Class 1B Rooming Houses presented in this strategy are new buildings designed for singles or couples looking for an affordable housing solution.
From an investment perspective Class 1B properties offer significantly reduced risk of complete vacancy owing to a spread of up to 9 studios in each property thus minimising a complete vacancy risk for the property.
Annual rent in a Class 1B Rooming House is estimated at 7 times the rent achieved from a single dwelling on the same block of land.
The DomaCom Fund ARSN 167 020 626 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.
This Class 1B Rooming House Property Investment Strategy is presented by DomaCom Limited (ACN 604 384 885). FD Property Group are the developers and DomaCom manages a fractional investment platform enabling investors to participate without the need to purchase a whole property. DomaCom may arrange leverage no higher than 50% eliminating the need for investors to satisfy income and serviceability tests that normally apply to individual loans.
Who Should Invest?
Class 1B Rooming House property investments are suitable for any retail investor, individual or SMSFs (Self-Managed Superannuation Funds) looking for exposure to higher yielding residential property which also fits into the affordable housing model in suitable locations.
Investors looking for a specific asset allocation where they do not have to purchase a whole property but can share in the rental income and future capital value of a portion of a property with other like-minded investors may find this syndication model attractive.
Once units in the sub-fund are acquired they may be sold using the DomaCom platform. DomaCom operates an on-line trading platform enabling investors to buy and sell units as it suits them, subject to there being other buyers and sellers.
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.
About FD Property Group
FD Property Group is a boutique business that is partnering with DomaCom to develop innovative investment properties that not only deliver significant returns for investors, but are socially responsible by providing affordable housing in areas where it is needed, close to shops, public transport and employment centres. FD Property Group work with architects, builders and property managers to meet DomaCom’s strict due diligence expectations. FD Property Group offer specialised housing solutions, helping Australians gain financial freedom, through smarter, more reliable, Rooming House Investments.
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|