DomaCom Family and Friends campaign allows you to invest in one or more properties with your family, friends, or other investors.
This is a great way to share investment and minimize the risk. By creating a family and friends syndicate in DomaCom you may be able to acquire multiple properties. And by diversifying you further reduce the risk and enhance profits by investing in different property types and geographic locations.
For example, why not look at our Top Australian Suburbs Strategy to co-invest in campaigns that use institutional research as well as qualified buyers advocates to identify properties in suburbs that are projected to deliver the best return over a 10-year horizon.
How does a Family and Friends Investment Campaign work?
Login to DomaCom platform
Find & Select the property
Click on Find A Property in the platform to browse through our diverse range of properties available before selecting the right property for your group of family and friends. To select the property that is of interest to you and your group of family and friends, simply click on the Start A Campaign red button of that property. You will then see a Campaign Type drop-down menu, one of which is Family and Friends.
After you have selected your chosen property, you can invite your group individually to join your private campaign/syndication and make a pledge (i.e. how much they would like to invest in the property). Alternatively, you can share the campaign on social media to attract other investors.
If you need help to select the property, DomaCom can introduce you to an independent professional Buyers Agent who will not only find the right property but assist you to negotiate the price or represent you at the auction.
Make a pledge
Each individual investor within your group may make a pledge (i.e. how much they would like to invest in the property) towards the prospective campaign as an expression of interest so that you can determine whether your campaign has any likelihood to complete.
At this stage, pledges are just an indication of your interest to invest in the property and there has not been any financial commitment.
Fund your pledges
If you and your friends wish to proceed with an actual crowdfunding campaign you will need to fund your pledge by opening an account in DomaCom. As with all property acquisitions, it’s important to have your funding in place before selecting a property to invest in. In DomaCom this requires all parties to:
- Review the DomaCom Fund Product Disclosure Statement; and
- Complete an application and deposit the amount you wish to invest in the DomaCom Cash Pool.
Please note that cash deposits earn interest (currently 0.48%) while you decide on a suitable property. Cash deposits have a 14-day cooling-off period before they can be applied to a campaign.
As pledges are being made, DomaCom begins the due diligence process.
- At 30% of the target amount, DomaCom engages a conveyancer; and
- At 50% of the target amount, DomaCom engages a valuer to provide a formal valuation and a property inspector to look over the property to ensure it is in good order.
Purchase & Settlement
When all parties have funded their pledges and the campaign is filled, you will also receive a Supplementary Product Disclosure Statement (SPDS) outlining the specific offer to invest in the property of your choice which will contain all the information required for you to make a decision. You are not bound to proceed with your pledge amount for the chosen property until you accept the offer contained in the SPDS (which will include the specific details for the properties).
DomaCom itself does not charge any fees during the purchase process, however, there will be fees associated with buying the property. Conveyancing fees, a property inspection fee, a buyers agent fee and stamp duty are all costs which will be shared by all investors in proportion to the amount they invest. These fees will be detailed before purchasing in the SPDS which will need to be accepted and signed by you in order to proceed.
Finally, after the property is purchased, a sub-fund for your group’s chosen property will be created and you will be issued units in proportion to the amount you invested the sub-fund.
Enjoy ongoing return
Every month all profit after expenses will be distributed to all the unitholders. Please note that DomaCom charges an annual management fee of 0.88% (incl.GST) for the property sub-funds.
If you are new to DomaCom, click on the Sign-Up button to begin your journey.
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.
- Syndication fee 1% of the Gross Asset value of your investment.
- Property Sub-Fund 0.66% p.a. of the Gross Asset value of your investment.
- Loan Sub-Fund 0.44% 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|