Joint Venture Example

Via our alliances with property developers we have access to new built stock in high growth areas in QLD, NSW and Vic. These new homes are purchased by our JV and on-sold, with Vendor Finance. These Joint Ventures are structured as follows.

You, our Joint Venture Partner, purchase the property for, say, $439,000, i.e. the title* of the property is in your name. JV Property Partners then on-sell it to a vendor finance purchaser, manage the new purchaser’s loan (under the provisions of the National Credit Code) and later help them refinance into a traditional loan.

In this example our JV Partner purchases the property with a 90%, principle & interest loan, at 5.2%. They inject $53,780 to complete the purchase, i.e. $43,900 as the remainder of the purchase price and $9,880 in other purchasing costs.

If the new purchaser refinanced into a traditional home loan at the end of year three, the expected returns would be:

Total Return $23,878
Total Outlay  $53,780
Total % Return  44.40%
Annualised % Return  13.03%

If the new purchaser refinanced into a traditional home loan at the end of year four, the expected returns would be:

Total Return  $30,262
Total Outlay  $53,780
Total % Return  56.271%
Annualised % Return  11.81%

If the new purchaser refinanced into a traditional home loan at the end of year five, the expected returns would be:

Total Return $36,593
Total Outlay  $53,780
Total % Return  68.04%
Annualised % Return  10.94%

‘Numbers’ For Each Property
Every property transaction is different, so we supply our JV Partners with a Calculation Sheet on the particular property we have at the time.

We calculate this Sheet over a five year period and, on average, see our new purchasers refinance to a traditional loan in year three to five years.

We help with this refinancing by monitoring their loan via our in-house Loan Management division.