What to consider when making real estate debt investments?

October 1, 2021

October 1, 2021

October 1, 2021

What to consider when making real estate debt investments?

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Understand the factors driving the returns, as well as the key areas of risk in Real Estate Debt Investments.

Historically low-interest rates and low fixed-income yields are drawing some investors towards alternative investments in search of higher returns. One area attracting a lot of attention is real-estate debt investments. As with any investment, it is important to understand the factors driving the returns, as well as the key areas of risk.

The new kid on the block

Once the poster child for self-funded retirees, term deposits have lost some of their lustre in the recent low-interest-rate environment. A number of higher-yielding fixed-income investments have stepped in to fill that void. And one option is private real estate – one of the fastest-growing alternative investments in Australia today.

With this investment, private investors (you) act as ‘the bank’, providing loans to borrowers in return for a registered 1st mortgage over their properties and the potential for a regular fixed income.

Not your typical fixed income investment

Private real estate debt typically pays a return of between 4.00% p.a.  – 8.00% p.a. % per annum.

What adds to the attraction of this investment is that it’s secured by a first mortgage over the real estate that you invest in. This provides the potential for a stable income return, backed by ‘bricks and mortar’ security.

Understanding the rate of return

There are several factors that can impact the rate of return. Here are some of the key things to consider:

  1. The quality of asset securing the loan

Considerations

  • Where the property is located

  • The loan to value ration of the transaction

  • The security type (residential, commercial, industrial, land)

  • Income status of the asset and is there a lease in place?

  1. The strength of the borrower

Considerations

  • How strong is the asset/liability statement?

  • What experience does the borrower have in property development?

  • What is the sponsor/guarantor’s credit history?

  1. Borrower income verification/serviceability

Considerations

  • Can the borrower produce company financials?

  • What individual/guarantor income can be verified?

  • What is the term of the lease (if a property is rented out)?

  1. Exit strategy from the loan

Considerations

  • How likely is it that the borrower will be able to refinance the loan to another lender?

  • How easy/difficult would it be to sell the property security?

  • How long would it take to sell the property security?

  • What would the expected settlement term be?

Is private real estate debt right for you?

At AltX, we offer a range of investment opportunities secured by registered 1st mortgages. Investors can self-select based on their preferred investment criteria. Since inception, 100% of the interest and capital on all investments has been returned to investors. To learn more about real estate debt and how to unlock alternative investment opportunities with AltX, visit here.

Historically low-interest rates and low fixed-income yields are drawing some investors towards alternative investments in search of higher returns. One area attracting a lot of attention is real-estate debt investments. As with any investment, it is important to understand the factors driving the returns, as well as the key areas of risk.

The new kid on the block

Once the poster child for self-funded retirees, term deposits have lost some of their lustre in the recent low-interest-rate environment. A number of higher-yielding fixed-income investments have stepped in to fill that void. And one option is private real estate – one of the fastest-growing alternative investments in Australia today.

With this investment, private investors (you) act as ‘the bank’, providing loans to borrowers in return for a registered 1st mortgage over their properties and the potential for a regular fixed income.

Not your typical fixed income investment

Private real estate debt typically pays a return of between 4.00% p.a.  – 8.00% p.a. % per annum.

What adds to the attraction of this investment is that it’s secured by a first mortgage over the real estate that you invest in. This provides the potential for a stable income return, backed by ‘bricks and mortar’ security.

Understanding the rate of return

There are several factors that can impact the rate of return. Here are some of the key things to consider:

  1. The quality of asset securing the loan

Considerations

  • Where the property is located

  • The loan to value ration of the transaction

  • The security type (residential, commercial, industrial, land)

  • Income status of the asset and is there a lease in place?

  1. The strength of the borrower

Considerations

  • How strong is the asset/liability statement?

  • What experience does the borrower have in property development?

  • What is the sponsor/guarantor’s credit history?

  1. Borrower income verification/serviceability

Considerations

  • Can the borrower produce company financials?

  • What individual/guarantor income can be verified?

  • What is the term of the lease (if a property is rented out)?

  1. Exit strategy from the loan

Considerations

  • How likely is it that the borrower will be able to refinance the loan to another lender?

  • How easy/difficult would it be to sell the property security?

  • How long would it take to sell the property security?

  • What would the expected settlement term be?

Is private real estate debt right for you?

At AltX, we offer a range of investment opportunities secured by registered 1st mortgages. Investors can self-select based on their preferred investment criteria. Since inception, 100% of the interest and capital on all investments has been returned to investors. To learn more about real estate debt and how to unlock alternative investment opportunities with AltX, visit here.

Historically low-interest rates and low fixed-income yields are drawing some investors towards alternative investments in search of higher returns. One area attracting a lot of attention is real-estate debt investments. As with any investment, it is important to understand the factors driving the returns, as well as the key areas of risk.

The new kid on the block

Once the poster child for self-funded retirees, term deposits have lost some of their lustre in the recent low-interest-rate environment. A number of higher-yielding fixed-income investments have stepped in to fill that void. And one option is private real estate – one of the fastest-growing alternative investments in Australia today.

With this investment, private investors (you) act as ‘the bank’, providing loans to borrowers in return for a registered 1st mortgage over their properties and the potential for a regular fixed income.

Not your typical fixed income investment

Private real estate debt typically pays a return of between 4.00% p.a.  – 8.00% p.a. % per annum.

What adds to the attraction of this investment is that it’s secured by a first mortgage over the real estate that you invest in. This provides the potential for a stable income return, backed by ‘bricks and mortar’ security.

Understanding the rate of return

There are several factors that can impact the rate of return. Here are some of the key things to consider:

  1. The quality of asset securing the loan

Considerations

  • Where the property is located

  • The loan to value ration of the transaction

  • The security type (residential, commercial, industrial, land)

  • Income status of the asset and is there a lease in place?

  1. The strength of the borrower

Considerations

  • How strong is the asset/liability statement?

  • What experience does the borrower have in property development?

  • What is the sponsor/guarantor’s credit history?

  1. Borrower income verification/serviceability

Considerations

  • Can the borrower produce company financials?

  • What individual/guarantor income can be verified?

  • What is the term of the lease (if a property is rented out)?

  1. Exit strategy from the loan

Considerations

  • How likely is it that the borrower will be able to refinance the loan to another lender?

  • How easy/difficult would it be to sell the property security?

  • How long would it take to sell the property security?

  • What would the expected settlement term be?

Is private real estate debt right for you?

At AltX, we offer a range of investment opportunities secured by registered 1st mortgages. Investors can self-select based on their preferred investment criteria. Since inception, 100% of the interest and capital on all investments has been returned to investors. To learn more about real estate debt and how to unlock alternative investment opportunities with AltX, visit here.

Historically low-interest rates and low fixed-income yields are drawing some investors towards alternative investments in search of higher returns. One area attracting a lot of attention is real-estate debt investments. As with any investment, it is important to understand the factors driving the returns, as well as the key areas of risk.

The new kid on the block

Once the poster child for self-funded retirees, term deposits have lost some of their lustre in the recent low-interest-rate environment. A number of higher-yielding fixed-income investments have stepped in to fill that void. And one option is private real estate – one of the fastest-growing alternative investments in Australia today.

With this investment, private investors (you) act as ‘the bank’, providing loans to borrowers in return for a registered 1st mortgage over their properties and the potential for a regular fixed income.

Not your typical fixed income investment

Private real estate debt typically pays a return of between 4.00% p.a.  – 8.00% p.a. % per annum.

What adds to the attraction of this investment is that it’s secured by a first mortgage over the real estate that you invest in. This provides the potential for a stable income return, backed by ‘bricks and mortar’ security.

Understanding the rate of return

There are several factors that can impact the rate of return. Here are some of the key things to consider:

  1. The quality of asset securing the loan

Considerations

  • Where the property is located

  • The loan to value ration of the transaction

  • The security type (residential, commercial, industrial, land)

  • Income status of the asset and is there a lease in place?

  1. The strength of the borrower

Considerations

  • How strong is the asset/liability statement?

  • What experience does the borrower have in property development?

  • What is the sponsor/guarantor’s credit history?

  1. Borrower income verification/serviceability

Considerations

  • Can the borrower produce company financials?

  • What individual/guarantor income can be verified?

  • What is the term of the lease (if a property is rented out)?

  1. Exit strategy from the loan

Considerations

  • How likely is it that the borrower will be able to refinance the loan to another lender?

  • How easy/difficult would it be to sell the property security?

  • How long would it take to sell the property security?

  • What would the expected settlement term be?

Is private real estate debt right for you?

At AltX, we offer a range of investment opportunities secured by registered 1st mortgages. Investors can self-select based on their preferred investment criteria. Since inception, 100% of the interest and capital on all investments has been returned to investors. To learn more about real estate debt and how to unlock alternative investment opportunities with AltX, visit here.

Get in Touch

AltX is an online investment platform offering alternative income – generating investments, delivered seamlessly.

Disclaimers

AltX Pty Ltd (ACN: 618 796 115, AR no: 1270087), is an authorised representative of AltX Funds Management Pty Ltd (ACN: 113 502 604, AFSL no: 291314). The information on this website has been prepared for accredited wholesale clients – only who are interested in learning about the different products they can access via AltX. This information is factual information only. Any displays of potential investments are for example purposes only, and may not actually be available to investors. It does not take into account any of your personal objectives, circumstances or needs and does not constitute financial advice. Choosing an investment is an important decision and, before making any investment decision, you should consider obtaining financial advice, always read the disclosure documents as listed against every deal on the AltX investment platform and understand the associated risks as explained as on the AltX investment platform. 

Past performance is not an indicator of future performance. Expected or forecasted returns may not reflect actual performance. Any displays of potential investment opportunities are for sample purposes only, and may not actually be available to investors.

The information on this website does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information contained on this website is a recommendation to invest in any securities.

AltX Pty Ltd is not a bank and is not regulated by the Australian Prudential Regulation Authority, and investing in AltX products is not the same as depositing money in a term deposit offered by a bank.

© 2024

AltX Funds Management Pty Ltd

AltX is an online investment platform offering alternative income – generating investments, delivered seamlessly.

Disclaimers

AltX Pty Ltd (ACN: 618 796 115, AR no: 1270087), is an authorised representative of AltX Funds Management Pty Ltd (ACN: 113 502 604, AFSL no: 291314). The information on this website has been prepared for accredited wholesale clients – only who are interested in learning about the different products they can access via AltX. This information is factual information only. Any displays of potential investments are for example purposes only, and may not actually be available to investors. It does not take into account any of your personal objectives, circumstances or needs and does not constitute financial advice. Choosing an investment is an important decision and, before making any investment decision, you should consider obtaining financial advice, always read the disclosure documents as listed against every deal on the AltX investment platform and understand the associated risks as explained as on the AltX investment platform. 

Past performance is not an indicator of future performance. Expected or forecasted returns may not reflect actual performance. Any displays of potential investment opportunities are for sample purposes only, and may not actually be available to investors.

The information on this website does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information contained on this website is a recommendation to invest in any securities.

AltX Pty Ltd is not a bank and is not regulated by the Australian Prudential Regulation Authority, and investing in AltX products is not the same as depositing money in a term deposit offered by a bank.

© 2024

AltX Funds Management Pty Ltd

AltX is an online investment platform offering alternative income – generating investments, delivered seamlessly.

Disclaimers

AltX Pty Ltd (ACN: 618 796 115, AR no: 1270087), is an authorised representative of AltX Funds Management Pty Ltd (ACN: 113 502 604, AFSL no: 291314). The information on this website has been prepared for accredited wholesale clients – only who are interested in learning about the different products they can access via AltX. This information is factual information only. Any displays of potential investments are for example purposes only, and may not actually be available to investors. It does not take into account any of your personal objectives, circumstances or needs and does not constitute financial advice. Choosing an investment is an important decision and, before making any investment decision, you should consider obtaining financial advice, always read the disclosure documents as listed against every deal on the AltX investment platform and understand the associated risks as explained as on the AltX investment platform. 

Past performance is not an indicator of future performance. Expected or forecasted returns may not reflect actual performance. Any displays of potential investment opportunities are for sample purposes only, and may not actually be available to investors.

The information on this website does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information contained on this website is a recommendation to invest in any securities.

AltX Pty Ltd is not a bank and is not regulated by the Australian Prudential Regulation Authority, and investing in AltX products is not the same as depositing money in a term deposit offered by a bank.

© 2024

AltX Funds Management Pty Ltd

AltX is an online investment platform offering alternative income – generating investments, delivered seamlessly.

Disclaimers

AltX Pty Ltd (ACN: 618 796 115, AR no: 1270087), is an authorised representative of AltX Funds Management Pty Ltd (ACN: 113 502 604, AFSL no: 291314). The information on this website has been prepared for accredited wholesale clients – only who are interested in learning about the different products they can access via AltX. This information is factual information only. Any displays of potential investments are for example purposes only, and may not actually be available to investors. It does not take into account any of your personal objectives, circumstances or needs and does not constitute financial advice. Choosing an investment is an important decision and, before making any investment decision, you should consider obtaining financial advice, always read the disclosure documents as listed against every deal on the AltX investment platform and understand the associated risks as explained as on the AltX investment platform. 

Past performance is not an indicator of future performance. Expected or forecasted returns may not reflect actual performance. Any displays of potential investment opportunities are for sample purposes only, and may not actually be available to investors.

The information on this website does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information contained on this website is a recommendation to invest in any securities.

AltX Pty Ltd is not a bank and is not regulated by the Australian Prudential Regulation Authority, and investing in AltX products is not the same as depositing money in a term deposit offered by a bank.

© 2024

AltX Funds Management Pty Ltd