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Alternative Finance blog


Property investment in the peer-to-peer and crowdfunding market

2 years ago


A recent White Paper from research company Datamonitor, The Global Wealth Market in 2015, has found that alternative asset classes are becoming increasingly important as part of high net worth investors’ (HNWIs) portfolios, with property particularly attractive as a tangible, non-liquid asset.

But investment in property is not restricted to HNWIs; in fact, the UK’s longstanding love affair with the property market has resulted in a proliferation of crowdfunding and peer-to-peer property platforms offering attractive returns to smaller investors across the whole range of property types – from buy-to-let, to commercial property and new developments. The fact that some of these sites allow investors to participate from as little as £100 means investors can easily diversify across a number of properties and spread their risk.

Crowdfunding usually involves the investor having a share in the property, so in addition to regular rental income, investors will benefit from any increase in the price of the property – but of course they also stand to lose money if house prices fall. With peer-to-peer, interest is earned on the loan, but without owning a share of the property.

Here are a few examples of businesses currently active in this market.  The list is not intended to be exhaustive nor does it represent any form of recommendation or advice to invest through them.

Peer to peer

Landbay – has lent £7.2m to date and focuses on the buy-to-let market, with a minimum investment of £100.

Proplend – investments are secured against commercial property, with a minimum stake of £5,000. Proplend breaks each loan into three tranches, allowing investors to participate according to their appetite for risk and return.

Relendex – divides loans into parts, so that smaller investors can take part in investments not previously open to them. Relendex investors lend on retail, office, industrial, leisure and residential properties. The minimum investment is usually £500 per property.

LendInvest – is a peer-to-peer marketplace for real estate mortgages. The minimum investment is £1,000 with average returns of up to 7.8%.

Assetz Capital – offers loans to property development companies, usually for a specific project. Loans are also made to individuals or businesses to purchase buy-to-let property.

CrowdEstates – helps property developers get access to funding for their projects and helps savers get a better return on their money. Crowdestates connects individuals who would like to invest in or diversify their portfolio with property, with developers and property owners looking for finance.

Folk2Folk – puts borrowers looking for interest-only secured loans on properties in the South West in touch with investors. The minimum investment is £25,000.

 

Crowdfunding

Property Crowd - allows you to invest in prime city centre locations for a minimum investment of £5,000.  You get a proportional cut of the rental income and share in the capital gain on sale. You reduce your risk by diversifying across several propertIes.

Property Partner - is similar to Property Crowd without the focus on city centre locations. You can exit your investment and realise capital gains by offering your investments for sale at any time. You can also exit at market value after five years.

The House Crowd - follows the principle of 'invest together and share together' in housing stock with the potential for good upside, including homes of multiple occupation (HMOs), repossessions and ex-local authority properties. The minimum investment is £1,000.

Elevate – offers the opportunity to fund buy-to-let properties that are either mainstream or have a social or eco theme. Investments can be made in either the equity or debt of a property according to investment objectives and risk profile, from as little as £100. The platform allows individuals to source their own properties and then invite friends and family to participate in the syndicate.

CapitalStackers – supports commercial and residential investment and development. A borrower needs to first secure a level of bank finance (usually 50-65%), then CapitalStackers “stacks” private funding on top to reach the level required to finance a property scheme.

Tagged: property investment crowdfunding propertycrowd relendex landbay proplend lendinvest assetzcapital crowdestates folk2folk propertypartner housecrowd elevate capitalstackers



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