Taking the time to work out your short, mid and long-term goals and priorities is essential before making any type of investment. Historically, real estate investments have presented either limitations or risks for investors who want to customize their strategy to achieve a specific outcome, like quarterly income, maximum growth or tax efficiency, for example. But real estate bonds are changing all of that.
For investors whose priority is secure, short-term growth, SKYIRE’s HomeBuild Bonds represent a solid solution. HomeBuild Bonds typically have a time horizon of 30 months and interest at a fixed rate of 7.75%. “Invested funds are placed in trust and bonded during the construction phase,” says George Lawton, CEO, North American Home Finance Inc. “Once homes are completed, bondholders are secured directly against the homes via a collateral mortgage, ranked behind the bank’s mortgage, but in front of any unsecured creditors and shareholders. Profit participation derives from proceeds of home sales.”
HomeBuild Bond projects are located in major urban areas and usually involve the construction of new single family homes (mostly condominiums) by proven developers. The structure of HomeBuild Bonds provides the security of a bond with real estate development returns, while eliminating the development risk and unpredictability of returns associated with more traditional real estate investments. Unlike REITs, development limited partnerships and MICs, HomeBuild Bonds have a contracted minimal return and priority payouts for investors. Funding is only advanced when construction begins, allowing the project to eliminate higher-risk early stages like zoning and pre-sales.
“Most importantly, investment in HomeBuild Bonds is protected by a surety guarantee during construction of the project,” Lawton says. “As well as offering a minimum priority rate of return, HomeBuild Bonds let investors enjoy profits generated by the real estate development. That makes them an excellent choice for investors seeking attractive capital returns on a short-term investment. Timelines can be as short as 18 months, providing high annualized returns.”
A combination of bonding, timing and rigorous project selection eliminates the risks often associated with development projects and provides a secure alternative to syndicated mortgages and limited partnerships. Tomorrow, CREW Online looks at another type of new real estate bonds: RealProperty Bonds.
If security and growth are important to your real estate portfolio, now is the time to act. SKYIRE will send you a complete Real Estate Bond package including a free copy of the book Residential Investing featuring HomePlan and HomeBuild Bonds As a bonus, SKYIRE will also include the discussion paper “Evolution in Real Estate Bonds,” as well as a certified registered investment certificate in the amount of $250 to be used towards any SKYIRE Real Estate Bond investment.
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At SKYIRE, we know real estate is an important asset component for portfolio diversification and risk management. We believe in strong investor protection and security. Through our exclusive Real Estate Bonds investors enjoy a predictable return with direct security. And, by investing in HomePlan or HomeIndex Mortgage investors receive steady monthly income while participating in the appreciation of real estate assets.
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