By Cam Harper*
As we all read headlines about record-setting inflation rates, OCR increases, share market falls and house price fluctuations, it can be hard to know which way is up for investments.
It means getting good financial advice and keeping up with your investment options are more important than ever.
Owning property has historically been a pretty sure fire way to make money in New Zealand, with relatively little risk and not too much input.
But as the housing market changes, the bright light test remains and landlords need to abide by things like healthy homes standards, owning a property outside of the family home isn’t quite as alluring for many Kiwis.
These shifts in New Zealand’s economy are part of the reason my team and I are so focused on giving Kiwis investment choices with good returns and tangible security.
Investing in property, without owning property
Gone are the days where you need to actually own a property to make money off houses in New Zealand.
With more than 25 years’ experience, we run a specialist lending division that identifies high quality, short-term lending opportunities, across residential housing and construction projects.
When a loan application passes internal approval processes, we lend our own money to the property owner and then load the loan up on our online portal for investors.
We lend at conservative loan-to-value ratios of up to 65% of the completed value of construction projects and up to 70% for residential refinance. This gives investors a buffer if things change during the loan period.
It’s these loans in houses and construction projects that Kiwis invest in. Kiwis don’t invest in Southern Cross Partners. Instead, they choose the specific project they want to put their money into.
Currently, investment interest rates start from 6% per annum, but these are subject to change and availability.
Click here to find out your potential investment income.
How we source investments for you
Most of our loan applications come through mortgage advisers that we’ve worked with before. Generally speaking our customers can’t get lending through banks for legitimate reasons and come to us for a short-term loan to see them through.
An example of this is a couple who had bought an investment property off the plans through their trust.
The property is a townhouse and they had pre-approval from the bank. After they’d paid the deposit there were construction delays, and by the time the townhouse was complete the bank’s appetite had changed and they wouldn’t fund the purchase.
The couple had to settle, but the bank wouldn’t give them a loan. They got a short-term loan with us, secured the townhouse, got everything in order and went back to the bank.
We are very careful about who and what we lend on. When mortgage advisers bring us loan applications, we look at four main things to assess if it’s right for our investors.
A clear exit. We need to know how a person is going to exit their loan with us and when that will be. Ultimately, it’s about making sure people can repay their loans at the end of their lending term.
Realistic repayments. We’re looking to see if the person taking out the loan can easily make their repayments with us.
Loan to value ratio. The difference between what a property is valued at and how much we are lending gives us a buffer in case the property needs to be sold unexpectedly.
Current valuations. Sometimes we’ll have an independent valuer involved and other times we’ve got enough data from other sources. What’s most important is that we can explain to our investors how we decided on the valuation.
This cautious approach to lending has served us and our investors well during the last 25 years, to learn about Southern Cross Partners’ investment opportunities click here.
Disclaimer: All investment opportunities are subject to change and subject to availability. Southern Cross Partners Ltd is licenced to provide Peer to Peer lending services under the Financial Markets Conduct Act 2013. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with a financial adviser before making any investment decisions.
* As Managing Partner of Southern Cross Partners, Cam Harper leads both the lending and investing sides of the business. He is passionate about helping New Zealanders achieve real financial freedom through specialised lending and secured investments.
