Frequently Asked Questions
The Sun Villages model is an Australia first and so we expect lots of questions.
Below are a some questions and answers. Please feel free to contact us to ask more.
Who owns Sun Villages (Queanbeyan) Limited?
The shareholders of the Public Company which will be changed into unit holders of a Trust. You could be one of them. Shareholders collectively own all of the shares in the development. The shares provide investors with a return which is paid as yearly cash dividends. For residents, these dividends can be seen as offsetting outgoings -which are similar to rent except that it is paid into your own syndicate.
Who will run the facilities and the social spaces at Sun Villages?
A resident run entity that you are also welcome to participate in but not required to.
Where will the resident run entity get the money to run itself?
From short term rentals of serviced apartments and income generated from the cafe and other activities.
Why was this model for housing created as an alternative to existing models?
-To make real estate development more transparent, interactive and accessible.
-To give you more control of your money; more financial security and freedom.
-To give you the benefits of owning real estate -a secure home that increases in value over time-without the costs that come with selling to upgrade or downgrade.
-To allow you to get into real estate without a loan or large deposit.
-To reward behaviour that strengthens the common good. You are buying into and therefore creating a group of homes and spaces for many people rather than for a single person or family.
-To make it easier to create a work-play balance. It will be built with work from home in mind.
-To create a more meaningful and robust mix of people from different stages of life. Easy financial entry and easy exit.
-To make it easier to build your own social capital. L.E.T.S system.
-From the time they buy their first house, every Australian, on average, moves every 6 years at an average cost of $50,000 each time. These are costs that our model was designed to eliminate.
How safe is my money when invested in this?
As safe as money invested in a family home or safer because there is no risk of bank foreclosure or interest rate increases. Your investment is backed by the real estate property.
Can I use my superannuation funds to buy into Sun Villages?
Yes, four of our resident-investors, with help from an accountant, have formed a self-managed super fund to invest a portion of their super funds into Sun Villages. Individuals can do the same.
Can I get into the property market with no loan?
Yes. All are welcome to buy into Sun Villages for as little as $10,000.
What return will I get on my investment?
This depends upon how early you get in. The earlier investors will get more shares which increase your rate of return. Our average returns are calculated at 6% net, and indexed to the wages component of CPI.
Is there a unique opportunity for founding investors?
Yes. We are currently offering bonus shares to investors who pledge to fund the pre-construction elements of Sun Villages.
How are the weekly outgoings for residents set?
Outgoings will be set at market rates when residents move in. The amount for each resident will only increase with the wages component of the Consumer Price Index (CPI) which is less than the property CPI, meaning that within a few years your outgoings will be lower than the rental market. The more equity you buy earlier, the less outgoings you need to pay. With enough equity you can create a cash positive scenario from your home.
How do I sell or will my equity?
You can sell or will your equity to anyone. Buying and selling equity will be set by market forces. This investment is "bricks and sticks" and thus ticks all the boxes for a top security investment. It is likely that residents will wish to gain more equity in order to reduce their outgoings which will increase demand for shares.
How do I buy equity?
Ask for the share application form and make a pledge to buy a certain number of shares to fund our construction.
Is there a minimum investment?
$10,000 is the minimum amount needed to buy shares in the company.
Is there a maximum investment?
What happens when the company runs out of shares?
We have to wait until shares become available or for the next project.
Do I own the apartment I live in?
Yes, but not in the sense of a Strata Title. You have your space for as long as you need it, and you can expand or contract the amount of space you require by negotiating with your syndicate. You can also gift or sell your equity which will appreciate in value over time. Legally speaking, you own a portion of the overall complex more like the Company Title model.
What if I can’t afford to make the payments – do I still have tenure?
There are several ways to reduce your costs. You may:
- reduce the amount of living space you occupy,
- sell some of your equity and use the funds to make your payments,
- in certain circumstances you may be able to reduce your other living expenses by using our LETS (local exchange trading scheme).
Real concerns and questions and our responses.
Below are some questions / concerns that resulted from someone attending a recent Sun Villages information session. The creator of these questions has given us permission to reprint them, together with our answers, for the purpose of educating others on this new model of Australian housing. Feel free to send your own questions.
Q: Under this scheme I would never own the title of a my own unit - only have part ownership in the whole building. Isn’t it better to own the title of my unit?
When you use bank finance to “purchase” a house, the bank owns your deed and title until the final payments are made, which can take some time. Then, by the time you finally reach that status, it's time to cash it in, to pay for your downsizing costs, and to fund your retirement and your death. Rarely do property deeds and titles get passed down to future generations, except in the case of family syndicates who are able to pull their resources together and use their assets collectively to work for them. In the SV model, all syndicate members - both residents and non-residents collectively own the title and deed and use it to protect the needs of everyone in the group. Residents can live in their apartment until they die and pass on the equity/ownership of the syndicate’s assets that they have built up, to their heirs. The assets of the syndicate includes the title and deeds to the complex. The SV model was designed by mothers to create the best possible combination of circumstances for all those involved, not to extract the greatest amount of profit out of everyone before they die and ensure that future generations get nothing.
Why wouldn't I buy shares in an established company with a strong history of return instead?
Investments are a personal choice and only you know what the right mix of real estate ownership Vs ownership in company stocks and shares is for you. Most financial planners and people in general would agree that owning real estate “bricks and mortar” is valuable and a priority part of one’s investment strategy. Being part of the SV syndicate gives you a safe, easy way to invest in bricks and mortar, using the strength or buying power of many -in the same way that a bank uses the people’s savings to create their power. It gives you a place you can call home-for as long as you like- that increases in value over time. It gives you the benefits of owning personal real estate without the extra charges that comes from using bank finances that we have come to know as the norm. The SV model gives you the benefits of owning personal real estate with most of the benefits and freedom that come from renting.
Investing in company stocks and shares and using the income generated from that to pay your rent is completely different. In that case you are still a renter with a landlord. Owning stocks and shares in companies on the stock market does not give you any long term residential tenure. Your landlord can take back her house at any time, as soon as your next lease expires. Investing in well established global companies doesn’t guarantee much. When the global financial crisis hit suddenly overnight, millions of dollars of Australians’ retirement and other types of investments disappeared into thin air (from investments in established companies) with no explanation. Being part of the Sun Villages syndicate means that your money is tied to other Australian's money locally- through local real estate, with no debt, which we believe is as safe as an investment can get. Sun Villages is a new company but collectively the team has developed skills from many years of experience and the ability to make this happen. Being a part of this syndicate your money is secure, as we own the land which has a greater value than the value of the total investments from investors. In the construction phase we won't start construction until we have what we need to create something that will increase the value of the land up to or greater than the total value of the investments. We will not commence construction until we have 80% so that in the worst case scenario where the project cant go ahead, investors will be able to get their money back.
Q: This kind of investment feels risky for me as this kind of thing has never been done before in Australia.
A: This combination of legal, finance and construction hasn't been done before however, each of the individual components have been done before. The Sun Villages model brings together the best of what’s available in each of these fields for the benefit of all, rather than just for a select few. Managed Investment Schemes are plentiful though they are not in the vernacular of the everyday person. They are mostly used by high net worth individuals looking for ways to protect their investments. Trusts are a sophisticated blend of legal and finance and are put together by specialists in those fields. The finance side of the Sun Villages model has been created with professional advice from lawyers, barristers, accountants, financial planners, tax specialists and we are using the services of a "Responsible Entity" to ensure total compliance with ASIC. What we are doing is sound and meets strong needs in the marketplace.
Q: How will the SV model provide more cashflow to create savings or buy more equity in my home?
A: Saving money for other things besides housing or to buy more equity in your home, is easier in the Sun Villages model than with a mortgage because you are working within a syndicate that you belong to and this gives you greater control. We are keen on the freedom of the individual to make their own financial decisions and increase their equity at their own pace with no penalties like both early payment penalties on mortgages and also late payment penalties from banks. With SV you always have the choice between more cashflow or more money being invested into the syndicate and a bigger return/ less outgoings.
Q: I am concerned that you are unable to give me an exactly figure for my outgoings responsibilities. At the meeting you said that "outgoings would start just below market value". From my research, there is a wide range of difference between costs for a one bedroom unit in Crestwood. With a mortgage I know how much I will have to pay for 30 years.
A: Before you commit, and when you are 100% sure about how much space you need to occupy, we can provide you with figures for your first year, and then after that the outgoings will be set to the wages component of the CPI which have always been lower than the rise in the rental market. We are advising residents to try less space, so that we can fit more residents to offset more of each residents body corporate fees. A portion of space will be reserved for the pool of serviced apartments - which provide the syndicate with a greater return. If the smaller space you take initially turns out to be too restrictive, then you can extra space from this pool. Before you commit we can calculate your outgoings based on the apartment size and specific space that you would like to live in. Our outgoing cost comparisons will be for buildings of a similar quality. The estimates will be accurate to within a range of about $10 -$20. Since you have been asking to compare Sun Villages with a mortgage scenario, with a mortgage, you are subject to interest rate fluctuations which make it impossible for the banks to tell you how much you will end up paying by the time you finish paying your mortgage.. Interest rates are at all time lows now and in the past they have gone into double digits, adding hundreds of thousands of dollars to people’s mortgages. But banks never talk about this. It is only people who have experienced it first hand that do.
Q: In order to leave the property I would need to find someone to buy my shares. This is not quite the same as finding someone to take over a lease.
A: With Sun Villages there is allot more flexibility when you would like to leave. For example depending upon your reasons for wanting to leave, you may prefer to put your space into the pool of serviced apartments and be free to travel or live somewhere else for a few years with no hassles or responsibilities for your space. If you were sure you wanted to permanently leave, it would be more like finding someone to buy your house, than finding another tenant to take over a lease. With the rights and freedoms that Sun Villages provides, comes the additional responsibility of needing to find someone to purchase at least $10,000 of your shares. This is a much smaller responsibility than that of a homeowner seeking someone to buy their house, when they wish to move. In this case the person must qualify for a loan from the bank first. Based on my experiences, once you create a fantastic place for people to live, there is a waiting list of people wishing to get in, which will make selling one's equity easier.
Q: I’m concerned that share prices might fluctuate over time.
A: All values fluctuate over time. No-one controls that in any investment however this is one that is more tangible and one that you have more direct control over. Fluctuations in the general investment market are largely irrelevant to residents as it is the proportion of ownership rather than the gross value of the shares that influences your outgoing obligations to the syndicate. As per my previous point, once we co-create a fantastic place to live, we will be co-creating our own value that others will recognise and want a piece of.
Q: I feel uncomfortable not knowing which apartment I would end up occupying. (There are some I wouldn't want to own due to position). Many of the apartments don't have balconies or courtyards ( a feature quite important to me, to be able to have a private green space.)
A: We can allocate your apartment prior to your investment.
Q: I am not so keen on the idea of living in such close proximity to serviced apartments and am concerned that it will feel like living in a hotel (suitcases in the lobby, cleaners and linen services in the halls etc. Stranger in the apartments etc.)
A: Think of the serviced apartments as a small business that you have part ownership in but for no extra outlay. Those people you might bump into in the hallways are y/our customers making you/us money /saving you money, and adding flavour to y/our community. The money we make from short term rental helps offset our body corporate fees, meaning we all have more cash flow or funds we can re-invest into our complex for personal returns, and to reduce outgoings. Most other typical apartment buildings out there also have short term rental arrangements happening -being sublet and/or Air-B’n B’d, and/or filled by students and/or backpackers. In our case this will be our business and we will choose who we will target to stay with us. We will have much more ownership of who we have and who we don't have staying with us. The Bed and Breakfast concept is a staple of all ancient villages, the world over, and we want to emulate this. When villages do the cost benefit analysis of housing short term travellers, it always wins. It keeps things interesting. We expect lots of interesting people passing through, some of which will have come to share their gifts and talents - perhaps to run seminars in our social spaces.
Q: I am concerned that it will be hard to purchase more shares (especially if new developments aren't built in the future.)
A: This is a possibility. We are working to limit this risk and there are mechanisms in place to increase the availability of shares. Having a diversity of ages will more than likely make more shares available as when a resident grows older they will be more likely to want to draw down on their investment and sell their shares or when they die, it is likely their family heirs will want to sell their shares.
Q: I am uncomfortable being the youngest in a community of aging residents and the responsibilities I might inadvertently inherit (a strange one i know, but it's an unknown factor)
A: You will have no responsibilities that you don't seek as there is no obligation for any resident to be any more engaged with any other resident than in any other apartment building. With that said, some entrepreneurial residents may see the ageing residents as an opportunity to provide services to - through personal arrangements - for a fee and earn extra money. From the point of view of the aging resident some may see a preferential benefit to hiring neighbors. SV recognises the importance of diversity including age diversity. We actually have a strong desire to target more young people and at this early stage you have an opportunity to be involved in helping make this happen if you wish, but with no obligation of course. The founders of this model first envisaged this model when they were young as a way to make things easier for both old and young people in a mutually beneficial way and we think we have created a model to achieve this.
Q: I’m concerned that there is no guarantee on a 6% return on my 10k investment.
A: Guaranteed returns for investments are not allowed. The structure makes the 6% return very likely and stable.
Q: I’m concerned that communal living might have more problems than benefits? (Hard to know...could be the opposite?)
A: This is a concern that many of us share. That is why we designed the building and structure to allow for as much or as little involvement in the communal spaces as each individual resident desires. You can live with as much privacy as any apartment building provides if that is what you wish. In many ancient village traditions it is understood that no one knocks on the other person’s door. The village square is where people go to be social. Even within the Village Square, villagers learn to read a person’s body language to determine if they wish to talk or whether they are just passing through. There will be scope for different types of activities to take place in the social spaces. No one is obligated in any way to participate in any of it, but we expect some people will share common interests and create great things, such as meals for everyone to eat. To clarify this point in another way, each resident only has responsibility for their own personal space as defined by their lease. All other spaces including the social spaces are not your financial or social responsibility. You may interact with them in the same way as one interacts with a shopping mall plaza. One of the resident investors (who is also one of the founders, Stina Kerans) is taking full responsibility for the social spaces to manage and pay for themselves in the same way that a business must pay for its space to operate out of. This is an important part of the Sun Villages model.
Q: There is too much concrete in the overall design for the common spaces. I like earth and green space surrounding me.
A: For apartment buildings, concrete is the hallmark of a high quality building in terms of durability. A brick veneer apartment complex is filled with a very high percentage of wood which eventually needs to be replaced at a significant cost. The social spaces will be designed to be welcoming and pleasant and the big trees already onsite will be preserved to create shade and a basis from which to create the outside space. We have reserved a portion of the land for the purpose of green space which can be used for a garden and outdoor garden/kitchen area which we plan to build and sculpt out of sun-dried earthen masonry. Our outdoor area adjoins an open reserve on the edge of town, that is right on a bike track that takes you to a beautiful country river setting in minutes -one way- and across the countryside to Canberra the other way. Between the river and Sun Villages is lots of public open space, including a community garden, skate board park, BBQ area, and playground. One day, take the short bike ride from the SV site at 3 Young Street Queanbeyan, past the train station and along the river to downtown Queanbeyan and see for yourself.
Q: The paperwork for shares doesn't look like a legitimate legal contract to me, and makes me nervous.
A: Purchasing shares/ownership in a company (and its assets) doesn’t require a contract like the one involved in purchasing real estate with bank finance. The share certificate you will receive meets all of the statutes and requirements for a fractional real estate investment. Show this to your accountant, lawyer or financial planner to ease your fears