Performance Statistics: March 2017

Performance Statistics: March 2017

The figures are now in for our performance statistics from last month. You will see below our summary figures from the dividend, interest and capital payments made in March 2017. You can also see our total cumulative returns from 2013, which you may also find helpful to know.

March 2017

  • Projects paid out against = 20
  • Total value of dividends and interest paid = £217,583.03
  • Total value of capital repaid = £2,015,907.39 (1 x development capital, 1 x bridging loan)
  • Total number of investors paid = 694

Total for 2017 So Far

  • Projects paid out against = 64
  • Total value of dividends and interest paid = £374,095.83
  • Total value of capital repaid = £2,881,907.39
  • Total number of investors paid = 1,714

Cumulative (from January 2013)

  • Project paid out against = 498
  • Total value of dividends and interest paid = £1,509,720.83
  • Total value of capital repaid = £7,887,627.39
  • Total number of investors paid = 10,212

To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

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How Much Diversification Is Sensible?

How Much Diversification Is Sensible?

This is an excerpt from Chapter Two, ‘How Much Diversification Is Sensible?’ of Frazer’s upcoming book, ‘The Alternative Guide To Property Investment‘. You can register your interest in pre-ordering the book by clicking on the button at the bottom of this post.

In the previous chapter, I mentioned that I go against traditional wisdom as I am not particularly convinced about diversification across different asset classes as one cannot possibly be knowledgeable about all of them and therefore must seek to rely on third-party advisers. If you have no time or inclination to look after your own money this is probably sage advice.

I accept that for most people there are good reasons to do so but, for me, I would point to the fact that one of the wealthiest people I have ever met invests all his money in property. But not just in any property, and not just in one particular area, but in one particular street (in central London). He won’t even consider buying properties on adjoining streets. As far as he is concerned, they are outside his area of expertise. Clearly, specialisation can have its advantages.

Therefore, I am not giving advice, just telling you what I personally think. The consensus of opinion about diversification may be generally sensible for most people but may not be right for everyone, especially for those who are experts in their field. That’s a matter for you to decide.

What I do think is sensible for most people is to diversify and spread your risk (within reason) so all your eggs are not in one basket.

And one reason I believe property crowdfunding is such a beneficial concept is that it allows you to spread whatever available capital you have over a number of different properties so, if a disaster befalls one, you don’t have all your money tied up in it and you still have others to fall back on.

Within the asset class ‘property’ itself, you could, if you wish, diversify your portfolio in a number of different ways. It could include traditional buy-to-let properties, new-build apartments, commercial investments, HMOs (houses in multiple occupation) and ‘fixer-uppers’.

Secured lending and development finance are other options that fall within the property investment umbrella, as you lend out sums to property developers and business owners who own property they can use as security.

Diversification also means a selection of risk profiles. Of course, you should take into account your personal circumstances and lifestyle requirements, as well as your own attitude to risk. Typically, higher risk investments come with the prospect of higher rewards, whilst a safer investment may yield lesser gains.

Buy-to-let has been the most popular option for property investment. Private renting has almost doubled in the period from 2003 to 2015, and in Manchester, it has almost quadrupled, from 6% to 20%.

This means, in theory, that the buy-to-let sector should offer great potential for investment over the coming years. However, as we shall learn later, the traditional way of purchasing single buy-to-let properties may no longer be the best way to capitalise upon this growing market. In fact, it may not be feasible at all for most individuals anymore.

The commercial property market, too, can be a good option.

Investing in commercial real estate can mean:

  • positive leverage (potentially increasing ROI (return on investment);
  • tax benefits (proper structuring can offer an array of benefits tied to interest, depreciation and so on);
  • more control (personal ownership equals control);
  • a hedge against inflation (such property tends to benefit long term from inflation);
  • cash flow and current income (rental income from stable commercial real estate means a potentially steady and predictable income stream);
  • historically strong returns (average annual return: 9.5% sustained over a 20-year period).

You can find out more about commercial property and how it compares with residential property investment later in this book.


To read more about diversification, you can click below to register your interest in the book. Fill in your details, and once the book is released, we will send you more information.

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Why Invest in Property At All?

Why Invest in Property At All?

This is an excerpt from Chapter One, ‘Why Invest In Property At All?’ of Frazer’s upcoming book, The Alternative Guide To Property Investment. You can register your interest in pre-ordering the book by clicking on the button at the bottom of this post.

Fact: almost everybody wants to be able to retire at some point and enjoy the later years of their lives in comfort.

If you think the state pension will allow you to do that, then, sorry, you are living in La La Land. The government will not look after you in your later years. It simply can’t afford to.

The maximum state pension in 2016/17 is £119.30 per week. Can you live comfortably on that? In fact, can you live on that at all?

It is imperative that you do something to supplement that. Your main choices are:

  • savings accounts
  • a private pension
  • shares
  • property

I will dealing with each of these briefly.

Savings Accounts

We are always being told that keeping your money in a bank account is safe and it’s guaranteed – at least up to £75,000. That is provided the government doesn’t also go bankrupt, which is not as ridiculous as it might sound; it would have happened here in the 1970s had the IMF not stepped in, and just take a look at Greece and Italy and Portugal and Spain … oh yes, and France, to see how vulnerable many governments are right now. I do not believe saving your money in a bank account is in any way a sensible manner to provide for your retirement.

The only thing that is guaranteed is that the value of that money is being eroded year on year by inflation, and given the current rates of interest payable the net value is actually decreasing. Even if you had a million pounds saved by the time you retired at, say, 2% interest, that would only provide you with £20,000 a year income – and that’s before tax.

Pensions

So, let’s look at private pensions…

The days of the final salary pension are long gone, and few, if any, private pensions have delivered what clients expected while some, it’s fair to say, have been outright disasters. The returns, whilst clearly considerably better than a savings account, are still negligible and the only people, in my opinion, who seem to really profit are the institutions that provide them.

We’ve seen pension fund after pension fund collapse, leaving thousands with substantial losses, executives ripping off their firms and employees for millions, and major holes appearing in the entire ‘safety-net’ structure. Robert Maxwell and the Mirror Group and British Home Stores are just two of a number of pension funds that spring to mind.

Please read Chapter 3 if you need convincing that the pension most people have is nowhere near enough to generate an annuity that will finance a comfortable retirement.

So whilst you definitely do need a vehicle to provide for your retirement, it definitely does not need to be an institutional or company pension.

Investing in Shares

Clearly, fortunes can be made in the stock market – if you know what you are doing. If you don’t, then picking the best tracker fund you can find would seem the most sensible option. I would not advocate against investing in the stock market but in my opinion, it is considerably more volatile than property and there are many more factors beyond your control that make it harder to invest in successfully.

Property

Of all the investment options available, I believe property is the one people most easily understand and, therefore, are most likely to be successful with.

I mean, let’s face it, even Goldman Sachs didn’t really understand what they were peddling in the noughties. The more complicated something is, the more likely it is that investors don’t really know what they are doing or what the risks are. They don’t even know what it is they don’t know, so how can they possibly evaluate the risks?


To read more about why to invest in property, you can click below to register your interest in the book. Fill in your details, and once the book is released, we will send you more information.

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Should You Judge A Book By Its Cover?

Do you think you should judge a book by its cover? Whether it’s fair to do so or not, it’s a fact that people do – literally and metaphorically speaking.

Whether it’s fair to do so or not, it’s a fact that people do – literally and metaphorically speaking.

Designing the right cover for a book is therefore important, and we would love to get your feedback, before making a final decision on which cover to choose for Frazer’s book.

We have narrowed it down to two choices and would be very grateful for your input.

Chose your favourite cover here


To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

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Baby Doomers: A Bleak Retirement Outlook For The Over 55s

Baby Doomers: A Bleak Retirement Outlook For The Over 55s

The House Crowd has conducted a survey of the over 55 age group to ascertain their plans for retirement. The results make for decidedly depressing reading.

Baby Doomers

Those nearing the end of their working years reported a pessimistic outlook for their retirement. 78% of those surveyed said that they are financially unprepared for their retirement, with over a quarter saying that they think it’s too late to change plans and save more.

Just 16% of respondents were confident that their lifestyle will improve once they retire, whilst 37% expected their lives to be worse. The financially secure retirement that we all hope for was considered no longer possible for a full 41%.

State Pension Shocker

Shockingly, it seems that a significant proportion of over 55s will be reliant on their state pension to support them through their later years.

Over half of respondents do not have a personal pension and have no plans to put one in place. Over a quarter have no workplace pension, and – once again – no plans to put one in place.

Once retired, respondents said they’d like £18,235 to live off, but expected just £14,180.

And who’s to blame? 20%, on average, blame the government.

Well, 23% of women do, anyway. Only 18% of men thought the government was at fault for their retirement woes.

Perhaps this has something to do with the fact that fewer women reported being financially prepared for retirement than men. Just 17% of women thought they were on track, compared with 28% of men. Regardless of gender, the results are far lower than anybody would hope.

A Silver Lining

It all looks pretty dismal, but there could be a solution. Frazer had this to say after seeing the survey results:

“These results paint a miserable picture for our Baby Doomers – but it’s not too late for people approaching retirement to improve their situation. By exploring newer investment options, like property crowdfunding, over 55s can benefit from solid rates of return to help make retirement more comfortable.”

The property crowdfunding industry has been around since 2012, and is now worth billions worldwide. Though, as with any investment, there are risks to capital, the potential returns of this method of property investment could mean the difference between a rotten or a relaxing retirement.

Find out more about property crowdfunding as a potential investment choice for your retirement by registering on our site using the purple button below. Alternatively, click the blue button to see our current range of property investment options:

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Name That Book!

Frazer, our CEO, has written another book – his first one was a novel called The Cheshire Sect which is available to buy on Amazon.

This second book is all about how you can build your wealth using property crowdfunding.

It’s due for publication in April but, before it’s published, he would like your advice on what to call it.

We’ve narrowed it down to two potential titles. Just click here to tell us which you think is best.


To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

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Performance Statistics: February 2017

Performance Statistics: February 2017

The figures are now in for our performance statistics from last month. You will see below our summary figures from the dividend, interest and capital payments made in February 2017. You can also see our total cumulative returns from 2013, which you may also find helpful to know.

February 2017

  • Projects paid out against = 22
  • Total value of dividends and interest paid = £73,730.53
  • Total value of capital repaid = £493,000 (1 x development capital, 1 x bridging loan)
  • Total number of investors paid = 478

Total for 2017 So Far

  • Projects paid out against = 44
  • Total value of dividends and interest paid = £156,425.94
  • Total value of capital repaid = £866,000 (1 x development capital)
  • Total number of investors paid = 1,020

Cumulative (from January 2013)

  • Project paid out against = 478
  • Total value of dividends and interest paid = £1,292,050.94
  • Total value of capital repaid = £5,871,720.00
  • Total number of investors paid = 9,518

To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

Register Now for more Info

View our Property Investments

 

Performance Statistics: January 2017

Performance Statistics: January 2017

The figures are now in for our performance statistics from last month. You will see below our summary figures from the dividend, interest and capital payments made in January 2017. You can also see our total cumulative returns from 2013, which you may also find helpful to know.

January 2017

  • Projects paid out against = 22
  • Total value of dividends and interest paid = £82,695.41
  • Total value of capital repaid = £373,000 (1 x development capital)
  • Total number of investors paid = 542

Total for 2017 So Far

  • Projects paid out against = 22
  • Total value of dividends and interest paid = £82,695.41
  • Total value of capital repaid = £373,000 (1 x development capital)
  • Total number of investors paid = 542

Cumulative (from January 2013)

  • Project paid out against = 456
  • Total value of dividends and interest paid = £1,218,320.41
  • Total value of capital repaid = £5,378,720.00
  • Total number of investors paid = 9,040

To find out more about investing with The House Crowd, you can register with us by clicking on the purple button below. Alternatively, take a look at our current property investment opportunities by clicking the blue button! Either way, we’re always here to answer your questions in any way we can.

 

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Apache Capital Partners Fund 466 Private Rental Sector Homes in Manchester

Apache Capital Partners Fund 466 Private Rental Sector Homes in Manchester

Property investment management firm, Apache Capital Partners, has teamed with Moda Living to secure senior debt financing of £85m, secured on the Angel Gardens development in Manchester city centre. The development will create 466 private rental sector homes in Manchester.

Deutsche Pfandbriefbank has agreed to a four-year term funding contract for the construction period of the development, which will convert to an investment loan for the rest of the term. The development is set to cost a total of £153m. Completion of the project is set for 2020.

The premium private rental sector apartments will stand 34 storeys tall, making it one of the tallest residential towers built outside London since the 2008 crash. Covering 520,000 sq ft, the Angel Gardens development forms part of the NOMA redevelopment project, regenerating a 20-acre site opposite Manchester’s Victoria station.

Angel Gardens and Beyond…

Angel Gardens, however, is not the only private rental sector delivered by the joint venture between Apache and Moda Living. It will be the first of many private rental sector developments created by the venture. In the pipeline is a total of 5,000 new private rental sector homes across eight cities across the UK, including London and the south east.

Johnny Caddick, managing director at Moda Living, believes the project will “set new expectations for rental housing in Manchester and throughout the UK”.

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Private Rental Sector Homes in Manchester: On Trend

Investing in property in Manchester is becoming a real trend for high profile investors. And the private rental sector is hot property, considering the vast increase in those seeking rental accommodation. It is mainly the young professionals, who are flocking to the city for its huge career opportunities, that make up the bulk of renters in the city. Angel Gardens will be ideally placed for the many employed in the NOMA area, as well as those commuting into Manchester Victoria.

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An Introduction to Investing Through Property Crowdfunding

An Introduction to Investing Through Property Crowdfunding

Traditionally, only those with access to large amounts of capital have been able to invest in the lucrative world of property. Managing a portfolio is normally time-consuming, business, which becomes increasingly more burdensome as the investor’s portfolio becomes larger.

However, in the last few years, a new method of property investment has emerged which has effectively democratised the entire investment process, allowing more people than ever to benefit from the financial gains that property investment can offer.

Property crowdfunding started to take off in 2012, and is now worth billions of dollars a year worldwide. The value of the industry currently doubles every two months, and is set to be worth $250bn by 2020.

The growth of the property crowdfunding industry has been catalysed, in part, by the relaxation of regulations over the last few years. The Government has identified the industry as being hugely beneficial to the economy, and has also begun investing in crowdfunding itself. Institutional investment is also coming into play at an increasing rate, and high net worth investors, attracted by the simplicity of the process, and the returns available, are also investing through property crowdfunding.

But why is investing in property crowdfunding proving so popular?

Offering the chance to build a diverse portfolio without all the legwork involved in traditional property investment models, and with the opportunity for significant gains, it’s no surprise that investing in property crowdfunding has grown exponentially in the last few years.

What’s more, as interest rates on savings continue to crawl along the seabed, and returns from both rental and sales continue to rise, more and more people are waking up to crowdfunding as a simple way to grow their money.

How Does It Work?

Property crowdfunding encompasses both equity investments and debt based investment (also known as peer to peer secured lending).

The concept itself is relatively simple.

Equity investments involve a group of people pooling their cash to buy a property as shareholders through a ‘Special Purpose Vehicle’ (SPV). The SPV is a limited company, set up solely for the purchase of that property. The SPV handles all the work, fees and maintenance of the property, whilst the shareholders receive their proportion of the rental yields, and/or share of capital gains when the property is sold.

People can invest even very small sums in buying shares in the property. On some platforms, this is as low as £50, but the typical minimum is between £500 and £1000. One of the advantages of property crowdfunding is that you can spread your available capital over a number of different properties across the crowdfunding platform, to mitigate risk.

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Getting started is a very quick and easy process. You simply register on your chosen website – it is an FCA requirement that only registered and accredited investors may participate, and, once registered, you simply select the properties you wish to invest in.

Debt based investments again involve pooling resources, in this instance, to make micro loans through the platform to a third party borrower. The loan as a whole is secured against the borrower’s property and the platform appoints an agent to act on behalf of lenders and take any necessary enforcement action. These types of investment are usually short term (up to 12 months, and pay a fixed rate of interest with no capital growth).

Where Did It Start?

The House Crowd is the longest-established property crowdfunding platform. It began trading in 2012 and offers both debt and equity investments. Since then, other companies have followed in their footsteps, such as Property Moose in 2013, and Property Partner and Crowdlords in 2014. The industry continues to expand, with several new platforms emerging each year.

Is It Regulated?

Property crowdfunding firms are all regulated by the Financial Conduct Authority (FCA), which ensures that platforms are managed properly, and that risks are made completely clear to investors. As with any investment, there is risk to capital – but it’s worth comparing this risk against other investment classes, and seeing how property crowdfunding stacks up.

Before investing through property crowdfunding platforms, it is very important to do your research. Every regulated platform should have the FCA authorisation number clearly visible on their website. If you can’t find these details, you should steer clear as they are not operating legally.

Is It The Right Choice For Me?

As with any investment, you need to take into account your personal circumstances to establish whether it is the right one for you.

You can find out more about establishing whether property crowdfunding is the right investment for you here.

Ask yourself what you wish to achieve. Investors with a lot of professional experience and access to bank funding, may find the model less appealing than novices.

If, on the other hand, you don’t have a deposit available, or aren’t able to get a mortgage, then investing through property crowdfunding could be an ideal way for you to access this asset class. And, given the government’s recent attacks on landlords, which has severely undermined the profitability and viability of buy-to-let investing for individual investors, it may well be that crowdfunding remains the only sensible option available for most.

Risk

The same principles that apply to other forms of property investment also apply to crowdfunding. You should be aware that capital growth profits are speculative, and investing in properties that produce a healthy cash flow is the more sensible approach.

One of the major risks associated with cash flow positive properties is that of damage or non-payment of rent. As such, you should always factor this in as an eventuality that may affect your yields. As mentioned above, however, if you have a well-diversified portfolio, with your capital spread over several properties, any losses due to one bad tenant will be more bearable than if you had all your eggs in one basket.

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At the end of the day, it all comes down to your risk tolerance. You do lose a large amount of leverage by investing through property crowdfunding, and you will only benefit proportionately from the property’s capital growth but, at the same time, having no borrowing means significantly less risk as there are no mortgage payments and no danger of the property being repossessed (as shareholders own it outright).

If making crowdfunded debt-based investment, (aka peer to peer lending) you need to know what would happen if the borrower defaults and does not repay the loan. You should ask questions about how your investment would be protected, what happens in the event of a default – how easy is it to take control of the secured property? – and how much equity is available to enable you to recover your money should the worst happen. Unless there is sufficient equity in the property, you could risk losing some or all of your money.

If you opt for debt-based investments, your investment will be secured by a legal charge. A critical matter to consider is at what LTV the loan is made. If, for example, a loan is made at ‘75% LTV’, it means that you will be at risk of losing some of your capital if the borrower defaults, the property has to be seized, and is sold for less than 75% of its current valuation.

Debt investments are generally considered to be lower risk than equity investments, as lenders are always paid out before shareholders, however, you do not get the potential upside of capital growth.

What About If I Want Out of My Investment?

If you need a liquid asset, then property is not the best choice.

Investing through property crowdfunding facilitates liquidity to some degree as it may be easier to sell shares in a property than the whole property. However, there is never any guarantee that you will be able to find a buyer, and, if you cannot do so, you will have to wait until the property is sold.

Some platforms will help you to find a buyer after the expiry of a minimum term, but you should check the small print before you invest. If you’re looking for a short term investment, P2P secured lending may be the better option.

To Conclude

We hope that this has offered you some valuable insight into getting started investing through property crowdfunding. Of course, you should know everything about the ins and outs of any investment before you part with your money, and we are fully committed to helping you know all you need to.

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If you have any questions, you can always get in touch with us and we will be very happy to fill you in.