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Investing with property without being a landlord

Southern Cross Partners taps into New Zealand’s love for property with our specialist peer-to-peer lending model. Read on to better understand how we work to ensure investors can easily invest with property without the hassle of actually owning property.

From the most common investment option in New Zealand, KiwiSaver, to bank term deposits, property, the share market, bonds, and cryptocurrency, New Zealanders have a lot of options to grow their wealth.

However, the most likely way Kiwis build their nest egg is through property. This could either be through a family home to sell upon retirement, with the addition of a holiday home or even additional rental properties.

Southern Cross Partners taps into this with our specialist peer-to-peer lending model. We are short-term lenders bringing together people who want to invest with property and those who wish to borrow money to further their property dreams.

This means investors can easily invest with property without the hassle of actually owning property.

But how do we do this?

Firstly, we make lending decisions by looking at the overall credit worthiness of the application rather than just the individual borrower’s credit rating (which is also important). We give the loan quality a rating from a preferred score of 1, to a more complex score of 5 and this plays a part in the lending team’s final decision.

Secondly, once we decide on and accept a loan, SCP secures a borrower’s property with a first mortgage and ensure they have a clear exit strategy with us.

Every NZ property is registered under a title or identifier number with Land Information New Zealand (LINZ) and the loans we provide to borrowers are listed under that title as the first mortgage or first charge.

Due to this, we come before anyone else with financial interest in the property and have a controlling position should anything happen over the loan period. For example, if the borrower owed us $500,000 and we sold the property for $800,000, we would take that $500,000 from the sale back to repay the debt owing.

This extends to insurance too and we ensure our offered properties are fully insured. On the rare occurrence a premium goes into arrears, the insurer contacts us. We then pay the unpaid premium on the borrower’s behalf and the borrower pays us back directly, or the cost is added to the loan.

Thirdly, we always lend our own money before placing the loan on our investment platform for investors to invest in. This is a variation from standard peer-to-peer lending in that the borrower already has the funds before the loan becomes available to investors. Therefore, it needs to be a property deal we know our investors want to invest with.

That’s why we undertake stringent due diligence processes and provide extensive information in the Investment Opportunities section on the Investor Portal for investors to consider.

To understand more about our investment strategy, feel free to give our friendly investment team a call. They’re always here to answer any questions you may have.