Property syndicates: Why join forces?
It might seem unusual to pool your money with a group of people you’ve never met, but there are a number of advantages to joining forces to invest in property.
Whether it be a residential property development or the acquisition of a commercial property, both investment vehicles can deliver great returns to investors.
However, both of these options also share a common problem – they’re both highly capital intensive.
The reality is that many investors simply don’t have the financial capacity to pursue these investment options by themselves.
For example, a good-quality commercial property would typically cost at least $2 million to purchase and usually require a loan-to-value ratio of 65-70%.
Likewise, while small-scale residential developments are typically feasible, most investors wouldn’t be able to finance a boutique apartment development, which could cost anywhere from $2 million – $7 million to complete.
However, a property syndicate is a practical option that allows investors to gain exposure to these larger assets but at a fraction of the cost.
The advantage of these larger assets, such as residential developments and commercial property, is that they typically provide investors with higher returns or profits and access to better quality investments than they could achieve on their own.
By investing in these assets via a syndicate, you’ll also have peace of mind that the investments are managed/developed by an experienced team, provided you engage a reputable company with a good track record.
When investing in a commercial property trust, another advantage for investors is that they’re generally not liable for the trusts’ loans and won’t be subject to commercial loan reviews or personal guarantees.
While property syndicates aren’t suited to every investor, they should be at least considered to determine if they fit into your property investment plan and are aligned with your investment goals.
Momentum Wealth regularly offers opportunities to investors to participate in property syndicates. Find out more by contacting our corporate property services team.