Fractional property ownership is an alternative way to invest in the property market without owning it a hundred per cent. This is becoming the trend partly because of the increasing price of properties and because fractional ownership allows investors to spread risk beyond one property.
Following on from the tie-up between fractional property specialist DomaCom and a major bank comes an opportunity to gain exposure to a prime Sydney suburb.
A newly released product disclosure statement from Sydney based AusFunds via its Fractional Property Investment Platform has brand new apartments near Epping station Sydney as the underlying asset.
As developers look at ways to shift their stock in a problematic market it is likely this offering from AusFunds will garner attention by virtue of the discount the promoters have been able to lock in through agreements to bulk purchase in this desirable suburb.
The AusFunds offer features a newly constructed 90 apartment complex in the inner-middle ring Sydney suburb of Epping at 17-25 Epping Road. More than two thirds of the apartments have already been purchased by home owners and investors.
The strategically located property is within walking distance to Epping station which is a 24 minute express train ride to Central Station Sydney. It’s also very close to Macquarie University and the Macquarie regional shopping mall. The city is also readily accessible by car via the Lane Cove Tunnel and the Warringah Expressway.
The promoters have rights to 12 apartments – three one-bedroom, seven two-bedroom and two three-bedroom residences, 11 of which have parking. The price represents a substantial bulk buy discount to most recent sales.
The apartments will be managed by AusFunds with a minimum investment from $25,000 and increments thereafter of $1000. There is no maximum. The investment amount covers all associated costs such as fund setup, stamp duty, legals, accounting, ongoing property management and audits.
AusFunds chief executive Edgar Hung says the apartments will be modestly geared, with the managers able to borrow up to 35 per cent of the total cost. Total purchase price of the apartments is $9,253,800 with the Supplementary Product Disclosure Statement designed to raise a total of $7,700,000 in lots of $25,000 or more.
“The apartments will be placed on the rental market and managed by AusFunds with the investment promoted as a 5-year hold,” Hung says.
The key advantages include the ability to simply and conveniently gain exposure to residential property in Australia’s premier city at a discount and the excellent location of the underlying asset.
A risk is that the current market will continue its decline although the substantial discount built in provides a buffer and the investment is styled as a 5-year hold, with the expectation that the asset will exhibit the average Sydney residential uplift over time.