Co-Investing- A new way for Australians to enter the property market
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Struggles in the Property Market
Millennials are struggling to enter the property market. Fewer than 40 percent of Australians in their 30s are able to enter the housing market due to the record-high prices of the Australian property market. As a result, more people are being forced into the rental market. This has led to increasing rental prices and placed families under rental stress (i.e., where people spend more than 30 percent of their income on rent).
Rental Stress and Co-Investing
At the same time, 57.4 percent of young people under the age of 24 who receive a Common Wealth Rental Assistance (CRA) payment are also under rental stress. With little money left over after paying rent, it is impossible for people to ever get into the property market and build equity for a secure financial future. This property plight, however, is becoming a dilemma of the past, thanks to a new co-investing strategy.
The Concept of Co-Investing
Co-investing in property, a new approach to buying property was devised by Scott Fraser, CEO of Investn. Investn has been co-investing in property with everyday Australians since its conception in 2019.
Co-investing means what the name suggests – two parties investing in the purchase of a single property. Investn’s innovative set-up sees everyday Australians owning their own investment property with only a $35,000 deposit. Finally, an experienced player in the property industry is using their know-all to absolve people’s property woes and help everyday Australians own their piece of the property pie.
The Co-Investing Process
The buyer covers all purchase costs such as stamp duty and legal costs, and Investn covers 10% of the property’s price for the deposit. The new owners own 90% of the property, with Investn only having a 10% co-investment. The new owners are responsible for servicing the new mortgage. The new owners are in full control of the property and can sell the property anytime they choose. An external licensed property manager handles all aspects of the property management and disperses the rental income between the new owners and Investn according to their 90 and 10 percent split.
Experience and Property Acquisition
Investn CEO Scott has over 20 years of experience in the property, mortgage, and financial planning industries. His co-investing conception was founded by a desire to help people who can’t generate enough of a deposit fast enough to enter the property market.
Investn has an experienced property acquisitions team that drives the buying process to meet the needs of each individual buyer. Guided by each buyer’s financial circumstance, Investn will source the ideal property to invest in.
Benefits and Future Prospects
Investn sources properties in growth locations that see decent rental incomes, and with good prospects for future growth during the property’s lifetime. The rental income generated from these investment properties performs traditional property models due to the reduced amount of money the clients contribute to the loan. This sees clients with rental income in hand after the mortgage and costs have been serviced monthly. They can use the profit from their 90% stake of the sale price to buy their ideal home in their ideal suburb when the time and price are right for them.
This gives Investn clients a way forward out of the competitive rental market and into homeownership in the future. Co-investing with Investn gives these buyers the luxury of time, a lifeline that is generally not afforded to people attempting to enter the property market. Alternatively, Investn’s co-investing service can be ideal for people who have already achieved homeownership and want to rapidly build their property investment portfolio.
Investn’s Unique Approach
It is important to note that other co-investing platforms do exist. These platforms, however, simply partner two potential buyers together, whether they be friends, family, or strangers in a co-investment arrangement. While these online platforms facilitate the process from initial partnering of co-investors through to post-settlement, their co-investing model can lead to complications. This is due to the fact that their co-investing arrangement involves the partnering of two subjective buyers, with their own subjective needs. It makes finding the right property, for the right price, and the ideal ownership split difficult to navigate in a way that is optimal for all parties.
Alternatively, Investn’s co-investing model sees Investn as an impartial investment partner. In this way, Investn helps individual clients secure their own ideal investment without the complications of meeting the needs of other parties. Investn’s co-investing arrangement is simple, streamlined, and geared toward the needs of one client.
Solving the Homeownership Challenge
The current climate of rental stress and Australia’s affordable housing crisis has been intercepting the homeownership dreams of so many Australians. Investn appears to have solved this with an ingenious swoop of its property hand.