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How ‘hands-on’ do I need to be with a development syndicate?

Wednesday, 3rd Aug 2016

developmentDevelopment syndicates provide investors with great exposure to property development, but how hands on do you actually need to be?

Residential property development syndicates have proven to be a great means for ordinary investors to gain access to much larger investment opportunities.

For example, very few investors would be able to fully fund a boutique 40-unit apartment complex, which could cost between $10 million to $14 million to build, depending on the final specifications.

Furthermore, syndicates can also provide a less risky avenue for investors to participate in property development – mainly because they require less capital investment from each individual investor.

But how hands-on, or involved, do you need to be with a residential development syndicate?

Typically, syndicates require very little input from investors.

Generally once you’ve committed to the syndicate, and deposited your funds, the syndicator (the company organising the syndicate) will oversee the entire project, from planning and design, to building approvals, construction and managing the selling agents.

As an investor, all you have to do is sit back and wait for the profits to be returned to you at completion of the project.

If you’ve engaged a good syndicator, they will send you regular correspondence to keep you up to date with the progress of the project.

One of the key benefits of syndicates is that investor’s gain exposure to the higher profits on offer, but don’t have to deal with the stress and hassle of completing the development themselves.

In some syndicates, in which investors keep a completed apartment instead of receiving a cash profit at the end, participants may be able to elect to be more hands on. For example, investors may be able to choose the style of fixtures and fittings, or colour of tiles or carpets.

However, this will vary from company to company and syndicate to syndicate.

Ultimately, syndicates can be a great option for a wide variety of investors, from those who have an interest in development and want to get a better understanding of the process, to time-poor investors who simply are too busy to complete a development themselves.