Crowdfunding is slowly gaining traction in Australia as investors realise they don’t have to purchase a whole property to participate in this investment sector. Crowdfunding is a modern form of syndication that instead enables like-minded people to come together and invest in properties of their choice for a share of the rental income and future capital growth.
In effect it models the equities market, fractionalising the asset for a larger number of people to invest.
To make this work Australia’s leading crowdfunding platform, DomaCom Australia Limited, has created an online platform where you can choose the properties you want to invest in. All relevant information is provided and DomaCom manage a strict due diligence process to inspect the property, ensure legal entitlement exists and a fair valuation.
Beneath the platform sits a legal structure called a Managed Investment Scheme (MIS). The MIS is registered with ASIC and the Fund engages a Trustee who ensures the Fund meets its obligations and a Custodian who holds the titles on behalf of the investors.
Crowdfunded properties are usually paid in cash, which disregards the significant tax benefits of gearing.
In a further development to crowdfunding, DomaCom is about to announce it’s ability to provide leverage to crowdfunding campaigns. This will benefit all investors but particularly SMSF Trustees who will not have to establish a Bare Trust and all that entails in the administration in order to take debt into their super fund.
The crowdfunding model also enables SMSFs to tailor their dollar allocation to property within their super fund to prevent over-exposure to the sector.
DomaCom recently released their latest Product Disclosure Statement (PDS) revealing they now have the capacity to offer two forms of borrowing for investors looking to join a crowdfunding campaign with the added tax benefit provided by gearing.
The minimum to invest with DomaCom in a property of your choice is $2,500 but with DomaCom’s new borrowing facility you can double that.
The first facility is DomaCom’s own internal mortgage fund with a borrowing rate of 5.5%. The second facility DomaCom will be offering is via a selection of external providers arranged by professional mortgage brokers. DomaCom are currently in discussion with a number of banks and other lenders to provide this default loan facility.
General Advice Warning
This information is general information only and does not take into account your personal objectives, financial situation or needs. Accordingly, before acting on the information provided you must consider the appropriateness of the information, in the light of your own objectives, financial situation or needs. If you wish to acquire a financial product within the DomaCom Fund offering, you should first obtain a copy of, read and consider, the PDS before making any decision. A copy of that PDS is available at on the DomaCom Ltd website, www.domacom.com.au or by calling your financial adviser. We also recommend that you obtain legal and financial advice before investing with DomaCom.