CrowdLords is a two-sided, residential Buy-to-Let crowdfunding platform that brings together Investors and Landlords. Instead of CrowdLords buying the property, they act as intermediaries between the landlord or developer and investors. Launched in 2014, CrowdLords is registered as a limited company with registration number 08868588 in Hook, United Kingdom.
How does it Work for Landlords?
CrowdLords allow landlords to raise funds for a property investment without the need of going to a bank and take out a buy-to-let mortgage. The landlord relies on crowdfunding to gain the cash. Once you identify the property you wish to invest in, CrowdLords will appraise development and refurbishment issues. The minimum investment amount is £5,000. It’s the landlord’s prerogative to calculate the percentage of the rental income and property capital growth to offer the investors.
CrowdLords will value the property and if satisfied with the project, they’ll list on their website for investors to put in their money. After reaching the target, the money is pooled together into a Special Purpose Vehicle (SPV) which will buy the property. The SPV overseer is an independent director. Both the landlord and investors will have shares in the SPV.
The landlord’s responsibilities include maintenance and running costs. The landlord will receive the money once the independent director has approved the expenses.
How does it Work For Investors?
Before you can commit your money to CrowdLords, you first need to complete a one-off assessment to ensure you understand the risks involved. After approval, you’re free to browse the investments on offer. To invest you’ll need a minimum of £1,000.
How does CrowdLords Investments Work?
Each investment covers a set term, of 1, 3 or 5 years and defined by the landlord. Assuming the property is occupied, the investor benefits from a percentage of the rental income over this period, paid as a quarterly dividend.
At the end of the specified years, the landlord can continue by relisting the property on CrowdLords or sell the property on the open market. The investor will get a portion of the sale if the property has increased in value. If the landlord is a non-performer, the independent director appointed to the SPV can intervene to help resolve any issues.
- Landlords pay a £500 listing fee as well as a ‘success fee’ of 5% of the total amount of investment capital raised.
- There is a ‘handling fee’ of 1% of all income paid out to shareholders. 10% ‘investment fee’ on the capital gain on the property being sold is also charged, but this is only when the investment was profitable.
Despite being denied the opportunity to raise money on CrowdCube, CrowdLords is raising capital through private investment and crowdfunding such as Seedrs. According to Seedrs fundraising history, CrowdLords investment obtained so far is:
DATE INVESTMENT OBTAINED
11-Dec-2014 – £150,000.00
14-Jun-2019 – £152,490.00
Whilst in Beta, CrowdLords is offering 80 shares at £5.00 per share. Share price history is as below:
- £5.00 – 24 June 2019 (Current price)
- £0.61 – 30 December 2016
- £0.65 – 22 June 2016
- £2.50 – 11 December 2014
There is an absence of liquidity in property investments and currently, CrowdLords lacks a formal secondary market. This means you should only invest money you will not need in the short-term. Nonetheless, CrowdLords rates of return are significantly higher than the one’s banks and building societies offer. They’re also relatively unaffected by changes in the stock market.