The largest protection offered to investors by our Unit Trust structure is that an investor’s capital is secured against the land that is purchased by the Unit Trust. The Unit Trust owns the land, and the unit holders are entitled to a portion of the trust’s assets based on the number of Units they hold. Another protection is that a trustee owes a duty of care to unit holders and beneficiaries within the Unit Trust and the unit deed mandates that the trustee acts in the best interests of the unit holders and beneficiaries at all times. If a trustee fails to do so, they can be held personally liable with civil and criminal penalties depending on the severity of the their actions.

Pre-sales are certainly helpful and we endeavour to sell properties as soon as possible, but they are usually not essential to obtain the funding required to complete the development. The funds we raise from Investors are used to settle the land purchase. Funding for construction is obtained via a loan from a bank or other lender. Obtaining a construction loan is usually straightforward due to the amount of equity that already exists in the Development by the time we need to obtain the construction loan. Alternatively, we can obtain funding via our Construction Funding offers.

In addition to our trusted sales partners who sell our developed properties, we also maintain an internal Sales division to ensure we fulfil our commitments to investors by selling all properties in a timely manner. We sell our properties in two phases. As soon as we have finalised, approved plans we begin selling off-the-plan. Any properties that are not sold by the time construction completes are sold in a traditional manner.

All investments have an element of risk; for property development one of these risks is the possibility of the project being delayed. We cannot fully alleviate the possibility of a Development running over schedule as some factors (such as Council approval and construction) are outside of our direct control. However, this is where our experience and strategies for risk mitigation come into play. Our practical experience from managing sixteen Developments has taught us realistic timeframes for each stage of the development as well as likely obstacles that may arise. Outside of our own experience, we also utilise the services of trusted external experts such as town planners and construction managers to assist where required and provide realistic timeframes. We also provide our Investors with regular updates on the progress of all Developments via email and a private Facebook group. From our Zenith project onwards, in the event that a Development runs over the expected investment term, we will provide investors with additional returns at a rate of 2% per quarter for the extended duration. 

We can never be certain that a Development will be profitable; all investments have an element of risk. However, before proceeding with any development we conduct a thorough feasibility study to ensure that the site meets our criteria and standards. We also obtain an independent valuation from CBRE during the design phase based on comparable property sales to ensure that our expected sales prices and subsequent calculations are realistic. We also add a contingency into the budget, typically 5% but varying based on the level of risk involved in the Development, to ensure that the Development will be completed.

Unlike a traditional buy-and-hold property investment strategy, our ability to achieve a profit as a Developer is not inherently tied to market performance; as long as the combined sales price of the developed properties is higher than the cost to build them, we still achieve a profit. There are a variety of factors other than final sales price that also influence how much profit a particular development will generate, such as the purchase price of the land, construction costs, and loan interest. This allows us to achieve a profit from the lucrative property market without being completely dependent on the performance of the market.