Looking for a better way to invest in real estate overseas? One that comes with less hassle, more transparency, and greater protection for your cash?
Why not consider BigFundr’s investment platform?
BigFundr is an online investment platform that allows you to invest in real estate-backed loan notes with as little as S$1,000. Our platform is designed to be easy to use and transparent, with no hidden fees.
In this article, you will learn all about the opportunities in investing in foreign property and real estate debt investing, the risks and challenges involved in doing so, as well as why BigFundr could be your best solution to investing in real estate overseas.
Opportunities in Foreign Real Estate Investment
What makes foreign properties an attractive option?
For Singaporean investors, our local real estate market is heavily regulated with multiple taxation schemes implemented by the government to maintain price stability. These regulations, while necessary for the local economy, can sometimes limit the opportunities for investors looking for higher returns.
Investing in overseas real estate further allows Singapore investors to diversify their portfolios beyond the local market. This diversification can help mitigate risks associated with economic downturns or property market fluctuations in Singapore.
That is not all. Certain overseas markets offer higher potential returns than the local market. For instance, emerging markets or regions undergoing significant development or regeneration can offer attractive investment opportunities.
Investing overseas can also provide potential benefits from currency exchange rates. If the Singapore dollar is strong against the currency of the country you are investing in, you could get more for your money.
Finally, investing overseas can provide you access to different types of properties that may not be available in Singapore. For example, you might invest in a ski chalet in Japan, a beachfront villa in Bali, or a retirement home in Melbourne. These unique properties can offer exciting investment opportunities that are unavailable in Singapore.
Traditionally, investors in foreign real estate do so through purchasing the property. This is known as Real Estate Equity Investment. While owning a foreign piece of real estate sounds attractive, it comes with multiple risks: low liquidity, high capital outlay, need to secure tenants (and rentals), estate maintenance, property taxes and other issues.
Introducing Real Estate Debt Investment
An alternative way to invest in foreign real estate involves what is termed as Real Estate Debt Investment. Here, the investor acts like a lender to the foreign property developer (or Deal sponsor). They invest in a Real Estate Investment Note as part of a Deal, and receive a fixed rate of return pre-determined by the interest rate on the loan and amount invested.
Unlike the former, real estate debt investing comes with many benefits: shorter holding period, lower outlay of capital, steady income stream, and less hassle in terms of needing to manage the foreign property. However, there are some challenges inherent in this option.
Challenges of Real Estate Debt Investment
While the opportunities for investing in foreign properties using real estate debt investment notes are present, we need to be mindful of its pitfalls. Here are some of the most common challenges in real estate debt investing faced by retail investors:
#1 Risk of Default
The borrower may default on their loan, which could result in foreclosure. If this happens, you may not get all of your investment back. This is the most significant risk of debt investing, especially when the borrower resides in a foreign land.
It is important to do your research on the regulatory requirements and invest with a reliable sponsor to minimise the risk of default, and to protect your invested capital and interest.
#2 Devaluation of Property
The value of the property could decline in a foreign land, which could lead to foreclosure. One of the reasons could be the change in governing law. This risk is lower for debt investors than for equity investors, but it is still a risk.
#3 Reinvestment Risk
If you do not need the cash from your debt investment, you will need to decide what to do with it. You could reinvest it in another debt investment, but you could also choose to invest in other assets.
This risk can be mitigated by investing with a platform that offers reinvestment options. This way, you can automatically reinvest your cash flow in new real estate debt investing Deals as and when they are available.
#4 Prepayment Risk
Occasionally, the borrowers (also known as mortgagees) may choose to pay off their loans early, either by selling their properties, or through refinancing their loans. Should they choose to do so, the cash flows associated with your debt investment may be interrupted. This may also decrease the value of your loan portfolio.
To mitigate this, you should consider debt investing options that protect on both your invested capital and your anticipated returns.
BigFundr: A Simple and Secure Way to Invest in Real Estate
Wish to tap onto the potential of foreign real estate without the headaches of buying, renting out, or selling property on your own?
Consider BigFundr, an innovative investment platform that provides an easy and secure way to invest in real estate through debt investing.
BigFundr offers Real-Estate Investment Notes — these are essentially loans backed by real estate properties. Investors purchase these notes and earn interest over a specific period of time. The principal and interest are protected, making it a straightforward yet reliable investment option.
Benefits of Investing with BigFundr
Here are some of the benefits to investing with BigFundr.
#1 Fight Inflation with Protected Returns
Inflation is a silent killer that erodes the value of money over time. BigFundr offers a solution to this problem by providing real estate-backed Deals that protect your principal and interest. This means that your investment not only keeps pace with inflation but also grows, helping you make the most of your money.
#2 Higher Interest Rates (6% or more per annum)
BigFundr offers a better-than-market rate of returns. With a net annual return of 6% or more, BigFundr's Deals are not only attractive but also protected.
This means that your principal and interest are secured, providing you with peace of mind and a steady stream of income.
#3 Lower Risk with Multiple Layers of Protection
BigFundr structures multiple layers of guarantees into each Deal. This means that your investments are secured not just by the real estate but also by additional protective measures.
BigFundr's Deals are made up of loans to real estate developers. These loans are secured on the real estate as collateral. This means that your investment is backed by real assets.
Furthermore, BigFundr has partnered Maxi-Cash to protect your capital and returns. Maxi-Cash ensures punctual repayment of monies to investors in the case of borrower default.
This multi-layered security structure ensures the security of your investments and provides you with a high level of assurance.
#4 Rigorous and Meticulous Due Diligence
To ensure the protection and security of your investments, we conduct rigorous four-step process of due diligence on every Deal proposal:
- Both BigFundr and Maxi-Cash have independent Credit Assessment Committees that evaluate and assess every Deal proposal, complementing assessments performed by external loan managers.
- We employ a robust credit scoring process that considers various factors such as country, tax, screening, structural, and operational risks.
- Key parameters in the due diligence process include the location of the property, the complexity of construction, the construction stage of the project, the affordability of the end project, and the credibility of the borrower and sponsors.
- Only when a proposed Deal meets all these criteria, it is presented to the Investment Committee for further evaluation.
This meticulous approach ensures that only the most promising and secure Deals are offered to investors.
#5 High Levels of Transparency
BigFundr believes in simplicity and transparency. Our Deals are structured in a straightforward manner, allowing you to clearly see what you are committing to.
#6 Low Levels of Entry: As Little as S$1,000
With BigFundr, you can start investing with as little as S$1,000. There are no tiered interest rates; you enjoy a flat interest rate as advertised.
This low entry requirement and non-tiered system make investing with BigFundr accessible and straightforward. It also reduces the risks for investors and makes BigFundr’s products accessible to everybody.
#7 More Flexibility and Control
BigFundr offers flexibility and control to its investors. There are no long lists of commitments to adhere to. Moreover, the notes that we issue only need to be held for a short-term period of 6 to 18 months depending on the construction or development project.
This means that you are free to respond to life's immediate needs and make changes as they occur.
#8 No Prerequisites for Investors
BigFundr is focused on providing the best products without many prerequisites. This focus on simplicity and accessibility makes BigFundr an attractive platform for both novice and experienced investors.
#9 Monthly Interest Payments: Easy on Cash Flow
Interest is credited to your account monthly and available for withdrawal anytime. This makes it easy on your cash flow.
Conclusion
In a world beset with sky-high inflation, you need to find ways to grow your money. Overseas real estate investing presents such an opportunity. However, venturing into these markets can be risky and challenging for the average Singaporean.
This is where BigFundr comes in. We provide a secure and straightforward platform specifically designed to democratise overseas real estate investments by issuing real estate investment notes.
Through rigorous due diligence, transparency, and robust security measures, BigFundr not only mitigates the challenges associated with foreign real estate investment — we make it accessible to everybody, not just seasoned investors.
If you are looking to explore the exciting opportunities of overseas real estate markets, consider BigFundr for your investment needs. You can start your account here or reach out to us if you wish to learn more.
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