What is your thoughts on Co-investing/Armchair development?

Hi PCers!

What are your thoughts on investing in property development funds?

Here are the details:

- Minimum investment of $10,000.00
- Secured returns of 12% p.a. (net of all fees)
- Diversified investment portfolio
- 2nd mortgage security
- Investment duration up to 24 months
- ASIC Registered
- Redeemable preference shares
- Investors returns paid first before the developer

Please share your thoughts,

Thanks,

Greatly appreciate.

Jack

 

If you are thinking about it because you dont hav enough for a deposit but want to do something involving property.....

 

Good is subjective. You have 5 mil in net and want to jump returns on the cash part of your portfolio, and have a strategy to get out well before it hits the fan? Maybe.

But you have no control and a second secured mortgage means nothing. The preference share, length of investment, none of those are guaranteed. Everything depends on how good the developer is and what the market does. You are taking on the part the banks dont want and the developer cant find funding for at 12%. Think about that. The bank thinks its too risky or want higher returns, and the equity provider want a cut of the profits, not a capped return.

If you have 50k and think this is a cheap way to get into property without thinking about the cycle? Bad.

You putting cents on that minimum amount is a big flashing sign.

 

Run!
(Away)

 

Do you understand how the 2nd mortgage security works?..The solicitors would make more when it goes belly -up..

 

Totally correct.
You have to ask yourself why / how 12% is on offer when there is cheaper finance available. Red flag.

 

I’m pretty sure someone else on here went with ‘armchair development’. It took years, was way over budget, and wasn’t worth nearly what it was marketed as.

Do a search for ‘armchair development’ you may find a lot of answers.

Blacky