Return on Investment sounds unreal: an crowdfunding property

Guys, I am looking at some crowdfunding property projects, not ready to invest any just learn it as something new. When I am looking at this so called most dominant crowdfunding property platform in Australia:
Cornerstone Village Pimpama

At the end of the webpage it gives a table of revenue and cost which lead to the final ROI of 63.37% which is attractive if you invest. According to these numbers given in the table:
Revenue: 29M
Cost: 25M
Profit: 4M (revenue - cost)
Equity: 7M (amount of total invest collected by all investor)

So the ROI is 4M/7M=63.37%. My question is the 7M invest is just part of the total cost of 25M, given that, how the total 4M of profit will be all given back to the investors who only pay 7M? Or in another word, apart from the 7M, another 18M is needed which comes from somewhere else, it makes no sense all 4M profit comes to the 7M invest so the other 18M has no profit return at all.

 

If it sounds too good to be true....

This is from their website
"Opportunites on VentureCrowd are generally available to wholesale sophisticated investors, meaning individuals who have a gross income of at least $250,000 per annum over the last two financial years, or have net assets of at least $2.5 million."

 

If the $18m comes from the bank and includes interest then they don't get a share of the profit.

However I find those sums very vague with not enough information to say what is going on.

 

Construction supposed to have commenced October 2019 - has it even started?

 

haha so they are asking for money, and yet they are giving qualifiying critera!

oh well, I guess the $7m I was going to offer isnt good enough

 

actually sounds almost illegal , if they're doing crowd funding and they're saying it's for sophisticated investors ...

Cliff

 

It's strange it refers to a average gross yield of 5 6% but does not refer to what their units will yield for.

 

Dont understand the balance sheet. If equity is 7 and total cost is 25-27, how is debt to equity ratio only 60%. And what is peak debt exposure?

1.1% entry fee plus management fee.

Property development has risks obviously. About 15% projected profit, 70% lvr on cost. This is why successful developers are rich because of all the leverage. But there are a lot of bankrupt developers too.

 

Their calculation is that the profit is 4, and the equity (how much you pay) is 7, so 60%=4/7

 

no, thats ROI. Debt to equity ratio should be about 250%.

Never heard of a ratio called peak debt exposure. Anyone?

Seen enough financial statements to know there is a lot missing here.

They say 26 month construction. Assume everything takes 2.5-3 years. ROI is about 20-24% a year.

 

Peak debt exposure definition taken from estate master handbook.

 

Its used to calculate the LVR

 

Dont understand that either. Until it is sold the loans cannot be repaid.

 

A pretty successful one, but why 80 cents for every $1.00 give it is $1.4 now?

 

I like the min 3.8% annual increases

 

To be honest $4m margin on $29m of sales isn't enough for my liking. Margin is too lean. Am I reading it right that there is only $350K contingency?

Here is some information around why they may have gone down the direction of targetting "sophisticated investors"
https://www.smh.com.au/money/invest...-sophisticated-investors-20150511-ggyopr.html

 

very interesting article