- In uncertain times, prudent investors are looking for defensive assets with good returns
- PrivateInvest is a non-bank commercial lender, with target cash returns of 8% to 9%, post fees and expenses
- Investors have the opportunity to 'be like a bank', receiving better returns than current bank cash rates
Some of the many questions for 2021 are: how long the current residential property boom will run for, will interest rates spike from their current record lows and what will be the potential long-term impact of the pandemic?
Add in the recent volatility in the share market and the only certainty is uncertainty.
In consideration of these potentially volatile market shocks, prudent investors are seeking more defensive assets for a percentage allocation of their investment portfolios. One of these investment considerations is investing in funds that provide loans into the growing private commercial non-bank lending sector.
This sector operates like the mainstream banks except they are not deposit-taking institutions. These non-bank financial organisations are common throughout Europe and the United States and could be institutions, mortgage funds, private equity funds or hedge funds all offering the emerging growth market of Australia a legitimate alternative to the mainstream banks.
Target cash returns of 8% to 9%, post fees and expenses
One of the key emerging non-bank lenders is Perth-based PrivateInvest, a company that trades nationally and has been achieving returns over the last three years with an annualised cash return to investors of 9.23% per annum.
The key to this defensive, alternative investment is its first mortgage security with investor distributions paid monthly.
“Our first mortgage investment funds are pure-play first mortgage security. This means we do not use second mortgages in our funds to bolster our investor returns.”
Mark Roberts, PrivateInvest founding managing director
Average loan periods are around 12 months and PrivateInvest has not had any impairment or loss on loans.
“Capital preservation and meeting target investment returns are important to PrivateInvest with industry loan to value ratios and borrowers providing additional security, the market would have to drop significantly before returns and capital are impacted,” said Mr Roberts.
Alternative finance for developers
PrivateInvest provides commercial first mortgage loans between $3 million to $25 million for site finance, construction, development, and residual stock loans that may not meet the strict guidelines of mainstream banks, or are too slow in credit approval.
“It is understandable for commercial borrowers to be tired of credit approval delays, faceless credit teams, years of a relationship with a bank to have the credit policy change, and then incur costly delays in getting a loan settlement,” said Mr Roberts.
PrivateInvest offers a legitimate alternative to traditional banks with flexible loans, faster credit approval and borrowers dealing directly with the credit team. This saves time, creates certainty and both investors and borrowers benefit.
Investing in this sector creates an opportunity for investors to be like a bank, receiving better returns than the current bank investment cash rate.
For more information on PrivateInvest and how to qualify as an investor please visit this website.
Also, do watch out for the upcoming PrivateInvest TALK webinars.