviceability for second property what are other investment options other than keeping in bank account for some 2.5% interest.

 

If you are serious, spend a few months reading about bonds, shares, etc. you need to understand risk.

 

Many - Just depends if you want expose to the risk your capital is eroded due to a market correction. If shares drop 25% a 25% fall requires a corresponding correction upwards of 33.33% to recover back to the original investment. If nobody sees a 25% fall nobody would predict a 33.33% rise either. ETFs that target income etc can also be worth considering to synthetise interest....But it will mean more risk. eg : comparing AAA v HVST v YMAX for a simple example.

After the GFC many fund froze redemptions too. Unlisted trusts etc. So your depleted investment may be 100% locked up and exposed to complete loss. Listed trusts may avert some of that issue.

In its simplest form saving money in a offset could produce a decent return without capital risk or risks of access to liquidity.

 

Hey Andy,

I invest in something similar with Australian unity called select income fund. Looked at the link you posted and i personally wouldn’t go into that one.
Australian unity are a much bigger and reputable player. They offer loans to developers at lvr of around 60% and you get between 7%-8%p.a return. Loans are normally 12-18 months. If the developer goes past the due date they normally give you an additional 5% bonus interest. You also have the option of choosing which loans you go into. Most of the developers they lend to must have a certain amount of pre sales as well. Have invested in a number of these loans over the past 2 years now and so far so good. A number of loans have matured and funds returned. I always spread my capital over multiple loans to diversify.
I also invest in unlisted property trusts with a number of different fund managers. I keep hearing the unlisted stuff is risky but from everything I have heard as long as you are dealing with a large reputable manager such as charter hall or centuria I would think having your funds locked in with a professional manager is a positive. Yes with listed you can withdraw your funds in a major crash, but that’s probably the worst time to be selling out. Don’t invest money in unlisted that you will need in the next few years. I do it with the mind set that I’m getting a nice yield ( most paying 7-8%p.a ) and would have no issue if my capital is locked up for the next 7 or even 10 years.

Hope this gives you some insight into this type of investment.
Cheers

 

Thanks @Trainee for your suggestions. When I said I was young I didn't mean 19. I meant young from risk appetite perspective. I am qualified accountant with 15 years of experience in investment banking. What I wanted to know is what is the risk of trust funds investing in real estate from people who may have invested in similar products as a retail investor.

Thanks @Big Al @Paul@PFI for sharing your experience. Isn't it good to stick with 12.8%return I am getting from a P2P lending business, moneyspot? I know the risk of capital loss. But what is the probability of more than 5%borrowers not paying back. If GFC type event happens, everyone is damned. PDS is in the bottom of the page.Invest in Consumer Loans | MoneySpot Investments

 

Personally something like the Australian Unity product is as high up the risk curve as I would go with this sort of asset class. I would take a 8% return against a secured reasonably good quality asset than a 12.8% return on a unsecured loan to Mrs Smith to get her dental work done. You have to question Mrs Smiths financial position to repay this loan if she is willing to borrow at a high interest rate for dental work. I'm referring to dental work as that's one of the examples they use on there website as a possible purpose for loan. Though if your are comfortable with that level of risk for a higher return then more power to you.
Cheers

 

Then the funds you have available and investment experience seem low?

Fund investing in real estate could mean anything. This is not a fund that buy an office building at 60% lvr. This is the equity piece of a development. If you cant tell the difference in risk, you need to read more even if your 80.