Why Crowdfunding is the smarter way to invest in property
They say property investment is in our blood. It's easy to understand and, in most people's minds, bricks and mortar represent a sound physical asset. However, the financial barriers plus the time-consuming purchase process and management of property have generally rendered it inaccessible to many people.
Democratising Property Investment
With property crowdfunding there is now a way that you can select and choose properties to invest in, without many of the drawbacks of individual investment.
The concept is simple: you simply pool resources with like-minded individuals via a web platform and then share in the resulting rental income and/or capital appreciation. It enables you to benefit from investments selected by highly experienced property professionals and spread your capital – and risk – over a number of properties.
It has certainly proved popular; in just a short few years, property crowdfunding has grown from nothing to become a multi-billion dollar industry. According to Massolution's Real Estate Crowdfunding Report 2015, the property crowdfunding sector is now worth $2.5bn pa and is set to grow to $250bn pa worldwide by 2020.
The House Crowd
The House Crowd was the first property crowdfunding platform in the world and is the UK's market leading property crowdfunding platform with more than 160 projects successfully funded. Individuals may select properties to invest in via the platform and invest with as little as £1,000, although many invest much more than that.
It's a completely hands-off investment and The House Crowd will manage the process for you. The company focuses on two main areas: short-term deals aiming to pay a fixed return of up to 10% pa – or, alternatively, longer term buy-to-let investments (equity deals) where the emphasis is on high-yield properties, some of which are as high as 9% pa gross, plus capital appreciation. The average profit generated on properties sold to date is 30.15% (ex-transactional costs).
Later this year, with the introduction of the new Innovative Finance ISA, the House Crowd is intending to offer peer-to-peer loans which will pay up to 10% pa tax free. All investments are, of course, secured against property.
Case Study: Why I chose the House Crowd
Mark de Mallet Morgan spent his working life as an independent financial adviser, applying his professional understanding to a series of personal investments in various asset classes. In 2014, he made his first investment with The House Crowd. Two years later, he has invested over £200,000 in a total of 12 projects.
"Property has piqued my interest since my late twenties, but I have neither the time nor the expertise to become truly dedicated. Getting involved with The House Crowd gave me the best of both worlds: significantly higher returns than traditional investments combined with an almost entirely hands-off approach. Everything is completely straightforward. Frazer and the rest of the team are remarkably savvy, and they know how to make the best of an investment.
I have neither the time nor the expertise to become truly dedicated. Getting involved with The House Crowd gave me the best of both worlds
"What really makes The House Crowd's model so enjoyable to invest in is the level of involvement I do have. Only having to make the basic decisions about which properties to invest in, how much money to contribute, and when to make a move; everything else is taken care of by them. It's a little like playing a game of chess with a chess master at hand to help make the moves for you; I decide what I want to achieve, but the hard work falls to The House Crowd."
How to Get Involved
FCA regulations dictate that all investors must first undergo a registration process to determine suitability. Simply visit thehousecrowd.com to do so. It should take just a few minutes.
Once registered, clients can browse a selection of available opportunities and download all pertinent investment information. The most popular projects are filled within days, and sometimes just hours.
To make an investment, a simple form needs to be completed, money transferred to a solicitor's client account and, after that, investors have access to an online portfolio that keeps them updated with their investments. To speak to The House Crowd, call 020 7873 2350 or head to thehousecrowd.com.
An investment in property and unlisted shares contains risks. Property values can fall. Your capital may be at risk and returns may vary. Investments are only available to certain specified persons who are sufficiently sophisticated to understand the risks.
Investments in property and unlisted shares are not listed on any market and you may not be able to sell your shares until the property is sold.
You may not receive the anticipated returns and your capital may be at risk.
A financial promotion by The House Crowd Limited (FRN 711355), an appointed representative of Prosper Capital LLP (FRN 453007) authorised and regulated by the Financial Conduct Authority.
