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Should You Consider Investing in Property Syndicates?

Investing in a property syndicate may seem foreign to many people, but there are a number of advantages to joining forces with others to invest in property.

Whether for a residential property development or the acquisition of a commercial property, both investment vehicles can deliver great returns to investors. However, both of these investment options require a substantial amount of capital – which is prohibitive to many investors due to simply not having the financial capacity either by way of cash or equity for the deposit, the ability to service the loan, or both.

For example, a commercial property costing $2 million to purchase  usually requires a loan-to-value ratio of 65-70%, which would result in a deposit of around $600,000 in addition to a sizeable loan.

While many investors are able to fund residential developments on a smaller scale, such as duplex or triplex properties, larger apartment-style investment options are largely out of reach.

For these reasons, a property syndicate is an accessible option that allows investors to be involved in larger projects for a lower cost.

A draw card of investing in larger assets is that they typically provide investors with higher returns or profits and access to better quality investments than they could achieve on their own.

Additionally, investors keen to expand their portfolio who no longer have the capacity to service a mortgage on a home loan, but who may have equity or cash they are looking to invest, can continue to expand their investment portfolio through property syndicates, and receive an attractive return on their investment.

The key to selecting a suitable property syndicate is to carefully select the developer to ensure they are experienced and have a strong track record of similar projects. Additionally, take the time to read and understand the contract terms, and have the document reviewed by a lawyer, financial advisor or accountant.

While property syndicates aren’t suited to every investor, they are worth considering to determine if they are a suitable method to assist you to achieve your investment goals.

*This article is for information purposes only. Our blog posts are not intended as financial or investment advice and should not be relied upon for any purpose. Before making financial decisions, you should seek advice from a qualified and registered financial or investment adviser.

 

 

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