Property Syndicates are quite a headache - and quite a risk. It’s safer and easier to contact Bronwyn and the Rentals.co team.
How is a property syndicate different from rental experts?
A property syndicate pools money from investors to buy rental property and split the rental income through shares. Investors buy ‘units’ or ‘shares’ representing a portion of the property. The number of units depends on the price paid; typically unit costs are $50,000 each. Investment returns are based on how much income the rental property makes, minus costs. One cost is for a property manager to take care of the management and maintenance of the rental property.
Listed property trusts, which usually invest in multiple buildings and have shares traded on the New Zealand stock exchanges, are not the same as property syndicates. As the Financial Markets Authority (FMA) advice tells us, high returns aren’t guaranteed and the money you’ve put in may be difficult to retrieve. It’s always best to work with a trustworthy group of local experts like Rentals.co who have been looking after properties for years.
The return received on the investment may be different to the rate advertised by the property syndicate.
Reasons may be:
Property syndicates don’t usually have a fixed term, and the FMA says this can make it difficult to get one’s money back if needed, as there is no active market available for on-selling the investment.
In the words of the FMA, “Syndicate managers don’t have to return your money if you need it, but they might help you sell your unit(s) to another investor. If you do this, you may have to pay fees. You may also have to sell them for less than you paid, especially if returns have dropped since you first invested. Otherwise you’ll need to wait until the property is sold, any loans repaid and the syndicate is wound up.”
The FMA - wary of property syndicates - offers the following guide: https://fma.govt.nz/assets/Brochure/151207-Property-Syndicate-Checklist.pdf
Other factors to be careful around if considering a property syndicate:
Luckily, the rental experts at Rentals.co are available to help. The team at Rentals.co not only handle the management of rental properties. We help landlords and investors find out how to capitalise on one of the most reliable investments there is: residential property.
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