Crowdfunding platform VentureCrowd has unveiled a new subsidiary that will enable eligible investors, including SMSFs, to build a portfolio of properties online without the middleman.
VentureCrowd Property has signed an agreement with its first property developer partner, Mirvac Group, which will give investors access to two Sydney properties.
“We think this is particularly attractive to younger SMSF investors who have got 20, 30 or 40 years of investing ahead of them, but don’t have the capital at this stage or the size of savings to put large amounts of money into particular asset classes,” VentureCrowd chief executive Jeremy Colless told selfmanagedsuper.
“The beauty of crowdfunding is it’s like fractional investing; effectively you can put small amounts of money, for example $100, into asset classes like property, venture capital or fixed income bonds.
“It will also be particularly interesting to SMSFs because a lot of the assets we’re targeting are better suited for longer-term investment horizons and therefore they sit well with someone who’s investing for the long term and isn’t looking for instant liquidity.
“This allows you to get property into your SMSF without all of the hassles of conveyancing, rental management et cetera if you were to do it yourself.”
The properties would be owned by a unit trust and over time were expected to include commercial and industrial real estate, Colless said.
“So there’s no limit to the type of property it might be, but certainly to start with, it will be high-grade apartments,” he said.
“We effectively have an option on the property for a period of time and we go out to raise the capital, so once we have it, we exercise that option and buy the property.
“We do leverage and use about a 50 per cent loan-to-value ratio on the property as well.”
VentureCrowd Property had registered “more than a couple of hundred people”, he said.
“That registration process involves making sure they’re wholesale investors, but we hope in time, once legislation changes, that our audience becomes much larger,” he said.
“The situation with crowdfunding is that it’s only open to wholesale investors, but we think that legislation may change as early as September this year and if that’s the case and demand is there, we would see there being tens to hundreds of apartments on the platform.
“The whole idea is really to try to cut out the middleman and allow the investor to go directly to the property investor as a one-stop shop with very clear and transparent fees.”
Last month, BrickX launched its online property platform, which targeted SMSFs as it believed it offered trustees an easier alternative to gain access to residential property exposure.
