Fractional property investment – BBG mastermind lunch – 13/06/2018
CEO – Avant-garde International Consulting Group- Australia’s Authority on Business Model Reinvention
Chris Grey FCCA – Founder and CEO of Your Empire
• Host of Smart Investing – Sky News Business
• Best-selling Author – The Effortlessness Empire
• Judge on “The Renovators” – Channel 10
• Real estate expert – “My home TV” – Channel 9
• Buyers agent, renovator & professional investor
Daniel Noble – Founder and CEO of CoVesta
• Serial Entrepreneur – With startups in Asia, the USA and Australia
• Co-founder of Noble Lakeside Australia
• CEO and founder of Drive MyCar
Hosted by: Ivan Kaye – Chairman of BSI and BBG (Business Builders Group)
As someone who attends many conferences, presentations, networking groups and training seminars, I would say it takes something special to blow me away.
The presentation delivered by Chris and Daniel did just that. The topic was Fractional property investment with a buyer’s agent.
In the words of Bruce Lee “simplicity is the key to brilliance”
Fractional investment is not a new idea. One can purchase a boat in a syndicate!
Have a look at the financials behind this common-sense approach of buying a boat in a syndicate
buying shares in a publicly listed company is the perfect example of fractional investment.
The traditional Aussie dream of owning your own home has quite simply become a nightmare, and it is becoming increasingly difficult for people to “get in to the property market.”
The Australian property market has been crying out for the right formula and in my opinion Daniel and Covesta have smashed this one out of the park.
CoVesta has launched a concept whereby an individual has the ability to buy a share in a property.
For example :- A property purchased for $1 million is “housed” in a trust with 100 units of $10.000 and the trust buys the house with investments it receives.
The rationale being if you had $100,000 to invest would you rather buy a small unit in a mining town which may not exist in 3 years from now if the mine shuts down or would you rather use that $100,000 investment to purchase a share in a beautiful property in Bondi with the knowledge it will be fully tenanted and, best of all, fully maintained with zero involvement in the day to day management of the property.
The advantages of Fractional property investment are as follows:
1. It enables you to purchase property in PRIME locations
2. It enables you to purchase better properties
3. High level of diversification. Remember the saying “don’t put all your eggs in one basket”? need I say more?
4. More consistent growth and yield
5. Completely outsourced
6. Professionally chosen and negotiated on your behalf
7. Ability to get into and out of the market quicker
The disadvantages of Fractional property investment are as follows:
1. Not in 100% control
2. Less leverage
3. Slightly higher fees
4. Risk in dealing with 3rd parties
Fractional property investment is worth considering if:
1. You prefer blue chip rather than interstate or regional
2. You have a limited deposit
3. Limited serviceability
4. You don’t want a mortgage
5. You are a non-resident
6. You run a self-managed super fund and prefer property investment over shares
Home ownership is becoming almost impossible and there is a universal decrease in home ownership. 75% of property owners are over 45. The biggest decline in home ownership is in the 25 – 44-year-old age bracket and the sharpest recent decline has been in the 45 – 55-year-old age bracket. Much of this can be attributed to the high cost of living.
Property prices are expensive!
1. Residential property is a 7 trillion-dollar market
2. 3 x bigger than the ASX
3. 6 x bigger than superannuation
4. Since 1996 the market has grown by over 150%
5. It has outperformed the domestic and global stock market returns
6. Sydney is ranked the 2nd most expensive property market in the world.
7. In Sydney the average house is 13.7 times the average salary and the average unit is 8.7 times the average salary.
For the last decade a home owner has been required to save a 20% deposit in order to purchase a property. Due to the extremely high cost of living this is almost impossible.
This has resulted in what’s known as a failure to launch: No deposit therefore can’t purchase a property = less people buying = less supply = increased rental demand = higher rental rates = higher cost of living = reduced savings capacity and so the cycle continues.
This is the pain that CoVesta is looking to solve.
They find suitable properties and each one is divided into 100 units, you are able to buy as many units in as many properties as your budget allows, this enables you to generate rental income and capital returns.
After 5 years the syndicate votes on whether to hold or sell with a 75% majority required.
So, the bottom line, choose your investment then sit back and relax while its all managed on your behalf.
As a property investor, it’s not about when you buy, it’s about how long you can hold to be able to sell at the right time.
And just when you thought it could not get any better, if you run a self-managed super fund you can use your super to invest in fractional properties.
In my opinion, a far less scary option than trying to manage your own share portfolio. This may very well be the key to building the property empire you have always dreamed of.
Thank you BBG
Once again BBG’s Chairman Ivan Kaye has shown what it truly means to deliver value to your customers. My father always taught me to under promise and over deliver and that is exactly what BBG does.
BBG is a networking group with the idea that if you know, like and trust someone you will refer business to them. Members are not there to “flog” our goods and services to each other …. we are there to see how we can assist our fellow members grow through Collaboration and Learning.
There are no targets with regard to generating referrals and no pressure either. Just think of it this way, a plumber is parked in your street 364 days of a year. On day 365 he leaves and that’s the day your pipes burst!
Business, more often than not, is about timing and if you give to the organisation, when the time is right you will get it back tenfold.
In addition to this model of collaboration we are regularly exposed to people like Chris Grey and Daniel Noble. If you are interested in expanding your business network with high level, like minded executives look no further than The Business Builders Group. https://www.bbg.business
Posted on June 15, 2018