5 min chat: Alison Payne and PLPF

14 February 2020

Recently, I chatted with Booster’s Chief Operating Officer, Alison Payne to understand more about Booster’s Private Land and Property Fund, and why she thinks it provides a good alternative to traditional property investment.

Alison, what’s the thinking behind Booster’s Private Land and Property Fund?

Most of us have savings in the bank, or in term deposits. Which makes sense and is a low-risk option. But the current low interest rate environment means that money just isn’t working very hard. And investors nearing retirement might be looking at their options and wondering if their nest egg is going to be enough.

In a world where term deposits aren’t giving the return they used to, investors are looking for alternative investments. Being Kiwis, we tend to view residential and commercial investment properties as a good option. But buying an investment property is a big decision. And it means that your money is tied up in bricks & mortar — making it difficult to access your capital if you need it in a hurry.

The Private Land and Property Fund (PLPF) bridges that gap. It connects everyday investors with quality commercial property investments — but without all the administrative headaches! It’s designed to get your money working harder for you with a better return rate than current term deposits rates of around 1-3%.

What do you see as the benefit of PLPF over traditional property investments?

When you invest directly in property, it’s not a simple case of ‘set and forget’. For a start, you have to be sure the property you’ve chosen is a good investment. Many investors are often too quick to jump in to get started and run the risk of making poor investment decisions.

Then there’s all the paperwork involved to get the keys to the property, getting suitable tenants in and then all the day-to-day landlording that comes with it! Not only do you have new legislation changes to contend with, what happens if there’s a major repair required? How do you plan for and manage that?

PLPF takes away the issues with directly owning property. You’re still invested in land and property, but you don’t have all the stress and worry that comes with being a landlord.

So, how does the Private Land and Property Fund work?

PLPF earnings.png

PLPF mixes the best parts of investing in property with the ease of managed funds. It does this by investing in productive land and property assets (mostly agricultural and horticultural land) across New Zealand.

Most of PLPF's land or property is then rented by a company looking to grow or supply crops — for instance, a winery or horticultural company, or operated directly.

With some of the vineyards it has, PLPF has contracts to sell grapes at market prices. Getting income from a crop is a bit different from a fixed rent but might mean some bigger returns in good growing years.

The rent and crop sale revenue that the fund receives becomes an income stream for investors (just like a dividend you would get on shares). And, your investment benefits from the capital growth of the land and properties as well — just like traditional property investments.

I’ve got some savings currently in term deposits. Should I move it all into PLPF?

PLPF is different from a term deposit. We see PLPF as a complementary investment fund to work alongside existing investments, like term deposits.

You’ll know that with interest rates very low at this time, your money in fixed-term deposits isn’t working as hard for you as it could be right now. So, it might be a good time to look at moving some of your money into a different investment option — like PLPF — so it starts to work a bit harder for you. It’s about creating diversification in your investment portfolio.

Adding property investments to your portfolio, without becoming a landlord, seems like a pretty good idea to me!

How easy is it to invest in PLPF?

It’s really simple. You only need $1,000 to get started with us. You can invest directly with Booster, or buy units on the NZX. And it’s not like a term deposit; your money isn’t locked away for a fixed period. So, if you need to access your money, you can make a withdrawal request from the fund or sell your units on the NZX. Booster can give you more details about this so you can work out which option is right for you.

Think about how much trickier it would be to get your money out of a rental property in a hurry; you have to go through complicated processes with real estate agents, lawyers, your bank and deal with any affected tenants. I don’t know about you, but I sure know my patience would be tested if I had a rental property!

What kind of return can investors expect from PLPF?

Since January 2019, the fund has followed through on our aim to give investors higher returns than fixed-term deposits. In fact, since January 2019, we’ve exceeded our long-run return target of 8% for the year (before tax but after ALL fees, charges and costs)*.

So, how do you get started with PLPF?

Getting started is easy. If you’ve got the minimum $1,000 required to invest in the fund, all you need to do is apply on our website at www.booster.co.nz/plpf.

Or, if you have a share broker, ask them to buy PLP shares on the NZX. The process for this is a bit different to investing in the fund directly, so it’s best to check out our FAQs for more info. The $1,000 minimum doesn't apply in this case but a broker or other platform provider may have other requirements.

Of course, at Booster we think it's a good idea to have a chat with your financial adviser first to work out if this investment fund is right for you. Your financial adviser will help make sure you’ve got all the information you need about the fund before making an investment.

 


*All information current at the time written.

By Rachel Southby

Rachel is our Content Specialist. She loves words, coffee, books and shoes. Not necessarily in that order. She's also interested in how the power of consumer choice can lead to positive changes in business and industry.