Syndicate

Hi,
After talking to a client of mine, I became so curious about property syndicates. I do know the company or unit trust structures where everyone is participating.

One I want to know is the type that requires a financial license and invest/manages funds for the investors.

I looked up the internet, I talked to a few friends only to get confusing and broken info like "it cost over $100000 to set up" etc.

Thanks in advance.

 

If you are marketing to the public you might need a licence and a prospectus.

 

Thanks Terry. Yes, I am wanting to know the procedures and costs to set up a syndicate that markets to the public and needs a license and prospectus.

 

In that case you will need some expensive legal advice. It will be very costly to set up as well.

 

A friend invested in one. That group was doing Land development. Total capital raised in the $20mil+ range. Unit trusts and company limited by shares seems like the common structures. I am sure there are all sorts of complex structures out there.

Members/Investors have very little say in how the project is executed and when it does come down to a vote, the majority vote is usually controlled by close friends and family so the "outside investor" tends to have very little say, so to speak.

Research more about armchair developments, land banking syndicates etc. Very mixed results and outcomes compared to initial projections.

Needless to say, it's an expensive affair to set one up and even harder to pull it off while keeping everyone happy and not get sued potentially.

Can always join very big syndicates and hope for the best: Land Syndicates Australia | Land Investment Property Australia

 

If you are raising less than a 2m and approaching less than 20 people you do not need a prospectus.

The entity can then use the 2m as a deposit and borrow for the development.

It is called the small capital raising exemption.

No need to make it expensive.

 

This is a complex area of the Corporations Act and this doesn't mean that advertising can be made to attract investors. The exception only applies to personal offers.

 

Yes you can only approach 20 people

It is not 20 investors

 

@Little Developer - I posted a similar topic in the development thread. Small syndicate @ $50,000 minimum investment. Have a chat with Graham Miller or get along to the meeting.

 

Out of curiosity - why would you want to do such a syndicate?