Alternatives ideas for property investment

JOIN FORCES: Property syndicates suit those who may have a limited budget and want to see long-term growth rather than flip properties. Photo - Shutterstock.
JOIN FORCES: Property syndicates suit those who may have a limited budget and want to see long-term growth rather than flip properties. Photo - Shutterstock.

If you are looking to make an investment in property, there are many ways to do this without becoming a residential landlord.

There are property syndicates, commercial property, land banking and investment funds to name just a few.

"There is no denying property is one of the safest forms of investment, especially considering the significant capital growth in property values nationally at the moment," Toby Balazs, CEO of realestateview.com.au.

"To get ahead in property investment, it's imperative to fully immerse yourself in the market by viewing open homes, attending auctions, subscribing to property news and engaging with agents who are experts in their local area,"

"With property prices at record highs, we have seen more and more mum and dad buying in partnership with their children, to not only assist their children in entering the market but also to reap the benefits of property investment for themselves."

We have seen more and more mum and dad buying in partnership with their children

Toby Balazs

According to realestateview.com.au property syndicates are also an increasingly affordable way people can buy an investment property for sale and then develop their property portfolio across all forms of investments, especially property investments.

Rather than find an investment property for sale and accept the compromises that come with your budget, a property syndicate allows you to pool your resources with either friends or financial partners to expand your property investment options.

Why start property a syndicate?

Property syndicates suit those who may have a limited budget and want to see long-term growth rather than flip properties. Getting into the market sooner, however, allows you to see returns sooner than you would if you had to save for an extra 2-3 years for a deposit on your own.

Your reduced financial commitment that results from segmenting a property investment means that you are forced to save, while gaining access to compounding growth through multiple property and stock investments.

Things to consider

What size? Decide on the structure of your syndicate and think in the long term. You may want to restrict the size of your property syndicate to a joint venture to reduce complications. If you wish to start a large property fund then you will probably need to acquire an Australian Financial Services licence, which can be hard to acquire. Seek help from a financial advisor in these cases.

Similar minds. Be sure that the people with which you invest share with you a similar approach to their own money. Friends who have never been very good at saving but have come into an inheritance and want to put it towards an investment may seem at first like a good investment partner but their lack of financial literacy will prove a headache for you in the future.

Monopolise on different locations. Having a property syndicate spread across different states, with members living in different areas, can allow you to more easily diversify your investment portfolio.

Lines of communications. Regularity is the key to a successful property syndicate. You want to have regular meetings that are in person, rather than solely by email.

Tailor your finances. A property syndicate is a financial syndicate first and foremost. This means that rather than spend the initial stages deciding what properties interest you, decide how you will structure the finances of the group. Will your ownership of a property be a partnership, a private company, unit trust, joint tenancy, tenancy in common or discretionary trust? These options will dictate how you use your money within the group.

Establish objectives. Whether you want to invest in a single holiday home, a series of properties or to diversify your portfolio into different asset types (e.g. shares, commercial property, businesses) you need to agree on these objectives and the timeframe within which you expect to achieve goals. A financial advisor will help you visualise such a plan.

Work out the legal stuff. A solicitor with experience in syndicates will help guide you in establishing what will happen in a variety of scenarios. For instance, what will happen if someone wants to leave the syndicate or if further partners want to be included, who does what within the group, will there be a hierarchy for decisions?

Look at commercial

Commercial properties can be great investments according to realestateview.com.au. But they do come with risks. The choice between investing in residential or commercial should be a simple one and usually depends on your financial position and what you hope to get out of your investment.

Commercial tenants are invested tenants. Their business is their lifeline so they have a greater incentive to take care of your property. They also meet the costs of many outgoings that you would have to face as a residential investor. This includes taxes and council rates, maintenance costs, utilities, cleaning and garbage disposal.

Residential rental leases often last between one and two years. Commercial leases factor in the need for tenants to build their business over time. This means agreements are often between three, five and 10 years.

It is rare for a residential property to go long without tenants. Commercial properties can run the risk of being vacant for months at a time. Commercial properties are often larger than residential. While they may be cheaper per square metre, their size may bump up the cost.

This story Alternative ways to invest in property first appeared on Port Macquarie News.