New fund allows investors to access residential property market without buying directly

A new fixed income fund, the CFMG Capital Monthly Income Fund (MIF), has been launched to provide investors with exposure to the residential property market without the need to purchase an entire property directly.

The fund, which is open to investments from as little as $5,000, will provide investors with a competitive target return of 8.25% per annum (reviewed monthly), with their investments used as loans to invest in pooled mortgages across a portfolio of 16 land development projects in southeast Queensland and Victoria.

CFMG Capital Group General Manager Andrew Thomson said the MIF operates as an open-ended pooled managed investment scheme, which means investors will have an interest in the benefit of construction loans made to the developer of individual new residential communities.

Once the land has been developed and sold to buyers, the loan to the developer is repaid to MIF investors.

The loans are secured by first mortgage securities over real property, so MIF investors have priority over all claims on a property if the project is not completed and the loan defaults.

“Traditionally, for investors to get exposure to this market, they needed to have a large deposit and buy a single property,” Thomson said. “The MIF allows all types of investors, from mum and dad retail investors to SMSFs and institutions, to increase their exposure to the sector.”

He added that with investments starting from just $5,000, it is a great way to get exposure to this large market and boost savings with monthly distributions at an initial rate of 8.25%.

CFMG Capital operates two core divisions: a residential communities development business with a pipeline of more than 2,000 lots and a funds management business that has raised more than $200 million in third-party equity.

The Monthly Income Fund is the third fund created by CFMG, alongside the CFMG Capital Land & Opportunity Fund and the CFMG First Mortgage & Income Fund.

Thomson said the company was proud of its perfect record for returning 100% of capital invested across its funds at the targeted rate.

“We have a strategic pipeline of projects to be delivered over the next few years, and the support of our investors is critical to the ensuring we have a diversified mix of funding to support the rollout,” he said.

He noted that the southeast Queensland land market remained buoyant with strong interstate migration and a healthy local economy driving demand, and expected these conditions to continue for at least the rest of 2024 and into next year.