It is a syndicated mortgage project on new development. That CAN be a good investment .. or a disaster !
I do not know this firm .. just checked their website. The opinion below is not just for this firm, but any syndicated mortgage for a new development in general !
Depending on the loan-to-value and experience of the developer it may be a decent investment, or it may be very high risk with potential for high or total loss of capital.
Check out their track record on FINISHED PROJECTS .. do not look only at fancy brochures or "in progress" development projects.
Get very specific project information you intend to invest in, such as:
a) real estate physical address
b) real estate legal address
c) any mortgage ahead of your (syndicated) mortgage
d) project costs incl. land costs, including timelines .. are they realistic ?
e) ownership of land prior to being sold to the construction project [any uplifts for firm's shareholders ?]
f) information of how many projects your mortgage gets invested in : one .. or several ?
g) loan-to-price and loan-to-cost and loan-to-retail-price ratios .. as you you may lend at 200%+ loan-to-price
h) principals of the lender AND of the borrower: what is their history ? [I see nothing on their website .. how come ?]
i) is money raised used to pay out other loans ? if so, which ones ?
The biggest risk is that the project doesn't get finished and you hold a mortgage with 20 or 300 others on a semi-finished project, which almost always will lead to a substantial loss.
Thus: track record of operators is critical. Ask for finished projects.
8% ROI is OK if syndicated mortgage is in first position. It is far too low for a mortgage in 2nd or 3rd position in my opinion ! You have capped upside but could lose all your money. It is like equity, but capped.
On a 3 year project 24% has to be held as an interest reserve. Plus commissions probably, say 10%. Thus, only 66% of the capital is actually invested in the project. Is the project executable with that % of money raised ? Maybe .. maybe not.
