Co-investing in property – Part 1

Over the past decade, there are a few unicorn app companies that do nothing but organize users together to purchase products in big quantities. The logic behind this successful business model is – The sellers tend to give discounts to buyers who are willing to buy with a bigger quantity.  This type of group purchase model became popular in both Western and Asia. The consumers get the products at the same level of quality with a lower price, but they may have to compromise on delivery time or they may have to self-collect the purchased item at a designated place.

Car hiring apps create a car-pooling model for passengers, who prioritize cost saving, and who are not concerned about having strangers sitting beside them during the journey. They enjoy a better travelling experience than taking buses, similar to getting a taxi and paying lower than a taxi trip. The car pooling model is also quite popular, where passengers have a worth-for-money option in travelling. Co-purchase of a property is not new. It has been happening since our grandfathers’ time.  As long as the purchase is more than a person, it is considered a co-investment or co-purchase. 

RICHCO-SPACE has created a new function – Pooling – for this segment of investors, it comes with two modes – close & open. The CLOSE group mode is for family members, siblings, friends, business partners and the OPEN group mode is for strangers.

Co-purchase with strangers?

Yes. We have been inspired by our clients’ real experience, who are strangers to each other, come together, and successfully secure bank mortgages by us and finally co-purchased a commercial property. Individual investors could look for potential co-invest partners, whose profile matches their needs. For example, if you are a young executive, your borrowing capacity is higher but lower savings in bank deposit, you may want to look for people who have higher savings bank deposits but lower borrowing capacity due to older age. You could look for a few like minded investors to buy a property together. 

RICHCO-SPACE Pooling function has ready templates for different share percentages based on respective co-investors’ financial contributions in the purchase: cash for down payment and borrowing capacity. The template also includes the agreement between co-investors, expenses recording & exit plan for the investors. The co-investors could collectively apply for a mortgage through RICHCO-SPACE. In short, the Pooling function provides whatever is necessary in organizing a co-purchase of property transaction. 

What makes co-purchase of property among strangers possible?

The fundamental element for multiple parties to work together is always the TRUST.  The modern “trust system”, such as credit bureau record, litigation search, company search, people search and mature legal infrastructure, are well established. As long as a person is “bankable”, he/she should have a good level of quality in his/her financial stand. 

I will talk about how to make RICHCO-SPACE Pooling workable for you in my next blog. To explore the steps to organize a Pooling group, click here.