Mog

This is the real estate side of things. If you’re after the Guides to Life, that’s the other website, linked below.

(sorry, currently closed to new investment)

These are the terms of the hard money investment deal offered by Mog. There is room for negotiation, but this is the starting point.

Summary: 12%pa, compounded monthly, paid out either monthly or all at once when returning the base capital.

You can follow project updates on this site to see where your money is being put to use.

If you want 20%pa instead, I can go find the guy who does that. But it’s not me.

Details

You lend me money. Once-off, ad-hoc, whatever we agree on.

Every month on the 15th, I repay you 1% of the highest borrowing value in the last month. Or it’s added on to the total repayments due at the end instead, if you choose that option.

You can ask for the money back, but everything is “best effort”, except at milestones that pretty much correspond to me being able to get more money out of the bank. Typically they’re about 4-6 months apart, and I can tell you the next upcoming one and a time estimate for it.

If I’m done with your money and want to return it, I will let you know when I know, which is probably a few weeks to a few months’ notice. It will come back to you by the 15th of the month following a milestone date, along with the final interest payment.

Fine print

The minimum investment amount is $10k NZD.

Fractional cents are rounded down in my favour when calculating repayments on the 15th of the month.

Lending is in NZD; any exchange rate risks and fees are on you to manage.

If I want to return the money, but you’d rather delay the return (hoping that exchange rates will improve in your favour, or whatever), the interest rate during that period is 0%.

Invest with Mog

The traditional method of splitting a joint venture is one person fronts all the money, and the other one fronts all the effort, and the profits are split 50/50.

I’m the one with the effort. That means you’re the one with the money.

For a 50/50 split, your minimum entry point is something like $250k for the first round, and $120k to accelerate it to two rounds per year instead of one. Exact figures depending on location of development. If you’re coming in with less, then I have to bring some of the money in addition to all the effort, so the final profit split will favour me. Each round is worth about 150-200k profit in approximately a one-year timeframe.

Alternatively, your entry point can include property you want developed in some way; we can figure out something that works. (Money is still required to develop the property! Just not $250k liquid of it.)

How this is different from straight lending

In the first place, you also assume a percentage of the risk. Discovered a leak after settlement, costing 30k to reroof? Too bad for the profit margin.

Next, I would note that buying property with me is a long-term venture. You don’t get 100k cash return and your 250k back after one year. You get 100k of extra property equity, and the original 250k is also still tied up in property equity. Almost the entire profit of each round is in property equity, that’s the nature of this game. There’s only one way to get equity out reliably, which is sell up. Refinancing doesn’t get you all your money back and it also puts a hard stop to any further development using that equity, in which case, we may as well disentangle the whole partnership anyway since it’s obviously run its course. (If you want to take out money by refinancing, holding costs isn’t an unreasonable approximation for how much money a project can afford to bleed without tripping up the cycle.)

Also, the paperwork involved in setting up ownership structures isn’t cheap, in either money or effort. It’s not worth it for a one-off deal, as far as I’m concerned. This option is a lot more suited for someone who thinks “buy a share in a rapidly growing stack of long-term rental houses” is a good idea. The correct time horizon to think on is multiple years. You should also take independent legal and accounting advice before agreeing to any sort of JV structure.

Another point of consideration is that transactions between related parties are generally still considered sales for tax purposes, and (depending on the exact specifics) also reset the clock on the brightline test. I am working very hard here not to be accounted as a “property trader”. Tax treatment is different if you’re a trader. Which I am not: I add value by developing, and then I hold on to it and keep my tenants happy. I’m not interested in doing things that drop me into the “trader” bucket. I’m sure you aren’t either, since traders have to pay GST.