Property Investment from £1000. Advice.

luke_pa

Hi guys,

I was speaking with a friend of mine yesterday, who told me he had seen an article about investing in property and 'crowd funding.' I really like the idea of investing in property but as it stands at the moment i have nowhere near enough funds to go it alone. I looked at the two websites that the article are talking about.
Article;
http://www.bbc.co.uk/news/business-27606802

The House Crowd:
http://www.thehousecrowd.com/

Property Moose:
http://www.propertymoose.co.uk/

These seem like really good opportunities but the skeptic part of me is always cautious. The House Crowd are offering two options:

Invest in property for income (6% pa) and capital growth.
Or Invest for income only (7.5% pa)

Both of these options are far better than any ISA rate i have seen but what risks are involved? Anyone who is a bit more clued up on this sort of thing than me, as i am a complete novice. Or anyone who is or has used any investment along these lines, please help. Any information, would be much appreciated.:beer:

Luke

G_M

Are those rates guaranteed? What are the risks? What if the property goes un-let? Or tenants default on rent? Who covers the costs? What if the Crowd-funding company goes bust? Or the Director runs off to S America......?

Have you listened to the BBC broadcast?

Remember your investment is unprotected (unlike a bank savings/iSA account). This is an investment plain and simple. Why not invest in a stock market fund via an ISA? You could select a property fund.

princeofpounds

Why bother with this nonsense? There are plenty of well-established property funds marketed by regulated asset managers worldwide. Investment trusts that invest in property are worth a particular look.

jjlandlord

7.2. Following receipt of your investment and the purchase of your property, you will receive a share certificate as evidence of your investment. A copy of the relevant SPV’s articles of associations (“Articles”) will also be supplied to you. The Articles will govern and detail your investment in the SPV, your position as a shareholder and how any income and return will be generated.

I wouldn't be comfortable buying shares before I read the articles of association.

10.3. Calculations we may provide on the website of the likely rate of return on investments are for guidance purposes only and are not guaranteed.

No guarantee of return, which seems to directly contradict how they present the investment:
"We pay you a fixed rate on your investment of 7.5% a year (paid every 6 months)."

As always, read every single word and ask for clarification before handing any money.

maas

There was a piece on Radio4 about this (Moneybox I think it was). Sounded interesting at first until they got to the nitty gritty of it.

The charges that the "investment company" takes out the pie means its more of a good deal for them rather than the dozens of small investors. And if its resold in the future they take another slice of the pie before the money is split between the original investors.

The other thing is that you dont actually own any share of the property, you just own a share in the Trust which overseas the property.

The more the radio show spoke about it the less attractive it sounded to me. There's obviously a market for this type of thing but I'd prefer to put money in an ISA property fund (as princeofpounds says).

somethingcorporate

Not a great idea, better and safer things to do with your money.

luke_pa

Thanks for the advice. You mentioned the ISA property funds. Any info or links for these?

dimbo61

Give me the money and I will buy a shed for my garden Thanks

EdwardS033

A safer bet with FSCS protection and ISA allowable is

https://www.castletrust.co.uk

They track the Halifax house price index and pay a dividend quarterly depending upon how long you commit the money for.

If you fancy investing in commercial properties have a look at
https://www.hl.co.uk/funds and where it says search funds select 'by sector' and search 'property'. These funds are where a lot of big industrial parks and retail shopping centres are financed.

For residential properties there is a fund http://www.hearthstone.co.uk/ that specialises in this.

Broken_Biscuits

I already invest a small amount each month into a commercial property fund and have been doing some research lately on residential property without actually purchasing a buy to let in the traditional way.

ive been looking at property moose with an open mind. Most of the comments here are negative but its fairly obvious that no one has invested.

now a man is not his forefathers, however, the person in charge of this is the great, great grand son of the Cadbury chocolate legend that created incredible housing opportunities for the working class of his time. I understand that a number of the investors from start up are family and friends - so he has a massive incentive to succeed.

its only been around a year but from what i can see, you put in minimum £500 and you earn 3% until the full amount of the property is ready. At this point property moose pay themselves 5%. In 3-5 years time the property is sold and 85% of the profit is divided by the investors. The latest property up is advertised at 8.07% returns from the rent and then 40% returns overall at year 3 when it sells. Obviously these are predicted and not confirmed. If prices fall at sale time a vote is held and majority decide on renting a further year or selling at a loss.

i am not ready to invest here and perhaps never will, but am looking for experiences of people who have or are fully researched and decided not to.

thanks

HappyMJ

Broken_Biscuits wrote: »

I already invest a small amount each month into a commercial property fund and have been doing some research lately on residential property without actually purchasing a buy to let in the traditional way.

ive been looking at property moose with an open mind. Most of the comments here are negative but its fairly obvious that no one has invested.

now a man is not his forefathers, however, the person in charge of this is the great, great grand son of the Cadbury chocolate legend that created incredible housing opportunities for the working class of his time. I understand that a number of the investors from start up are family and friends - so he has a massive incentive to succeed.

its only been around a year but from what i can see, you put in minimum £500 and you earn 3% until the full amount of the property is ready. At this point property moose pay themselves 5%. In 3-5 years time the property is sold and 85% of the profit is divided by the investors. The latest property up is advertised at 8.07% returns from the rent and then 40% returns overall at year 3 when it sells. Obviously these are predicted and not confirmed. If prices fall at sale time a vote is held and majority decide on renting a further year or selling at a loss.

i am not ready to invest here and perhaps never will, but am looking for experiences of people who have or are fully researched and decided not to.

thanks

8.07% gross returns are almost unachievable. Look for properties on the market yourself and see if you would pay 8.07% rent for a property. The net returns would be nothing...I'd imagine the property to be a money pit which is not worth much as it's condition is poor.

For an example my property is let at a gross return of 4.9%. It's net returns are around 3%.

The figure could be ROI instead. I could invest £25k borrow £75k on a BTL at 4.5% buying a property worth £100k. Rent the property out at £500 per month i.e 6%. Gross income is £6k less interest of £3,375 so the net return is £2,625 or 10.5% of the initial investment. If the value of the property falls you could lose the lot...however if the value of the property increases then your investment is multiplied due to the leveraging the BTL mortgage has given you.