More and more it is becoming popular for investors to want to invest with short-term business lenders. After all they offer superior returns, which now more than ever with our inflation rate currently sitting at 7.4 percent per annum is crucial.
Unfortunately, not all lenders are equal. There are some things that you need to be aware of when you are investing with certain lenders. So, today we are going to go through some of the risks of investing with lenders that pool their funds, plus show you a superior option to doing this.
In a nutshell, lenders that pool funds take your investment and add it to a large pool of investments. They then invest your money on your behalf in various short-term business loans. So, they might, for example, raise twenty million from one hundred investors. They will then pay you the return that they are offering on your investment.
So, everything seems all fine on the surface, and if the fund is governed properly then they can work. The biggest problem with these kinds of lending schemes is that there is no transparency. A lot of investors do not realise that you do not really know what you are actually investing in with these kinds of lenders.
There are a lot of start-up lenders that raise money and make poor decisions. Investors are then put in a very vulnerable and precarious position, as they are not able to properly monitor what is really going on with their investment.
When you invest with a lender that pools funds, you as the investor are not able to do all of your due diligence on who is going to be actually borrowing the money. You have no idea about whether the security for the loan is residential, if it is a commercial building, or if it a proposed development. These are all factors that you as the investor want to know about.
For example, if the loan is secured against a development, the value of the security might be influenced by a development application approval (D.A.) A D.A. can increase the value of a residential or commercial asset, as they are very costly to obtain. As the investor, though you would want to know what the value of the land on its own is actually worth. This is because builders often get delayed and the D.A. can then expire. In this case the value of your security will have actually decreased.
We have also seen many occasions, where borrowers have gone into default on mortgage payments on a project and the land has gone to a mortgage sale. What tends to happen with these projects that have a D.A. is that most buyers want to have their own drawings done and start the process again. In this case the buyers gets a bargain, but the investor loses out! This is information that you cannot possibly know, if you are in a pooled fund investment.
Fortunately, there is a superior investment to pooled funds lenders that will guarantee above average returns. It is called co-funding short-term secured business loans, and this is exactly what HomeSec offers.
HomeSec has been an established secured short-term business lender since 2004. Since then we have funded an incredibly diverse range of loans across Australia. As a result, we have a lot of experience, and you can rest assured that you are in very safe hands with us.
We offer a minimum of 12% per annum returns on your investment. So, if you invest one million with us, for example, then you will make one hundred and twenty thousand dollars. The difference between typical investing and co-funding in business loans is that you have a direct line of sight on where your money is at all times. This means that you can expect full transparency with Homesec.
So, for example, we mentioned earlier about securities on proposed developments that might have a D.A. HomSec never uses a D.A for our internal valuations. We value a property at what it is actually worth, so you are not going to get any nasty surprises with us! With investing in pool funds, your money really is invested out there in a large pool that you have no idea what is going on with.
Co-funding is very straightforward. Your money is either in your account, or it is invested with us in a business loan, secured with real estate. You know where the real estate is too, and your name is on the mortgage as well. We like to think that it is a win-win for the investor too. This is because while you do have complete transparency and control, it is still a “set and forget” investment. This means you do not have to watch the share market all day or night in some instances. You also do not need to be a finance wiz.
You can trust that you are in good hands with a solid, experienced and reputable lender, while knowing that you get to choose what you are comfortable with. So, if you are an investor that would like to receive returns at a minimum of twelve percent with complete transparency, be sure to contact us today.
