A model like no other for developers, investors and tenants
- Developers sell lines of stock to investors via financial advisers
- Investors receive a significant developer discount
- Tenants receive up to 5% equity
A unique pathway to affordable housing and property ownership for renters
DomaCom have partnered with BlueCHP, a Tier 1 Community Housing Provider to deliver affordable housing to essential workers, specifically nurses, firefighters, teachers and police officers.
Negotiating a minimum rebate of 10% with property developers DomaCom offer investors and tenants the opportunity to share this rebate in a way that gives investors an immediate uplift in the capital value of their investment, and gifts tenants 1% equity pa for each year they are tenants up to a maximum of 5 years, or 5% equity.
Approved workers from these industries also receive a rent discount of 25% off the commercially available rent applicable to the area in which the property is located.
The reduced rental yield is offset by a greatly reduced Government loan at 2.5% with a maximum Loan to Value Ratio of 40% of the value of the property.
The Affordable Rental Property Accelerator is a leveraged growth investment rather than an income investment as rental income services the debt component.
It is also social benefit investment assisting essential workers towards affordable housing and the ability to earn equity from the developers rebate.
What is the DomaCom Fund
The DomaCom Fund is an investment vehicle managed by DomaCom and is an ASIC registered Managed Investment Scheme which issues units in the sub-fund that holds the property.
The issuer of this product is Melbourne Securities Corporation Limited AFSL No 428289. DomaCom Limited holds an Australian Financial Service License (No.444365) and as the Manager is responsible for all due diligence. All properties are professionally managed to ensure maximum tenancy at all times.
How does Affordable Rental Property Accelerator work?
- Developers list properties that have an indicative gross rental yield of around 4% and for which the developer will offer their distribution margin as a rebate.
- DomaCom verifies indicative yield with an initial review by an independent property manager.
- DomaCom completes property due diligence incorporating legal review, building inspections and independent valuations.
- DomaCom creates a syndicate campaign for each individual property.
- Investors collectively contribute 40-50% of the purchase price (a potential tenant can contribute as much of this as they choose).
- A loan is established by the Fund for the remaining amount of the purchase price.
- DomaCom creates a trust that holds the 5% tenant ‘gifting reserve” called the DomaCom RTO Trust (“RTO Reserve” ). This trust then distributes 1% equity to the tenant annually until the 5% is exhausted.
Benefits for investors
- Build equity with an investment from as little as $1,000
- Developers rebate to investors a minimum of 10% from their retained equity that would otherwise be spent on marketing and sale commissions
- Investors share rental income and future capital growth
- The 5% tenant gifting feature should act as a leasing incentive which should result in lower vacancy risk
- Tenants with equity reduce the tenant risk for investors
- Tenants with equity increase market depth in the event investors wish to sell their units
- The Affordable Rental Property Accelerator model offers further diversification in the residential property sector
Benefits for renters
- There is no mortgage required by the tenant therefore no loan serviceability test.
- Tenants receive 1% equity from the RTO Reserve each year they remain a tenant, up to a maximum of 5%.
- Approved essential workers are entitled to a discounted rent of 25%
- Tenants can buy units in the sub-fund that holds property at any time using their income or savings.
- The Affordable Rental Property Accelerator model does not affect any future entitlement to the Government First Home Buyers Grant.
If you are new to DomaCom, click on the Apply button to begin your application. If you are an existing DomaCom Fund investor, you can login to access your account and all the other public crowdfunding campaigns by clicking the Investor Login button.
Risks for Property Sub-Funds
Refer to Section 7 of the Risk section of the PDS for an explanation of the risks involved in an investment in the DomaCom Fund and the general risks associated with property markets.
Specific risks of this investment:
Property not acquired – If there is insufficient investor interest the property will not be acquired however Investors with an Active Bid will all be proportionately liable for the Campaign Costs. A list of approximate campaign costs is set out below.
Value changes – The value of an Investor’s investment will go up and down in accordance with the value of the Underlying Property. There is no guarantee that the value of the investment will increase, and it may in fact decline in value.
No guarantee – Returns are not guaranteed, and Investors may lose some or all of their capital. The nature of this investment is to expect an appreciation in the value of the units, with little to no income to be paid to investors during the term of the investment. There is no guarantee that this expectation will be fulfilled.
Past performance – While this area in which the underlying property is based has experienced capital growth in the land value in the past, this is no indication it will increase in value in the future.
Liquidity risk – An Investor cannot withdraw from the Sub-Fund until the Sub-Fund is terminated, and the Underlying Property is sold. DomaCom does intend to offer a facility through which Investors can seek to sell their Units to another party, however there is no guarantee of this.
Damage or loss – There are a range of events that can damage the Underlying Property including acts of God (fire, flood, earth quake and other natural disasters) through to accidents, negligence, and failures of maintenance. While insurances will be in place it may not cover or may not fully cover such losses.
Insufficient income – The costs associated with Underlying Property may exceed its income, however if there is a shortfall Investors will be given an opportunity to subscribe for additional Units in the Sub-Fund to meet those expenses pro rata to their Unit holding in the Sub-Fund. Investors who don’t subscribe for further units will have their investment in the Sub-Fund diluted.
Vacancy risk – a property manager will be appointed to manager the property and secure tenants to tenant the property and derive income from the underlying property. If tenants are not secured there is a risk that the property will not generate the income that has been budgeted for. If this were to occur the investors may be required to raise further funds to offset the expenses of running the property.
Unexpected property event – The risk that the Underlying Property may be negatively impacted due to a property specific event, for example, a change could occur to local zoning rules, development of competing and other events that were not anticipated at the time of acquisition.
Economic risk – There is a risk that the general economic conditions in Australia may change in relation to interest rates, employment rate and economic growth that could in turn have an impact on the Property market and specifically the value of the Underlying Property.
Fees and Costs
Refer to section 13 of the PDS for Fees and Other Costs
The Management Fees for managing your investment
- Cash held in your Cash Account 0.22% p.a.
- A syndication fee of 1%
- Property Sub-Fund 0.66% p.a. of the Gross Asset value of your investment
Set out in the table below is illustration of the campaign costs that are likely to be incurred. An Investor who participates in a Campaign and has had an Active Bid which fails to result in the formation of a Sub-Fund will be liable (in a proportion that is equal to the amount of their bid divided by the sum of all Active Bids at the time the Campaign costs were incurred) for the Campaign costs incurred by DomaCom. The investors will be only liable for Campaign costs and Acquisition costs that are set out below if the Sub-Fund was not created, as these costs have been incurred prior to the acquisition of the property.
The settlement costs set out below are only incurred and payable if the Sub-Fund is created and the property acquired.
If the Sub-Fund is established, these costs will be deducted from the Sub-Fund and only those investors that accept the SPDS will incur the on boarding costs – Campaign, Acquisition and Settlement costs.
The costs below are an example of the campaign costs, the actual costs may differ and will be set out in the SPDS.
|Contract review and title search||$500-$1000+GST|
|Building inspection and pest report||$500-$1500+GST|
|Property valuation report||$500-$5,000+GST|
The following costs will be incurred, whether or not the property is purchased.
|Legal costs (if contracts require further amendments||$2,000-$2,500+GST|
Below is an estimate of the following Settlement costs if the purchase is successful and a Sub-Fund is created. These costs will only be incurred if the Property is purchased and will be paid from the capital raised on the acceptance of the SPDS.
|Estimated Settlement Costs||Estimates|
|Conveyancing costs||$1000 – $2,500+GST|
|Stamp Duty||Varies based on state and Property Value|