Property investing in Australia has changed a lot in recent years — that’s why we launched ResiFund.
While the ResiFund model is well established overseas, it’s still somewhat new to Australian property investors.
So we’ve answered the most common questions we get from investors about how ResiFund works, who it’s suited to and how to get started.
(Prefer a PDF? Download our Intro to ResiFund Guide here.)
What is ResiFund?
ResiFund has become a unique way for our investors (individuals, SMSF’s, Family Trusts and companies) or advisers, to gain exposure to a diversified portfolio of quality Australian residential property. Our investors currently invest anywhere from $1,000 to $500,000 and the average investment is around $30,000.
Investors have a stake in all ResiFund properties, which are spread across different states, properties and tenants. This makes the entry point into the Australian property market much more accessible than the typical home deposit amounts, much less taking on a full property mortgage and servicing the loan.
Plus, the greater accessibility of not having to meet the same lending requirements and approvals involved in buying a property means fewer hurdles for investors to get started.
Why we launched ResiFund
Our founders are specialists in Australian residential property, with a 20-year track record of property investing success. ResiFund has been independently rated twice by Independent Research House, SQM. As major investors in the fund ourselves, we are fully committed to achieving long-term success for you.
We started ResiFund because we saw a lot of investors who couldn’t afford to get into the property market or achieve diversification. Many of these investors were also unable to find a property investment that could help grow their wealth over time through progressive investments.
Before ResiFund, we knew many investors who were having to seek significant family assistance to try and get cash together to buy an investment property. Or if they didn’t have enough to get into the market, they were just sitting on the sidelines and not investing at all.
We realised that there were no truly professionally managed residential property funds in Australia that generated rental income for investors. This is amazing, because around the world, the option to invest in residential property through property or managed funds is one of the largest and most professional forms of institutional investment, to help build retirement savings.
So we were able to use our decades of property investing expertise to create a fund that allows investors to invest right alongside us. Today, we are the largest investors in ResiFund and other investors can benefit from all that knowledge and experience, and what we believe is the best strategy that you can use in the Australian property market.
Who’s investing in ResiFund?
We already have a wide range of investors in ResiFund, including direct investors, family trusts and SMSF’s. Our investors come from all ages and walks of life including young investors trying to get into the market, sophisticated investors who see this as a better alternative to buying an investment property, SMSF’s seeking a diversified property investment and retirees seeking income returns.
Many of our smaller investors have invested in ResiFund, as they were trying to get into the property market and didn’t have enough for a deposit or property purchase just yet. Investing with ResiFund has the potential to help these investors purchase their own properties faster with savings, market growth and rental income.
Another notable group of our current investors have been retirees, who we understand are seeking regular income returns significantly above current cash interest rates. These investors also typically no longer want to take on personal debt, or invest directly in, or manage, additional properties. ResiFund takes care of (almost) everything for them while still allowing them to invest in a type of investment they feel very comfortable with.
We also have around 1/3rd of our current investors investing through SMSF’s. ResiFund is an eligible investment for SMSF’s. While we cannot provide any advice for SMSF’s and like all investors, SMSF’s should seek independent advice before making a decision to invest, we know many of our SMSF investors have invested due to the greater property diversification we offer, relative to owning a single investment property. Many of our SMSF investors have also invested due to the fact they don’t have to borrow money to invest in residential property.
Even property investors with an existing portfolio have become investors in ResiFund, either due to the fact they cannot borrow additional money or due to ResiFund providing investment in types of residential property which they don’t currently have an investment in, like co-living.
Who’s Investing in ResiFund
▶ New and emerging investors seeking to invest in residential property in an affordable and profitable way
▶ Experienced property investors who saw ResiFund as a strong alternative to buying an investment property, and without the requirement to borrow money
▶ Investors seeking regular income
▶ SMSF’s who have been seeking more diversification than through direct property investment
▶ Parents building up investments for their children so they can enter the property market
▶ Advisers seeking property allocations for their clients, without taking overweight positions and diversifying from purely commercial property or listed investments
Ultimately, we have seen ResiFund work for investors across a wide spectrum of situations. From the investors who want to “set and forget” and not be too active, they’re just happy to get the regular income returns with the potential for capital growth, to investors who are very active and really want to understand the residential market and principles and strategies, we’ve used to achieve success for many years.
We absolutely believe that investors in ResiFund, who follow the information we provide and learn about the strategies that we share through our market updates and our acquisitions will be better positioned to take their own investment journey beyond ResiFund if they choose to in the future.
Advantages of ResiFund vs. owning property
For investors who have enough money to buy their own investment property, we don’t necessarily discourage them from doing that. That’s obviously a decision that investors need to make with informed advice.
That being said, today’s market is very different than the market in the late ‘90s, when we started investing in property. From the lending environment and valuations, to pricing and competition, it can be quite a challenge to start and grow a successful property portfolio these days.
Today what we’re seeing is that more investors are reaching a ceiling to their property investments if banks won’t lend them more money to buy another investment property. Some are using ResiFund to supplement their property investment portfolio for a greater share of the property market. So they’ve got their own properties, and they’ve also got ResiFund working concurrently for them.
How ResiFund Compares to Traditional Property Investing
▶ Lower minimum investment: Start from as low as $1000
> Retail units ($1k-$100k) or Wholesale units (+$100k). Our average investment is currently around $30,000 but some investors have invested as much as $500,000
▶ No major deposit or loan required
▶ Greater property diversification to manage risk
▶ Aims to outperform returns from traditional residential properties
▶ Investing options include types of residential properties unavailable to most investors
▶ Co-investing with one of Australia’s most successful residential property investment group
It’s also critical to understand the impact of diversification: investing in multiple properties means you’re not just relying on one tenant and one income stream, and the things that can go wrong there, which certainly can happen.
Getting to multiple properties can be harder in many ways, and as a result, the number of Australians who own three or more investment properties is a very small percentage of the population.
One of the key benefits of ResiFund is having a very diverse portfolio of properties with different types of tenants paying rent.
ResiFund is also a cash flow positive investment, providing quarterly income returns as well as potential capital growth. Importantly, investors can steadily increase their investment in ResiFund over time as they build savings etc, unlike a “one-off” residential property investment. This can be achieved through a range of ways such as our Regular Savings Plan, or by simply increasing their existing investment at any time. This can be far more efficient than an investor having to wait until they can save for a first or perhaps second or third investment property.
In addition, as there is no requirement to borrow money, investors are not committed to paying monthly mortgage payments over say 20 or 30 years,for example, should their circumstances change or be in an unfortunate position, like losing their job.. With ResiFund, investors can invest an initial amount and even if they choose to make additional regular monthly investments, they can always discontinue that, should they wish or need to, unlike mortgage payments.. That’s one of the major differences between having an investment property portfolio and investing through ResiFund.
Advantages of ResiFund vs. investing in listed shares
ResiFund is an unlisted property fund, which means that it doesn’t trade on a stock exchange like the Australian Securities Exchange (ASX). When something trades on an exchange like the ASX, it means that the share price or the unit price is set by the market for those units on a daily basis, by investors buying or selling those shares or units.
When we hit a bit of market turbulence like we saw through 2020 due to COVID, for instance, it can bring a really rapid fall in the value of shares. If share prices drop really quickly, people’s wealth can also be eroded quickly by those market forces which may have had little or nothing to do with the underlying performance of the assets.
While there are significant differences between listed and unlisted investments, the value of unlisted property funds has historically been much less volatile than listed shares (Source RIA), as we have seen during Covid. This fall in share markets and substantial volatility of the ASX during Covid, was due to prices being largely set by investor sentiment, rather than necessarily on underlying asset values or investment fundamentals.
In contrast, the unit price for ResiFund is set in relation to the value of the underlying assets (e.g. properties) on a monthly basis. Every month ResiFund’s assets are valued to set the unit price.
Although ResiFund should always be considered a medium to long term investment, it has achieved 10% p.a net return since inception to March 2021. And while its always important to recognise that past performance may not be indicative of future performance, it does represent an excellent result and helps reinforce the merits of this type of investment.
As most investors would be aware, property investments are generally made for at least several years, for several reasons, such as recouping costs like stamp duty. Consistent with that, while ResiFund is not currently permitting withdrawals, ResiFund intends to give investors an opportunity to redeem part or all of their investment, should they wish, in Nov 2023, or around 2 years from now. At that time, investors would be selling (redeeming) their units based on the value of the properties at that time, which is reflected by our monthly unit price.
How has ResiFund performed and what are we aiming for?
ResiFund aims to achieve a 10% per annum total return (net of fees and expenses, before tax) over the long term, including income and capital growth.
The ResiFund total return since inception (March 2019) has exceeded that target, returning 20.4%, or over 10% per annum to March 2021, significantly outperforming the residential property market.
We spent years refining our investment objective and strategy, before making this investment opportunity available for investors. Management of ResiFund is based on our own successful investment property portfolios and uses the most professional methods used in managing property funds. And consistent with that, we are now the largest investors in ResiFund, as we see this as an even a better way for many investors to invest in residential property. We only wish we had launched ResiFund 20 years ago!
Our investors love the fact that they’re getting quarterly income returns from rental income, and that it comes from a substantial number of tenants, which reduces their risk and should provide more consistent income than from an individual property investment. It’s like a positively geared property, and has also consistently been generating capital growth since inception. Even through the COVID period, ResiFund’s total net return for the year to 31/12/2021 was 12.5% (income & capital growth) which was much better than most other investments during the same time. Our strategy doesn’t simply rely on traditional property market house price growth, but also the value that we add through our expertise that allows us to aim to identify properties which can outperform the Australian residential market. We have certainly achieved that so far and while past performance is not an indicator of future performance, we are confident we can continue to do that over the long term.
Investors considering ResiFund should view it as a medium- to long-term investment. Like any property investment, most investors don’t go and buy a property with the hope of selling it the next day, but want to be there to benefit from capital growth over time.
Since we launched ResiFund over two years ago, the number of investors has substantially grown and significant number of them have increased their investment -and they tell us that, with the returns and diversification that they’re getting, they’re likely to stay in the fund for a long time as well.
Over the next few years, we aim to see ResiFund expanding to have an even more diverse range of properties, having hundreds and hundreds of people paying rent. And with that, being able to add value far beyond what a typical investor could do with their own portfolio.
How can you start investing with ResiFund?
Once an investor chooses to invest in ResiFund, they complete our five-minute online application form.
After completing the application form and transferring the application money into the account, they’ll start earning an investment straight away.
As soon as an investor completes an application and funds are received, they receive a 10% per annum return on that money until they are then allotted units at the start of the next month. Thereafter they become unitholders in ResiFund, like being a shareholder in a company and are then entitled to their proportion of all the income and capital growth across the whole property portfolio.
While we’ve made the process as simple as possible, we’re always happy to help. Potential investors can download our full ResiFund PDS here.
Want to speak with us about investing in ResiFund? Contact us or call 0439 586 964 now.