EXAMPLES SHORT TERM INVESTMENTS
Posted On July 22, 2018
SHORT TERM INVESTMENTS
There are always short term investment scenarios coming up. Some are for 3 months, some 6, nine or 12 months. These investments are usually sought by people who need either a bridging loan or a loan to do repairs to a property prior to the sale of that property, although that is not always the case as you will note in the second and third scenarios. Security is achieved by listing a Caveat over said property converting it to a second mortgage. In most cases this is the most effective method of getting the second mortgage.
A recent scenario presented was that a client wanted $60,000 and the security was a registered Caveat converting to a second mortgage. The purpose of the loan was to pay out arrears and prepare the residence for sale. The property security was a residential dwelling worth $830,000 (as per Valuation Report) making the total loan to value ratio 49%.
Terms for this scenario was for 6 months which could be paid out early by the lender without penalty.
Interest payable to the investor was 15% pa paid monthly.
Exit Strategies are vital and in this case Sale of the Security Property was the exit strategy.
Monthly income from this particular investment, over a six (6) month period, was $750pm with the total income to the investor of $4,500 and the return of the initial investment.
This is just one scenario but one can see that if one was able to do that a couple of times a year the interest would compound giving investors and healthy income.
A SECOND SCENARIO
The second scenario shows the diversity of the inquiries that come through on a constant basis. For this particular purpose the funds required, $198,000, was for working capital. Once again a Registered Caveat converting to a Registered Second Mortgage and the property security was a residential dwelling. This property value was $870,000 (as per Valuation Report) and the total loan to value ratio, in this case, was 72%.
Terms in this case was for 3 months minimum and 5 months maximum.
The rate of interest was, in this instance, 14% and the exit strategy was the sale of the security property.
As the income is paid monthly this investment paid $2,310 per month equating to $6,929 for 3 months and $11,540.00 if the term went to 5 months.
There are many inquiries such as these that come daily and not all of them are able to be serviced due to the fact that we do not have enough investors. These short term Real Estate backed opportunities are, unfortunately, only for AUSTRALIAN RESIDENTS. These scenarios are available for Australians living and working overseas.