Developer Loan Notes- Are they worth a look

Video Transcription:

I wanted to encourage you to look at a thing called developer loan notes. I think really what they are, and they're a new style investing for most of us and it's come about via two things really. Which is number one, crowdfunding and all the crowdfunding activities that've been going on, which really is one and the same thing as the fact that the banks, the normal means that we used to get money from are no longer functioning the way they used to, or no longer, they've made it harder for people to get funding.

Basically what that's meant is nowadays people are going elsewhere, and that means developers as well and so developers are looking on the crowd to actually help them fund their developments. Now like anything there's risks, there's good, there's bad, there's ugly and there's plenty of ugly, but the reality is, this is a new style of investing.

The new style of investing is quite simply that whereas it used to be a developer got an amount of money, which they got from family and friends, the money they had, existing property, wherever they did, they went along to the bank and they got the rest in the bank and effectively they would go out and they would build a property. Then they'd either sell it off or keep it and rent it out, whatever.

That same process is going on, but what they're doing now is rather than going to family and friends and coming to their own funds, they're actually going to people like you and I who have funds and they're saying, give me this fund for a certain period and it could be 12 months, six months, 18 months, seven years, whatever. Effectively they're offering a rate of return and that rate of return is somewhere between eight and 22%, although some of the higher rates I'd be very skeptical about.

It's a new way of investing, well it's an old way of investing that has opened up to a new market, which is, if you like, the rest of us. There's huge opportunity here because if you look at what your money, cash in your bank is getting, it's getting nothing really. It's not even keeping up with inflation, whereas a developer loan note eight, 22% and even if you keep to the safest sort of ones, which is eight to 12%, that sort of interest is quite good and quite attractive.

Basically you've got huge opportunity here where actually I think the more and more we get into this, and yes, you're going to have people who lose money doing this, but I think as we evolve and as people get better at understanding what goes into a good development, what goes into a bad development, what is a good developer and what is a bad developer, and really this for me is an alternate strategy, is not a core strategy.

What I mean by that is that it's, for me, building a foundation of direct property investment is the key. This is what should do with your money while it's sitting around until you can get to buy your next property, so that sort of just gives you a bit of an idea of what's on the market now.

Now if you want to learn more, I've written a course, a seven part course, goes through all the aspects from the benefits to the risks. It looks head to head at direct property investment versus developer loan notes. It looks at stock market investment versus developer loan notes, so basically you get a really good well rounded view of what these things are called developer loan notes or loan notes or there's various things they can call them.

Effectively they are here to stay because they've been around forever. It's just they've changed slightly in terms of opened up the market a bit further and you know what? They're here, so you're best to learn about them. Jump on my course. It's a free course, and effectively you've got probably all up the course is about 35, 40 minutes of videos as well as the accompanying material that you can read through and you know what?

You'll get a really good sense for what it's about and also about what it is, what you should be watching out for in before you invest. I think if you got that, that'll give you a really good footing to work from, so jump online and go and see, so it's loan note course, so , jump on there, sign up and basically start that course. Run through that course and you'll get a really good understanding of what these developer loan note things are, and what they're all about.

All right guys, jump online. If you've got questions, contact the team. Otherwise the link will be no doubt below or beside and yeah, look forward to chatting to you on the course.

Brett Alegre-Wood
November 27, 2019

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