Real estate has always been a trusted and preferred investment choice, particularly in land-scarce Singapore, where its value consistently appreciates. While monthly rental income is the ideal form of passive income for many, investing in property is easier said than done.
Acquiring a second property for investment in Singapore is challenging due to the substantial capital required. Secondly, the Singapore government imposed an additional buyer’s stamp duty (ABSD) on those owning multiple homes. In April, the government raised the ABSD from 17% to 20% for second-owned properties; for third-owned properties, it increased from 25% to 30%.
Given the significant barrier, Quah Kay Beng was determined to offer a more accessible solution to the market. He took his 25 years of background in real estate investment and experience as a founder of private equity investment management firm Trinity House Investment (THI) and began to innovate. Since THI’s investor base was limited to accredited investors, he wondered how he could create opportunities for retail investors to access real estate-backed investments beyond Singapore with higher returns than traditional bank deposits.
A serendipitous meeting with industry veterans led to Quah launching BigFundr, a platform targeting retail investors to access real estate debts. Unlike what its name suggests, investors do not put money into bricks-and-mortar property. Rather, investors are able to invest in property loan deals by playing the role of “lenders” to small and medium-sized real estate developers who commit to paying a fixed monthly interest over a specified loan duration.
Now in its second year of operations, BigFundr is a leading investment platform and the sole fintech firm providing real estate-backed loans with a full guarantee on capital and interest from Maxi-Cash Capital Management, a wholly owned subsidiary of SGX Catalist-listed Aspial Lifestyle 5UF Limited (ALL).
ALL’s parent company, Aspial Corporation A30 , is an SGX mainboard-listed firm managing a wide spectrum of businesses including property development, hospitality and resort management.
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Through a legally binding contract between BigFundr and Maxi-Cash, investors are ensured that their capital and interest are fully guaranteed. In the event of an unlikely default, Maxi-Cash immediately steps in to repay both the capital and interest amount in full. The robust backing of Maxi-Cash and Aspial Corporation, makes BigFundr strategically positioned to provide real estate-backed investment products.
Quah, who serves as the CEO of BigFundr which holds a capital market services licence from the Monetary Authority of Singapore (MAS), articulates the concept: “The idea behind BigFundr is to empower investors with the freedom to choose a product with a well-managed risk-return profile.”
BigFundr, in collaboration with its network of global fund managers, will actively seek real estate-backed loans in Australia, the UK and Singapore. These experienced fund managers specialise in real estate lending and typically manage loans ranging from $1 billion to $3 billion across various property markets.
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As certain local regulations limit the exposure of large banks to segments of the real estate market, developers have turned to other sources of funding, leading to potentially rewarding investment opportunities for other lenders. In Australia for example, private sector lenders like institutional funds and savvy investors are alternative sources of funding for borrowers. BigFundr is currently focused on Australian commercial property lending.
“Our extensive network of fund managers and developers give us access to high-quality borrowers and loans, which in turn bodes well for our investors investing in our real estate-backed loan notes,” says Quah.
Each deal goes through a stringent credit assessment. After an initial assessment by external loan managers, BigFundr and Maxi-Cash will conduct further due dilligence to determine the viability of the deal to be presented to investors. Also, BigFundr will only lend up to a maximum of 70% of the property’s value, known as the loan-to-value, to provide a buffer for any changes in the property value that could result in asset devaluation.
In addition, BigFundr has three other layers of guarantee all in the best interest of investors — it holds the first charge on the real estate; followed by a personal guarantee from the borrower entity; and finally a buyback guarantee from their Australian fund manager companies.
“With Maxi-Cash, our partner, we wanted to guarantee both capital and interest for investors,” says Quah. “It gives people peace of mind because Maxi-Cash and Aspial Group are established household names in Singapore.” Even in a default, investors are assured of receiving their entire capital and interest back, although Quah notes that such a situation has never occured.”
“Our reason for existence is simple: to build wealth for customers … and to deliver the highest possible rate of return in the safest possible manner to investors." says Quah.
An investment for all
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Starting with as little as $1,000, prospective investors can have exposure to the real estate sector. Based on the deal’s structure, they can choose their investment duration, ranging from six to 15 months, all at a fixed interest rate. BigFundr pays monthly interest to investors, allowing them to generate passive income from their available funds.
Since its inception, BigFundr has doubled its rates in line with the current interest rate environment and now offers 6.25% p.a. on a 12-month deal, surpassing traditional bank deposit rates of around 3% as of September. BigFundr’s flexibility to adjust its rates according to the current interest rate environment enables investors to benefit from better returns.
“What we find is that a lot of our investors are fairly cash-rich, and they may have fixed deposits, REITs and bonds (as investments),” says Quah. “But we want to encourage people to diversify their investments, and real estate debt is a form of short-term investments earning a good interest rate.”
BigFundr has attracted $100 million in investment through more than 65 deals in 22 development projects in just two years. Its investors range from professionals to the everyday man and retirees looking to preserve their wealth and seek regular income or better deposit rates.
From its inception up until today, BigFundr has relied only on word of mouth to grow its client base, which can be attributed to strong referrals from its existing pool of investors. About 60% of new investors are from referrals, a testament to the trust investors have in the product.
To reward BigFundr investors for referring the platform to peers, it has a “refer a friend” programme. The programme has two levels — a reward for both the referee and the new investor who successfully opens an account. The second level rewards the referee for the first investment the new investor makes. The programme has several reward tiers with the highest tier paying out $400 in referral fees.
Funding the future
Quah and his team are dedicated to ensuring a seamless investing experience on BigFundr for all investors. Thanks to ongoing close collaboration with its investors, BigFundr will launch a revamped, mobile-friendly website in early 2024 to provide investors with an enhanced user experience and better access to investment resources.
In the coming months, BigFundr will launch a mobile application enabling investors to manage their portfolios conveniently and on the go.
Quah says this allows for ease of capital flow in and out of projects, giving investors more control when transferring their funds. He says there may also soon be deals as short as three months.
While BigFundr continues to build on its strong foundation in Singapore, Quah expresses the company’s desire to extend its presence beyond its primary market. Given the similarity in real estate regulations, they are inclined toward Commonwealth countries. Quah actively seeks joint venture partners to facilitate entry into these markets and offer investors enhanced diversification opportunities.
Returning to Quah’s original concept behind BigFundr, which is to empower investors and put their money to work for them, Quah emphasises that this approach offers investors greater accessibility and convenience.
“We are several seasoned property professionals who have created a proprietary platform with one product, and we do it well,” says Quah. “Our reason for existence is simple: to build wealth for customers at this time of high inflation and low growth, and to deliver highest possible rates of return in the safest possible manner to investors.”
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