The case for alternative property assets: DomaCom

When most people think of investment property they think of residential, commercial or industrial property, but there are many sub-sets of these in almost unlimited geographic locations, so choice can be difficult. There are a range of metrics like population and economic activity that influence different property types and geographic areas impacting rental yields and growth potential, all adding to the complexity of choosing a good investment property.

Alternative property assets, which are sometimes categorised as thematic, can be a combination of interests in the land and/or improvements to the land and can include agriculture or farmland, land zoned for future use (eg residential), property allocated for specific uses such as renewable energy, affordable housing, logistics, social infrastructure, leisure and tourism etc. Investors can own land on its own, land plus improvements, or lease the land and own the improvements.

Alternative property assets are a viable option given values for residential and commercial property have been rising for some time, and retail is under pressure. There are always opportunities in alternative property, we just have to find them, and then find a way to participate in them. Due diligence is paramount to understand the merits of the opportunity, in other words the business model and the financial attributes.

How can you invest in alternative investment properties?

Without a large capital base or at the very least a substantial debt, it’s difficult to invest direct, and even if you have a large capital base, why would you put all your money into one property?

There are options where you don’t have to invest in a physical property such as A-REITs and Unlisted Property Trusts, but they don’t always reflect the pure performance of property (rent and capital growth) and they offer little or no choice to the investor.

This is where crowdfunding can add value.

Crowdfunding is a modern form of syndication. It lets you choose a variety of property investment opportunities thereby diversifying across property types and geographic locations, and engages independent due diligence. In other words, you can diversify property investment in much the same way as you diversify share investments across different companies and industry sectors, which is the best form of risk mitigation.

DomaCom is a company that has created a crowdfunding platform that can acquire any property for sale in Australia for any number of investors. You can join a public campaign to acquire units in a sub-fund linked to a specific property of your choice or you can club together with family and friends to acquire a property. Each investor receives units in the sub-fund in proportion to their individual investment. Each sub-fund has a term to expiry, usually 5 years, which guarantees an exit strategy or investors can sell their units online at any time, provided buyers exist. These may be other unit holders or new investors looking to share in the rental income and capital growth.

To read more about DomaCom click here.