Anyone been with Armchair Development for investments? They are promising 20%+ return on investment.
In theory it works and legit on paper. PDS checks out but can't read any reviews.
I was wondering if anyone had dealings with them? Positive negative etc
Thank you
<Mod: link to PDS removed>
It's nothing new. It's big shots buying big land and then sub dividing and we get a piece by investing as not all financing can be done via banks.
I'm sure it's legit and in an another level of Investing
If 'investors' are really just mezzanine financiers then they carry a higher level of risk - which is reflected in the claimed return I guess.
This.
I'm sure it's legit and in an another level of Investing
If you are so sure why are you asking here?
Or are you spruiking this company?
The Tweed Heads development is claiming expected returns of 30.47% pa…???
I find those numbers very interesting since rental yields in TH are around 3.6% and prices have been pretty flat for the last twelve months or so…
I'm sure its a great investment - until it isn't.
Did you consider the softening market and the ALP's changes to negative gearing?
If the investment was such a sure thing they'd have no problem getting loans from banks. I would say it is a lot more risky than they're letting on.
This..If they can't get finance through a bank, you want to ask yourself why would I invest money with them.
Even with 100% pre-sales and massive equity I have seen people not being able to get loans for development.
Also does a bank want to see 'hurt' money?
Ignorance with this answer.
Really? If you show me a resi development with 100% pre-sales (we are talking fully funded pre-sales, not a small deposit in lieu of full funding) and "equity" that is allowed to be held as collateral, i'll show you bank funding for days.
I think your "people" you speak of might have tiny pre-sales deposits with weak easy out contracts for buyers and want to fund their development unsecured (or recourse to the development only).
If it was such a sure thing they'd be getting their family and friends to invest. Why make random strangers richer? But do what you want with your own money.
I asked the same question
Looks like there is never enough money to go around
@Poor Ass: The reality here is NO ONE offers those sort of returns without you taking on a considerable risk. If it was such a sure bet they would have wealthy investors falling all over them for far less. When something seems to good to be true it probably is. go look up those guaranteed returns on whisky businesses that were a sure thing just a couple of years ago or the many other scams where people did not realise they were basically financing a high risk gamble.
PS: have you looked at the fees section of that PDS, they seem to be massively loaded up with fees. The only winners here will be those running the thing.
@gromit: yeah i know those whisky scams
yes the natural feeling is too good to be true
but this is just one company that does it… there are a lot more companies that do the same.. now i'm sure they are not all related parties but why would they be all doing it… doesn't seems like the hey you got a virus on your computer give me your credit card to fix kind of scam
difference is this is physically something you can see… accreditation, offices with real employees… AFSL, people with reputation to lose. Feels a bit of extreme to prepare this well written PDS for a ponzi https://wefindhouses.com.au/uploads/documents/East-Estate-Of…
the return is not guarantee as they carry risk like equities and other funds
thanks for the input
@Poor Ass: I wasn't suggesting it was a ponzi scheme (like others), merely pointing out it comes with considerable risk, especially as you are paying an upfront fee of 5% just for the right to invest and then ongoing management percentages as well. plenty of investments that are legit have 20%+ returns but you just need to be aware they also come with far greater risks.
@gromit: oh so they said and I probe them that the 5% is returned after first distribution (sounds dodgy) I know
the development company cops the all the fees and no fees to the investor
yes I understand the risk (heaps of risks)… could lose everything
@Poor Ass: So the 5% is just an interest free loan to them? I would want that in writing that you get that back. regardless you still have a lot of other fees, I find it hard to imagine an investment with high risk and an annual total fees of around 7% can be a good investment. It seems those running this have nothing to lose as even if it goes bust they collect the fees while you are explicitly listed as an unsecured investor so you get whatever is left after everyone else gets their cut.
@gromit: yes they get the fees regardless
"Up to 5% + GST of the application monies received and accepted by the Investment
Company. This fee will be refunded by the 15th of the next monthly distribution cycle after
the investor’s investment has been made"
page 64
investment company (bunch of investors that has units in the investment company) doesn't pay the fees…the development company pays them
yes I am sceptical too. but i have to say it is professionally written.
@Poor Ass: Bernie Madoff's investment company turned out to be a Ponzi scheme after having taken in over $60 billion in investments over 30 years.
A fancy PDS doens't mean squat.
@arescarti42: What about the real accountants, lawyers, afsl, real estate licences on the PDS with legit qualifications and people that have everything to lose?
@Poor Ass: You realize that lots of companies try and do this type of funding because it is actually cheaper than bank funding? When someone will give you money for free with no recourse if the money is lost, that is a lot better deal than you'll get from a financier. Yes they promise beig returns, but in the end if something does go wrong, you lose all your money.
These guys can probably get financing through an FI, but if you don't need to tie yourself up with that, why do it? Easier to get people to give you money for free with a promise of a big return to them if everything works out as planned.
@serpserpserp: no no bank funding is the cheapest
yes can lose all money we both agree to that
like most investments, risks are not stressed enough because if it is then everyone would be scared to invest
@Poor Ass: Unsecured mezz bank funding (if you can get it) you'll find is not that cheap at all.
What I am saying here is that this funding is "cheap" because you don't have to pay upfront fees, ongoing interest or have anything secured etc. because people are giving you their money for free, unsecured, in the hope of at some stage getting 20% back.
For the developer this is in fact the best money you can get. The only costs is in the advertisement/admin and the long long lead times into getting the funds you need.
@Poor Ass: Oh wow really? What developing have you done with mezz funding? What leverage financing team have you worked for?
@serpserpserp: bought an old house on LMR land and demolished it and built apartments.. then australia had an oversupply problem
funding was through la trobe and the rest with mezz funds
i haven't worked for a financing team
hope you weren't being sarcastic
@Poor Ass: I wasn't being sarcastic. But at least I know where you are coming from with your experience. I can see why you are asking questions on a forum as opposed to asking them to the business themselves.
Good luck with it all.
@gromit: Actually many mezzanine financiers are wealthy (funds from Singapore a lot of the time).
However it is a flavor of the month type of thing, where they stop funding All deals because they can see higher returns elsewhere or because fear.
Also you need a certain size, and smaller development obviously don't reach this size requirement.
Also location restraints (so anything outside CBD, that is not triple net lease to a Major (wool/coles) does not get a look in.
You seem to have your mind made up about this already, and as an adult what you do with your money is up to you.
But it's a rather pointless exercise to ask for opinions from others then play devils advocate to every reply you get.
PS. If this was such a sure thing then there are a lot of people out there with a lot more money to play with who would be all over these opportunities.
I am still sceptical and have not made up my mind yet
thanks for the input
I would treat this like a rabid pittbull.
avoid at all costs.
if it was so spectacular then why isn't some multi-million stepping in with cash?
however, if you want to go ahead with doing it then I can do a pre-investment consultancy package for $25,000.
I recently had a friend who had to deal with the fall out of an "investor package" deal. he was a victim. the perpetrators - who would appear very qualified/legitimate -stole approx $13,000,000 from investors.
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Lots of buzzwords. Sounds about right.
Any free trials?
Lol how did you come up with the gibberish
@nfr: googled -"business bullshit buzzwords" and, because there are so many, it was so easy to add them together to create that train wreck of utter shite.
which is even easier when OP posts garbage like "Rich are already doing it themselves but they are not looking for investors because they can fund themselves" but here is an opportunity to make 20% return on investment - I guess no rich person wants only 20%. that's for amateurs. 30% or GTFO
and again, if these people are so successful and they have done it so many times before then why aren't the previous investors lining up to re-invest? because the previous investors would have made so much money then they could reinvest their profits without concern for loss.
@altomic: You do know when I said the rich I meant like your Westfields and Stockland fully funding themselves without small time investors
Vs the Armchair development (small business) looking for residual funding for land sub division that the original land was purchased many years ago (fully funded) which the value has appreciated. You can physically go to tweed heads and see it and land sales have started all on realestate.com.au
There's hardly any companies that do it and these funds are fairly new. It's like comparing Hyundai and Kia back 20years ago no one will touch them vs now acceptable.
I know you have a mind set of it's too good to be true but everything has to start somewhere. If anyone is skeptical it will be me. I also have a degree in accounting and financial planning but that doesn't gain you experience. Been practicing advisory for 10 years, and I won't recommend this armchair but personally I was seeking comments from people who have invested in them not regular keyboard warriors
I won't recommend this armchair but personally I was seeking comments from people who have invested in them not regular keyboard warriors
On a bargain website? This is where you start?
@altomic: I know a builder that is wealthy. Does he look for outside investors? No.
I asked him why, he told me that they are too much effort and too annoying/demanding.
As such, he does miss quite large opportunities but he just goes why bother (he sold land at Golden Beach about 5-6yrs which could of accommodated a very large apartment complex). He could of done with outside investors at the time but didn't even bother (couldn't do himself as to high LVRs, esp with a new project on top).
So investors don't even get to invest with him, much less invest profits with him in the next project.
Don't worry though, his asset position is now excellent (LVRs 35%-50%), so don't cry for him.
Also from what I've seen (multiple times) most investors seem to get taken in by salesmen/persons and not investment reports and legal documents (which talk about the type of security you get), which is quite sad and shows how unsophisticated we are. (where we will buy on the emotion that someone talks us into and not based on the logic from docs).
No deal. In your work experience you havent even "disrupted various industries". Pass.
This guy is seriously trying to talk himself into it. If you are not going to take advice I suggest you not ask for it.
Look their main business is very reputable.
It sounds like you're selling for them or is it the case that you're trying to sell it yourself?
I am not. I don't have anything to gain.
@whooah1979: I'm doing research and looking for people who have invested in them so not really looking for regular comments sorry
Its not that they hide their secrets, rather the system is against a certain type of investor and when the rich see that, they don't play the (same) game, rather they find other ways to invest for a positive expectancy.
For example day trading major currencies pairs does not work, yet many retail traders believe it does.
All day trading does is make the (for example CFD) provider rich or brokerage (esp. if they take the opposite side of the trade).
Its like options - people buy an option on the hope they will get a big win (so buy far OTM options), but they almost never do because of time decay. Thats why most options expire worthless.
OP, people are raising red flags on this yet you are defending the company. Perhaps you are steering towards doing so, might as well do it if you are fishing for an answer tbh.
If 30% return yield is true, this would be either done by the dev and inv; no need to draw in the masses.
First up, i didnt neg you. Secondly have you thought the return, not on your 50k but in a larger scale? 50k investment is considered a small fish unfortunately. Lets say we take off the cream and assume 20% return on 10 million, thats whooping 2 mil return in a year. I must say thats a huge return
It is small I'm saying majority of people don't have that. Yes it is true.
The investment is capped once target is reached
@Poor Ass: You run a post here as licensed financial advisor and you ask about a 20% plus investment opportunity.
https://www.ozbargain.com.au/node/447589
Surely as licensed advisor you should understand ponzi schemes….
These schemes pop up all the time and all use the lines like…..
Money is needed elsewhere….
This is a secret only the big boys know, so its fair you can get your share….
Look we can show you others who are making that right now….
How do I know? My parents fell for the same lines 20 years ago, others fall for this today.
One thing for sure I wouldnt be asking you for licensed advice
@RockyRaccoon: That's ok we don't know each other
I don't discriminate against investment opportunities nor am I recommending this product to anyone. I look at facts, accreditation and previous successful dealings which I'm trying to find the success dealings part
If you understood the background of the investment and the previous business dealings of their parent company which is quite reputable and I also have dealings with (buyers agent). If a Ponzi, why would the guy throw away his lifes work and everything the organisation has work up to plus gaol time
Returns might be ridiculously high but you can't just call it a ponzi until proven.
Let's not get your parents involve.
@RockyRaccoon: Also not I have participated in 20%+ returns successfully before in investments..not this product but that one wasn't a ponzi
@Poor Ass: You do realise that with a ponzi scheme the early "investors" get paid out, it is only the latter ones that miss out. Just because you got paid out doesn't mean it wasn't a ponzi scheme.
@Quantumcat: Yep.
But there is a set time period not an endless fund
Would it help if I said it was a product from the big 4?
For development finance I've seen something similar (half investment $5m, half the return of example investment $900k).
However outside CBD Syd, Melb so all institutional investors not interested (still good project tho).
Maybe the OP has a vested interest in promoting this?
Just saying;)
You sound sold on them so go for it and report back to us all later on how you went.
Quite a few years back I put some money in debentures at 10% PA when average interest rates at the time were like 6%. I was in for only 2 years then I withdrew the money coz I needed it elsewhere.
Anyway a few years later I googled the company and saw that they had gone under and many investors were looking to lose all their money.
Just shows that not everyone loses from high risk investments. But I think I was just lucky in that case.
I'm quite risk averse nowadays so I'll give it a miss though, thanks.
Wouldnt be here if I was sold
I'm looking for people invested with them
Stock market is dead in Australia
Aren't you a licensed financial adviser so shouldn't you be giving the OzB communtiy advice rather than asking for it?
Also isn't your request to "don't comment if you are not their client" a bit harsh? I mean isn't this meant to be a community allowing open discussion and restricting comments is not really going to fetch the best outcomes for its members is it?
Harsh yes but this time it was for me only
Advice goes both ways and yes I can ask
@Poor Ass: I think you have your mind made up already. The challenge is for people here to talk you out of it. You're playing a dangerous game.
What do you mean Market is dead? Market is always alive Bear or Bull…
The only Fund I've heard of return consistent 20-30%+ a year for a long period is Medallion Fund from Jim Simmons. 20% p.a guaranteed for how long? if you are in the right mind, you will feel that it's too good to be true.
asx compare to overseas markets is more dead I mean
most blue chips are reaching back what it was 10 year ago so would be dividend income rather than capital
i don't discriminate on investments
@Poor Ass: What on earth are you talking about?
S&P/ASX 200 April 1 2019 - 6217.0
S&P/ASX 200 April 1 2009 - 3579.7
The ASX200 is up 73% on what it was 10 years ago!
No way the stock market is dead. I bet you 10 years from now the ASX will beat this armchair thingy of yours.
it's not mine
and yes it is proven that stock market has never gone backwards but depends how much time you have
too good to be true.
I think even madoff was only promising 12% pa to people in the end,good luck.
make sure this is extra money you can afford to lose.
Yep invest what you can afford to lose right
I can get 7-8% p.a. on first mortgagee investments
Sure you can… with ~5% default rate Low doc applicants? No thanks.
20%… *cough*ponzi scheme*cough*
lol yeh it does but qualified
I'm just seeing if anyone has done it
Sounds too good to be true hey.
I've invested in something similar but higher returns. But at the end wasn't a Ponzi. Isn't it a only ponzi when someone has been charged
I've invested in something similar but higher returns. But at the end wasn't a Ponzi. Isn't it a only ponzi when someone has been charged
Somehow, I don't think I would use you as a financial adviser. Ever.
High risk Big 4 product FYI
@Poor Ass: Nonsense.
Since this has supposedly come and gone you can tell us what it was and with what bank.
There is no big 4 bank that is running retail investment schemes that promise over 20% returns.
you sounds more like a judge than a financial adviser.
"a person cannot be considered criminal until proven guilty"
presumption of guilt also exists in some countries buddy
@Poor Ass: in relation to law, yes.
but sometimes something like ponzi scheme can be clear as day.
a little example, you receive an email from Nigerian prince, you can tell straight away that it is a scam, you don't have to go to court and ask for a guilty verdict.
I'm not saying that this is a ponzi scheme.
Ponzi Scheme is a high risk 'investment' but not all high risk investment is ponzi scheme.
So how does this work exactly, like the Dakabin Crossing packages, you invest $50,000 and get $10,000 a year return back paid monthly plus your original $50k at the end of the term? Certainly sounds too good to be true.
Something like that
The guy is legit but I'm trying to find existing clients
Have you thought about asking the business for customer referrals? They might offer their best mate to talk to, but at least it is a starting point.
My warning is if you've got your mind made up and you're trying to get us to talk you out of it. Good luck.
Ta
We have provided money on a 20% pa loan to a property development company. They need the money to fill the gap that the banks won't lend them. The company is a small one and we know the management and it wasn't/isn't open to anyone. So far they've paid every month and we're very happy with the arrangement. But we are at their mercy as to when they pay it back and I doubt we could get it quickly - this probably wouldn't be possible without replacing the funds from someone else. We're expecting to be paid back after a future settlement, however they've rolled over the money into subsequent deals and have kept the arrangement in place. Works for us. We love the return. We have a personal guarantee from the directors as security for the loan. They have nice houses.
Strange.
This comment is VERY similar to one I made a few days ago and for which I was given a day in the sin-bin.
And yet - this is still here.
And we wonder why the culture here on Ozbargain is toxic…
can you link me mate?
yeah people here can be brutal
Not even Bobby may promise returns like this.