SKYIRE HomeBuild Bonds, Development Return with No Development Risk.
Investing in real estate has gained in popularity. As investors seek higher returns and increased portfolio diversification, real estate, especially real estate development, has risen to the top of the wish list.
And if you do your research and plan your investment properly, real estate can be a key part of your overall investment portfolio and retirement planning strategy. Not only can this sector provide investors with growth and income, it can also provide additional diversification when combined with a traditional investment portfolio of stocks, bonds and mutual funds.
Risks with limited partnerships and syndicated mortgages
Over the past few years, limited partnerships and syndicated mortgages have become a popular choice for many real estate investors.
Developers and builders use limited partnerships and syndicated mortgages as part of their financing in order to bring a project from conception to completion, and this is where the risk lies.
Banks are often not willing to fund a building project that hasn’t even started, so developers routinely rely on these types of financing to cover soft costs such as consultant fees, zoning permits, architecture costs and even marketing and sales expenses. Therefore, the limited partnership or syndicated mortgage that you’ve invested in is funding the initial stages of a project and not the actual building of the project.
This could become a potential problem if the project becomes delayed or goes bankrupt, and this does sometimes happen.
Is it worth the risk?
Syndicated mortgage sponsors aim to allay investor fear by promoting the fact that the mortgage is registered against the land so there’s no real downside. However, once construction financing is secured, syndicated mortgage holders rank behind this new debt, and become exposed to development risks. Limited partners are shielded against any liability, but they too rank behind construction financing and any trade payables or creditor debt. If something should go wrong once construction begins, syndicated mortgage and limited partnership investors won’t be paid first. Once higher ranking debt and creditors are paid, you may see some money.
So as an investor, you should ask yourself, is the potential return, worth the risk? For this reason, it’s extremely important that investors conduct due diligence when it comes to investing in limited partnerships or syndicated mortgages.
A safer alternative
Up until now investors faced all of these varying degrees of development risks but now they don’t have to.
SKYIRE Home Corp. is excited to introduce an advanced investment strategy as an alternative to what is available in the market today. This new financing approach for developers and investors is called HomeBuild Bonds and creates the return of a development project but eliminates the development risks outlined above.
How they work
This new type of investment uses bonding protection that eliminates development risk and provides an attractive return. In addition to collateral mortgage security, HomeBuild Bonds also have the added benefit of a bonding company’s assurance, protecting not only the principal investment but the minimum return as well, until the development is complete.
Sponsored by North American Home Finance Inc., Home Build Bonds are the clear choice investment to achieve real estate development returns in your portfolio, while diversifying from the stock market and managing risk. Find out more about HomeBuild Bonds and how to get them into your investment portfolio today.
Get your Free Guide and Investment Book
There’s a lot more to learn about HomeBuild Bonds and residential real estate investing. Order your HomeBuild Bond investor guide today. It outlines everything you need to know about HomeBuild Bonds, how they can help you invest in real estate development, earn attractive returns and avoid development risk. We’ll also include a copy of our recently updated book, Residential Investing. It provides great insight on what to look for in a real estate investment and why Canada is a great market for real estate investing.
This material is intended for investor marketing purposes and is only for accredited investors residing in Canada. This is not an investment recommendation. Please review all subscription material prior to investing.