North Shore housing and Auckland CBD seen from High Rd. Photo / Michael Craig
North Shore housing and Auckland CBD seen from High Rd. Photo / Michael Craig
Whangarei investors can now get into the Auckland housing market - without having to stump up with the total sale price of a house.
Auckland startup The Ownery is offering a vehicle to enter the Auckland housing market, with investors putting in as little as $500.
The investor selects aproperty from the portfolio listed on The Ownery's website. Each property becomes a registered company and each company will own only one house. Shareholders can exit anytime by selling their shares with no fee - unless the shares are sold to a third party.
Shareholders can request the house-share company buy their shares at current published value. Share valuations will be updated monthly based on QV data and twice-yearly from a registered valuer.
The business model is similar to residential equity crowd-funding but doesn't require The Ownery to have a crowd-funding licence. Rather, each company has to put out a product disclosure statement that requires more disclosure than crowd-funding and will be monitored by the Financial Markets Authority.
Co-founders' Paul Jacobs and Kurt Settle's associate company, Houseshare Management, which will manage the properties, charges investors an annual management fee of up to 1.5 per cent of the property value.
The Ownery charges investors an up-front fee of 4 to 5 per cent of money put in. Mr Settle said the exact figure for the up-front and the annual management fees is still to be decided.
When property prices fall, no additional funds would be required of shareholders but debt will be used to cover any short-term shortfall until the property can be sold and any proceeds distributed to shareholders.
No bank debt will be used by house-share companies to purchase the houses but each constitution will allow borrowing of up to 20 per cent of the property's value for buying back shares of those exiting and other big ticket items not covered by insurance.
The money invested will be held in trust until each property is bought and refunded if the sale falls through.
One property each month will be advertised on the company's website and all the properties will be at the cheaper end of the market, below the median price in Auckland, said Mr Jacobs, to ensure good rental yields.
The annual management fee will be deducted from rental income along with other expenses such as rates and insurance and a small dividend may be paid to shareholders.
Mr Settle said there are no plans to operate in other parts of the country such as Whangarei for at least one year "but if the demand is there we will consider it".
