Forum Archive Index - May 2002

["Dave and Helen" <daveandhelen@paradise.net.nz>]

Of course, not all contributary mortgages are a happy affair. Some are fraught with risk.

 

Lets say a property developer wishes to build & sell a block of apartments. The bank might not want to know about it. Solution - the Mums & Dads, who gladly post their cheques expecting a greater return than the bank is offering.

 

Property development can pose problems. Look at the number of people/organisations involved. Surveyors, tradesmen, architects, OSH, resource consent people, suppliers, and so on. It may run smoothly, but it may not and some mistakes are extremely costly.

 

The project could be delayed or abandoned halfway into the construction.  They may have difficulty selling the apartments when they're completed. It's the proceeds from the sales that pay back the Mums & Dads investment.

 

So I recommend anyone considering these sort of investments to undertake some robust research.

 

Does the rate of return compensate you for the risk taken?

 

-Coge