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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Traditional Property Investment versus Property Crowdfunding

Traditional Property Investment versus Property Crowdfunding

Property crowdfunding and traditional property investment have some significant differences. The main difference is to be found in the ease of management.

Whilst those who favour traditional property investment value the sense of control associated with full ownership of a property, along with the costs and time involved in maintaining their investment, others simply do not have the time, nor the resources, to keep up with the demands of a property.

There are also additional financial implications to consider, and we will go into these in this article.

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Property crowdfunding eliminates many of the responsibilities involved with traditional property investment. An investor wishing to create a properly diversified portfolio of properties will invest large sums on a smaller range of properties, and will be responsible for everything from biological disruptions (by infestation of plant or animal life), to managing tenants and weathering void periods on a rental property. With a crowdfunded property investment, none of these aspects apply, as they are taken care of by a third party.

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Furthermore, the due diligence, prequalification and vetting of an investment property are all handled by the SPV (Special Purpose Vehicle), the company behind the purchase property.

If, on the other hand, you have the skills and experience necessary to avoid mistakes and handle the investment on your own, then traditional property investment is a lucrative and engaging way to grow your money. That being said, you will need substantially more money in the first place in order to make your first investment purchase, which is not something that all those wishing to invest in property have to hand.

Fees and Costs

There’s also the matter of fees. A traditional property investor will have to contend with solicitors’ fees, mortgage broker fees, loan arrangement fees, and surveyor charges, for example. With property crowdfunding, these fees are included within the overall cost required to sell the property, as listed on the crowdfunding platform’s website.

It’s also worth learning from the mistakes many property investors made ahead of the 2008 property crash. Many found that their mortgage lenders had allowed them to leverage at a rate that exceeded their affordability. The banks then revalued people’s assets, leading to a swathe of repossessions, subsequent catastrophic loss, and bankruptcies.

Checking the small print and getting legal advice when investing with the traditional property investment model is wise. Then again, none of this applies to property crowdfunding.

This is, of course, a worst-case scenario for traditional property investors. It is, nonetheless, one that still bears some weight. If mortgage rates rise, those who have invested with a mortgage may find themselves out of pocket. Buy-to-let investors should take the obvious step of making sure that their monthly rental income covers, at the very least, their mortgage repayments. However, they may also benefit from factoring in potential mortgage rate rises.

Find out more about our current property investment options.

Buy-to-let landlords have also been hit by changes in Government legislation that have removed the ability for these landlords to deduct interest from profits from their tax liability, which can prove a further obstacle to ensuring the profitability of their investment. Again, there are no such risks with property crowdfunding.

Challenges and Rewards

Whilst there are challenges involved with investing in property in the traditional manner, there are also a great many rewards. First of all, rather than earning a percentage of returns based on your initial investment sum (as with crowdfunding), once all outgoings (such as loans and legal fees, for example) have been taken into account, an outright property investor will earn a potentially much higher return.

There is, however, a downside to this. Where a traditional investor leverages a lot of cash, the risks to the investment are increased dramatically. Should the investment value fall, they could stand to lose a very significant amount. Whilst risk is, of course, not negated with property crowdfunding, no mortgage is necessary.

Selling Your Investment

Another benefit of traditional property investment is the control over when to sell the investment. If you are able to sell at a profit, and as quickly as you require, then the power resides within your hands. Property crowdfunding, on the other hand, requires a majority vote from all shareholders if you wish to sell before the end of the investment term.

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To Conclude

Property investment, whether traditional or crowdfunded, has long been a profitable investment choice. Whilst both forms of investment carry risk, there are significant pros and cons on both sides, which potential investors need to factor into their investment decision.

Weighing up which type of property investment is right for your particular needs is key to ensuring that you are confident in where you have placed your money. At the end of the day, however, whichever path to property investment you choose, there is potential for great returns.

Prospects for Property Investors After Bank of England Clampdown on Buy to Lets

Some recent changes are already hitting landlords hard, others will soon. Here we look at the available options in what for many buy to let investors are troubling times.

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Top Buy-to-Let Returns; Manchester does us proud!

Impressions aren’t everything. Investors are now beginning to look way beyond the wealthy, gold-plated streets of London and into more lucrative areas of the country.

The latest data on buy-to-let returns, from lender HSBC shows cities offering the greatest yields (rental income measured against property cost) include Southampton, Blackpool, Nottingham and Hull with many private landlords in these areas owning at least 1 in 4 properties.

Taking a moment of pride – Manchester falls into the top 5 cities offering the greatest yield with a return of 7.98%. That’s number TWO on the list!

So why are these cities more attractive to landlords you ask?

The answer; although London properties offer prosperous returns due to high rental income, the original investment near extinguishes the return. High house prices in the big city crush the yield and limit the return. Therefore, investments into the top yielding locations are much more appealing to landlords thanks to healthier returns and overall more durable investments.

So it certainly pays to do your research, and here at The House Crowd, we’ve done just that from our very first investment. Visit our Why Join? section for more information on the benefits of property investment with The House Crowd.

Information sourced from: http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/10859896/The-towns-that-offer-the-best-buy-to-let-returns.html

More VCs announce their investments in crowdfunding platforms

Crowdfunding for property is becoming the largest industry in terms of committed capital, according to an article on Crowdsourcing.org.

In the US, a recent investment by Canaan Partners of a whopping $9 million to Realty Mogul illustrates this clearly. Hrach Simonian who is a principal at Canaan and sits on Realty Mogul’s board told what he see are the key things VC’s see when making property investments via crowdfunding:

  • Technology is part of the solution, but it’s not the whole solution. You need to attract both sides of the marketplace, the sponsors… and the investors.
  • Is the market that a startup is in big enough, and is the timing right?


Simonian acknowledged that the real estate market is worth around $11 trillion and that niche crowdfunding platforms (which is what we believe The House Crowd is) are more advantageous over general ones, and with so many VC’s making investments in property via crowdfunding, it’s great news for the industry across the world.

Happy 18th birthday Buy to Let mortgages…

…and thank you for our present – a predicted 11% profit for the next decade according to a recent report.

The findings from the report published in an article by The Guardian identified that with average annual returns of 16.3% (£13,000 profit) on each investment of £1,000 since buy-to-let mortgages were launched in1996, landlords have earned more than they would have done with every other type of investment. These are clearly superb returns.

The report has been timed to coincide with the new affordability rules requiring lenders to carry out detailed checks on potential mortgagee spending and ability to pay if interest rates go up, but buy-to-let investors will be exempt from these rules.

Landlords take one in seven mortgages, and since 1996, lenders have granted 1.5m mortgages worth £174bn to buy-to-let investors. You can read the full article here: http://www.theguardian.com/business/2014/apr/26/returns-for-buy-to-let-landlords-dwarf-other-investments

The Misery That Banks Cause

Following on from the reports in the press last week about Chris and Denise Tudor-Whelan, I have coincidentally met five separate people recently who have been ruined by the banks for no good reason.

These people once had very successful solid property businesses – all of them worth tens of millions and all of them keeping up payments on the loans they had secured against the properties.  And yet these people were all destroyed by the small print in their loan documents; three of them being made bankrupt and two still fighting to avoid it.

What most people do not know is that the small print in their mortgage documents allows the banks to call in the loans if the borrower breaches the “Loan To Value Covenants”.

Essentially, what this means is the banks can have your property portfolio valued periodically by a surveyor (of their choosing) and if that surveyor decides the value has dropped below a certain threshold the bank can call in the loan immediately or massively increase the interest rate because of the perceived extra risk, thus making the investment unsustainable. They are allowed to do this even if you have never missed a payment.

There is little doubt in my mind, after speaking with these people that some if not all the banks have actively pursued a policy of using this small print to destroy property investment businesses and seize their assets at a vastly reduced level.

Yes it’s immoral, unethical and corrupt, but what can be done about it? There is certainly a groundswell of public opinion against the bankers. And the internet abounds with the self proclaimed “free men movement” seeking to remove themselves from the shackles of HMRC and the “banksters”. They have some interesting arguments and I would love for them to be successful. Unfortunately the whole system is stacked against them so it is incredibly unlikely.

To my mind the best solution is to avoid using banks wherever you can. Give them as little power over your life as possible. Its why we set up The House Crowd so you have the choice of dealing with an ethical, transparent and fair organisation that will also give you a much better return on your money.

Read more about the Tudor Whelan’s story

Read more about the how the banks operate illegally and cheat people out of their homes

Read Cartmel Butlers Report to the Parliamentary Select Committee on how banks sell on the benefit of your mortgages to privately owned offshore companies but then seek to reclaim the debt from you and repossess your property (even though you no longer owe them the money).


Who Moved My Cheese? …Different Strategies For Changing Market Conditions

I have been reading quite a few forecasts of the property market of late. As usual, I regard these reports with a healthy degree of scepticism as nobody really knows what the future holds, however much of an expert they like to portray themselves.  And clearly some of them have their own agenda to promote.

Money Week, for example, has always been extremely pessimistic about property investment as a vehicle to build wealth – as anyone who has read their panic inducing ads will know.

Could this possibly be because a) they don’t understand it or b) they want to sell you their “Special Reports” on Gold, Oil, Timbuktu Stocks (or whatever) so you can learn about the imminent disaster about to afflict the whole world… apart from, of course, those with the inside scoop.

I used to subscribe to Money Week – it has much worth reading – but the continual drip drip of articles designed largely to create a sense of fear and panic (and sell Special Reports) was, in the end, just too much. I had to stop before I slashed my wrists. One thing I do remember though before cancelling my subscription 3 or 4 years ago was its editor, Merryn Somerset-Webb, writing about how financially stupid it was for us English to own our own homes. Apparently she had just sold her house in Battersea and was going to rent from then on. Hummm… Wonder how she feels about that now.  Not so smug, I wager.

Probably the two most reliable property forecasts I have read are Savills where you can see likely growth region by region:

Savills five year forecast

and The Centre For Business and Economics Research which reports: ”a typical house in the UK is expected to cost £227,000 in 2014, surpassing the 2007 pre-crisis peak for the first time… By 2018, we expect a typical UK home will cost £267,000, as house prices rise by 4.6% over that year. In 2018, we predict UK house prices will be 20.4% higher than this year.”

In short both forecast that growth in areas outside London and its environs is expected to be steady and moderate (between 2-5% a year on average) over the next 5 years. That, to me, seems about right.

As those of you who have attended our investor evenings know from my talks house prices are set to rise faster than rents and, as prices rise, yields will fall. At The House Crowd we have had a good run at buying properties at rock bottom prices but it is becoming tougher to find the deals. Rather than sitting round moaning about ‘Who Moved My Cheese” (Google it if you don’t know what I’m on about) we have to adapt to changing market conditions. We have been discussing this and have several potential strategies to accommodate changes in the market.  We will be developing these in 2014 and will, of course, keep you informed.

House Crowd Passes £2,000,000 Mark

We are pleased to report that we recently passed the £2M investment point, proving the popularity of our investment model among investors. This represents a significant milestone for us as we created an entirely new way of investing in property and made it accessible to small investors.

This ability to invest as little as £1000 and gain greater returns than most savings accounts and pensions (not tom mention being better than the returns most private landlords get) has been central to take-up among investors. The focus on cash flow rather than speculating on capital growth has seen us concentrate on purchasing traditional housing stock in areas of high rental demand in Manchester.

In the last first 18 months,of trading we have purchased 31 properties, predominantly two bed terraces, and we have offers on a further two houses.

Frazer Fearnhead, founder of the company, said:

“I am very pleased with the progress so far. The company is growing steadily, which is especially pleasing when you consider investors had no reference point before for a company like this.

We are happy they have seen the validity of this as an investment vehicle, and to be repaying their trust in us. It is a testament to what we do that many of our investors are now investing in every project we do and bringing in friends and family.

The only problem is that we are now getting oversubscribed very quickly for each project, and are sometimes having to return people’s money. But as problems go, it’s a good one to have.”

“We generally need around £63,000 to purchase and refurbish a property,” said Mr Fearnhead. “It used to take us 10-14 days to raise that amount each time, but now it is taking just a few days.  In fact, the last project took just four hours to raise £70,000.”

Pensions vs. The House Crowd

According to recent reports in the press, annuity rates are at an all time low. In fact they are so low, you would have to live to 90 to get value for money. And low interest rates and rising life expectancy are pushing rates down even further.

The BBC reported that a man aged 65 living with £30,000 to invest in an annuity would receive £1,719 a year gross for their rest of his life. Put another way, after 17 and a half years the original will have been paid back, so if he had died before then he would have lost out financially.

Compare that with The House Crowd where you would get £2,250 for the rest of your life (with our income only product). That’s a whopping 30% more PLUS you still have your original £30,000 capital which can be accessed when you like or passed on to your heirs (unlike with an annuity which will stay with the insurance company).

And yet, amazingly, pension companies promote themselves as being low risk. I wholeheartedly agree with former Downing Street pensions adviser Ros Altmann who stated that pensioners are not properly warned about the risks involved in buying annuities. She added  ‘If you buy a financial product that can lose more than three quarters of your money, it would usually be considered “high risk” – and those selling it to you would surely have to give you a proper risk warning.’

‘Pensioners take ‘the biggest gamble’ of their lives when they buy an annuity to provide for their retirement. They would have to live until the age of 90 before their annuity became ‘good value’, warned Altmann.

Where we disagree with her is when she said:  ‘Most pensioners, have little option but to buy an annuity if they want a guaranteed income in retirement, will lose much of their nest egg if they die young, become ill or if inflation rises…’ We know people do have an option, but she clearly hasn’t heard about The House Crowd.