Propellor Property

Using Proportional Ownership of an Investment Property for Your Investing Strategy

Using Proportional Ownership of an Investment Property for Your Investing Strategy

Often referred to as syndicated property investment, this is a form of investment based on a concept of shared ownership. Multiple investors pool their money to buy a property they would each be unlikely to purchase outright for whatever reason. Investment in a proportional ownership scheme is an effective and affordable way to participate in the property market, and enjoy the benefits and returns from above-average performing real estate assets without having to deal with the stress of day-to-day property management issues by yourself.

Now its even easier to own a residential investment property

The alternative option for savers facing falling deposit rates

Falling deposit rates are forcing savers to look around for alternative options. Due to the lack of other alternatives, a growing number are considering managed funds – a product similar to KiwiSaver which doesn’t lock people’s money in.

More than 40 per cent of 195 term deposit investors surveyed by the Financial Markets Authority said they were likely to invest less in them because of falling interest rates.

But now there is an exciting and credible option….Syndicated Property Investment.

Who is PPO

(Propellor Proportional Ownership)

It made sense that New Zealand’s most respected property investment company would look to helping more people achieve their goals.

The problem was to design a product in a way that was as risk adverse as any investment could be, easy to understand and with a low threshold of investment.

Along with a group of respected professionals in the finance, accounting and investment arenas, we are proud and excited to introduce Propellor Proportional Ownership (PPO).

We believe we have a product that will radically change the face of property investing in New Zealand!

What is proportional ownership?

Usually called syndicated property investment, it is a property investment where multiple buyers pool their money together to buy a property they probably couldn’t afford on their own.

Investment in Proportionate Ownership Schemes is an effective and affordable way to participate in the property markets and enjoy the benefits and returns from above average performing real estate assets without having to deal with the hassle of day to day property management issues.

The Benefits Of Proportional Property Investment

1. Get Into The Market Quicker

The benefit of a property market syndicate is the pooling together of multiple people’s cash and multiple people’s money in order to purchase an investment property that they probably couldn’t buy themselves. In some cases this may be residential property (which doesn’t require as much capital) or larger investments like commercial real estate or developments.

So being able to get into the market quicker can have huge advantages if your investment goes well because you’re getting growth much earlier on than if you had to wait another two or more years before you had your full deposit saved.

2. Build Your Portfolio Faster

Because you can get in earlier and get access to that growth and invest in different property syndicates or different investments with less cash than you would be able to by yourself, it means that you may be able to build your property portfolio quicker.

3. It Can Help You Save Money

We’re really good at spending money, but we’re not really good at saving money in most cases. By spending money on property syndicates and on these investments that potentially generate you income, you could actually be saving by purchasing more syndicates rather than trying to save for a big deposit and then not experiencing any growth.

4. You Can Save Your Time

Because you’re not going through all of the effort of purchasing the property, doing all of the research, and managing the property, a syndicate can save you a great deal of time.

5. Diversify Your Risk

You can actually diversify your risk if you don’t put all of your eggs in one basket and spread money between multiple syndicates (properties) in different growth areas in New Zealand.

6. Access To Different Investment Options

For yourself, maybe you can not afford to purchase an investment property due to either lack of cash for the required deposit or not enough equity in your home to guarantee the full deposit on an investment.

With a syndicate, however, you can actually purchase properties upwards of $500,000 for less than $50,000 investment; and in a development that you wouldn’t have had access to if you were trying to do it by yourself. The benefit of that is that sometimes these investments have better potential upside than what you could do by yourself.

7. Less Cash Intensive To Grow

In order to go from one property to two properties, you either need to grow the equity of your first property or you need to save a whole other deposit again which is a big chunk of money that takes time to save.

8. Tax Advantages

Because the PPO company is not a close company, it is not subject to the new loss ringfencing rules introduced by the government in 2019 and therefore any excess of expenses over the interest earned can be deducted for income tax purposes. In addition, after ownership of your investment for 5 years, there is not likely to be any tax on capital gains.

By investing in syndicates you can invest smaller amounts of money for significant capital gains (profit).

How does it work

PPO will search the country looking for brand new or off-the-plan property that can offer higher than usual returns in areas where the potential capital growth can also offer a higher gain over the life of the investment

These properties are typically between $500,000 and $750,000 and we complete a full due diligence on each of these before we offer them to a syndicate.

There will be no more than 12 investors in any one syndicate that offers 12 equal shareholdings.

An investor is able to purchase more than 1 shareholding to increase their percentage of ownership of the property.

Once we have the required number of investors we will purchase the investment property on behalf of the syndicate.

The syndicate will own the property outright. No bank funding or borrowing to put our investors at higher risk

Propellor Proportional Ownership only requires a minimum of $45,000 depending on the purchase price and costs associated with the property.

To access cash to invest in a syndicate if you do not already have the funds, an investor can borrow against equity in a property already owned ie your home. We can organize a Mortgage broker to do this on your behalf.

Supporting your investment

We recommend and work alongside some of the most respected property professionals in New Zealand.

These solicitors, accountants, mortgage brokers and valuers are at your disposal whilst you conduct your own due diligence on the scheme and the properties we choose for investment.

To find out more or to speak to a consultant, please get in touch with us.