Crowdfunding Real Estate in Australia seems like a spectacular idea. Australia is probably one of the last great frontiers for crowdfunding real estate. Most parts of the world already have crowdfunding real estate in some shape or form. Australians love property and are 3 times more likely to invest in property than an American. Everyone seems to be in on the property game in this country yet there are quite a few who are locked out, as they do not have sufficient capital to invest and enter the property space.
A crowdfunding real estate platform that allows you to invest small amounts and invest in specific projects of your choice is a winning idea. But it comes with a host of challenges.
First is obviously the regulation, under currently Australia law, you can only raise up to 2 Million from 20 retail investors and make only 20 offers in a year. And there are significant restrictions around promotions. If you want wholesale investors to participate in your project funding you are kosher, but the fact of the matter is that wholesale investors do not have any shortage of investment opportunities being presented to them. They can do everything that a crowdfunding real estate platform can claim to do and remove any middlemen in the process. A crowdfunding real estate platform for wholesale investors only doesn't make any sense for the simple reason wholesale investors do not care for crowdfunding. Crowdfunding is a retail investor play.
The second issue is that if you are going to offer people the opportunity to invest in a house then the essential offer is to invest in the capital growth and the rental return. But there is a significant amount of paperwork that goes into making an investment offer possible and the cost of compliance means that the a couple of percentage points are knocked off the return. Assuming a capital growth rate of 6 to 7% and a rental yield of 4.5%, the in hand rental yield comes to just above 3 to 3.5% and capital growth is meaningless till the house is sold. 3 to 3.5% is better than the cash rate a bank would offer but not enough to get even a retail investor out of bed. Most crowdfunding real estate platforms are learning this the hard way that people want to invest in property online, but they also want strong returns.
Generally, development projects run anywhere between a year to four years and can offer profits around 20%. But an ทาวน์โฮมมือสอง กรุงเทพ investor must look at the offer documents for the specifics of a deal. Investors should look at the checks and balances to ensure that their interests are secured and the deals that are presented are only of the highest quality.
When Australians start investing in property, leverage is a key factor in the path to creating a Real Estate Empire. Most people start with a home, then after paying down the mortgage for a few years and once sufficient Equity has been accumulated they draw down a portion of it by taking a loan against it and then invest in putting a deposit against the next property. Most banks think property is a safe asset and are willing to loan up to 80-90% of its value.
The big idea of Fractional Property investment and even Real Estate Investment Trusts loses out of steam because it is a financial investment and most banks don't view it the same as owning a house. Which means that leverage is out of the picture. With the option of drawing down equity out of the window, the premise of potentially negative cash flows and very low rental returns suddenly seem like a dead duck in the water.
At crowdfunding real estate platform, investors are also allowed to select Development projects to invest in by themselves. There are essentially two ways to invest in a Development project. One is Debt and the other Equity.
Most Development projects get a large portion of their project funded by banks and the remainder is funded by private money or second mortgage capital. If a crowdfunding real estate platform provides funding in place of a second mortgage then the returns after the platforms fees are going to be 6% to 12% per annum. This is a decent return for retail investors but second mortgage has little security. An early stage crowdfunding real estate platform may not always have the capability to litigate for rights for years in case a project goes bust.
So if you are going to take a risk, why not get the commensurate returns for it in the form of an Equity position where you get rights to share in profits. However the risk is that profits are what are left from revenues after expenses. You can always have a shady Developer/Builder claiming thousand-dollar doorknobs and leave nothing in profits to be shared. It will take only one bad actor to destroy the credibility of the platform.
In addition, most developers want certainty in funding. They put deposit and then they want to know that they will receive funding else its their neck on the line come settlement. While in the US projects get filled in hours, the depth of market in Australia or awareness of the concept is minimal. Guaranteeing funding is not possible in the early days of a crowdfunding real estate platform.
ไม่มีความคิดเห็น:
แสดงความคิดเห็น