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

Discussion in 'Investment Strategy' started by Propertyislife, 11th Feb, 2019.

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Is this a good investment?

  1. Yes

    0 vote(s)
    0.0%
  2. No

    11 vote(s)
    64.7%
  3. Need more information

    6 vote(s)
    35.3%
  1. Propertyislife

    Propertyislife Member

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    4th Feb, 2019
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    Location:
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    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
     
  2. Trainee

    Trainee Well-Known Member

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

    Trainee Well-Known Member

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    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.
     
    Last edited: 11th Feb, 2019
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  4. Car tart

    Car tart Well-Known Member

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    Run!
    (Away)
     
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  5. willair

    willair Well-Known Member Premium Member

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    Do you understand how the 2nd mortgage security works?..The solicitors would make more when it goes belly -up..
     
    Last edited: 11th Feb, 2019
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  6. VB King

    VB King Well-Known Member

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

    Blacky Well-Known Member

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    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
     
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  8. Denis

    Denis New Member

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    So jack, what did you do?
     
  9. mickyyyy

    mickyyyy Well-Known Member

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    Is this from the mob up in QLD, forgot his name?
     
  10. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    High risk of never seeing a cent after all what obligation is imposed on the company to pay any dividend ?? (A - Likely none !!)
    Likely a concern by ASIC if it hasnt issued a prospectus and satisfied all regulatory requirements. A private company cannot do this.
    Unsecured - What security is given to a shareholder ? Thats rubbish to say its secured when its a second mortgage. Maybe cents in the dollar not 100 cents in the dollar.
    What "fees"... How can the shareholder get a return after fees and be paid first ?
     
    ellejay likes this.
  11. JohnPropChat

    JohnPropChat Well-Known Member

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    Are you thinking of this?
    ASCF - Australian Secure Capital Fund

    Richard Taylor, I think he used to post here?

    To be fair they do offer first mortgage based investments.
     
    Last edited: 31st Jul, 2019
  12. mickyyyy

    mickyyyy Well-Known Member

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    The bloke from we find houses but can remember his actual name
     
  13. lemons

    lemons New Member

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    Paul Wilson
    Has anyone had any experience with him?
     
  14. ellejay

    ellejay Well-Known Member

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    If you can't do it alone, don't do it at all. You have no idea of the scams going around in the real estate world until it's too late..and by then your money is gone.
     
  15. lemons

    lemons New Member

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    Jack, I had a bad experience with a similar company - Viva Properties. I lost all of what I invested. So, I'm a little wary of these. It was a good lesson though. I now invest by buying my own property and doing my own homework.
     
    ellejay likes this.
  16. Sackie

    Sackie Well-Known Member Premium Member

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    I firmly believe that anyone who doesn't take the time to do some self study for 2-4 months and learn this craft from the basics up, shouldn't be contemplating any course. Courses often have their own biases and if you don't get a well rounded 'education' on this game, you are likely to be doing yourself a great disservice.

    In reality, no one can make you successful but you (doesn't mean you don't engage with others to help you succeed). Anyone who is serious will learn this stuff for themselves from the ground up such as building a team, goal setting, strategies, leverage, CF vs CG, finance, growth drivers, due diligence, negotiation strategies and tactics, buying strategies, traps to avoid, demographic due diligence, add value strategies, dwelling due diligence, risk profiles, market cycles, etc etc . The nuts and bolts of this game.
     
    Last edited: 5th Aug, 2019
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  17. ellejay

    ellejay Well-Known Member

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    I totally agree. The scammers and con artists that exist rely heavily on the many people who want to pay to take shortcuts and who don't even do due diligence on the courses they're thinking of taking (or the people involved).

     
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