Choice requires some homework - and don't forget the liquidity issue

Friday 5th May 2000

GETTING IT TOGETHER: People considering private property syndicates should look at the type of property, the location, the condition , leases and returns and who is offering it

It may be stating the obvious to note that individuals have the capacity to invest in property commercial industrial, or residential in many ways, although vehicles for multi-participant investment in residential property are limited.

Residential property investment lends itself to the individual approach, because the capital involved is usually a lot less than for commercial and industrial sites after taking account of likely mortgage finance.

The individual is catered for the commercial and industrial areas through listed property companies, listed or unlisted property trusts, syndicates - particularly those with professional management - and perhaps indirectly through contributory mortgages.

Private property syndicates carry the same potential problems as general syndicates, particularly if they are small, when the liquidity issue can be important.

Whatever vehicle is chosen, the same rules apply as for most "alternative" investments.

People should investigate what is being offered in terms of the type of property, the location, the condition, leases and returns and who is offering it.

A similar principle applies to contributory mortgages, where the basis of percentage returns to the investor needs to be investigated as well as the nature of the likely value of the security if the mortgage is called in.

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