Crowdproperty is a peer-to-peer lending platform that specializes in giving loans to small real estate developers. They use Brismo, an independent market-leading provider of loan performance data to verify each loan. Mike Bristow, Andy Hall, and Simon Zutshi founded Crowdproperty in Birmingham in 2014.
The three co-founders background is in the real estate sector and have extensive experience in the selection and management of real estate portfolios.
To date, Crowdproperty has lent around 50 million pounds on properties valued at over £120 million. The firm currently has over 8,500 investors. The company is both solvent and financially steady, with a perfect record of closing at 1.1 million pounds round of capital funding.
Crowdfunding site Seedrs conducted the campaign with contributions from 575 investors and a pre-money valuation of £15.7 million.
Crowdproperty managed to break even in 2018, and the same results are expected in 2019. This and other factors add to the stability of the firm considering many Peer to Peer lenders are still operating at a loss.
Crowdproperty is authorised and regulated by the UK’s Financial Conduct Authority (FCA) with full permissions under FCA number 723959. The firm gained FCA permissions in September 2017. It’s important to note that the FCA is not the same as the FSCS (Financial Services Compensation Scheme), thus capital is not secured as it would be in a bank.
Registration and Conditions for Investors
Registration with Crowdproperty is open to people living outside the UK. But only EU citizens who can provide proof of residence in the EU can invest. Plus the platform requires its investors to have a bank account with an English entity.
You don’t have to live in the UK to open a bank account there. Many banks, especially online banks don’t ask for proof of residence to open an account.
Who Can Borrow From Crowdproperty?
Crowdproperty lenders lend directly to the borrowers who have experience in property development. Crowdproperty knows many of these developers and the firm trusts them as they are return clients who have taken out loans for other developments.
Loan agreements are directly between the lender (investor) and the borrower. Crowdproperty only acts as a middle man, managing loans, payments and debt collection. Should it be required, Crowdproperty can add an extra layer of safety with its ability to take over and manage projects to completion and sale.
This is a better option than having to repossess a defaulted property which can take years to sell and dispose of. Instead, developments could be completed and sold in a matter of weeks or months.
Is Crowdproperty A Safe Investment?
Crowdproperty’s real estate experts thoroughly evaluate and carry out a rigorous Due Diligence on each project proposal, and does background checks of its partners. Each project must meet a criterion of 25% return on cost and loans do not exceed 70% of the LTV (Loan To Value). For larger loans, loans are staggered in tranches.
The firm only makes loans on properties in which it can register such loans as the first load. In case of default, Crowdproperty will have preferential rights over the property.
Pros and Cons of Crowdproperty
- Established in 2014 and with proven experience
- Authorised by the FCA and regulated since 1 November 2017
- Simple registration process
- One hundred percent return on investment
- Profitability target of 8% annually
- The first legal charge for security
- The secondary market is non-existent
- There’s no buy-back guarantee