Crowd funding buy to let houses

cells

chucknorris wrote: »

It needs a lot of thinking over, I can see the attraction of pooling the properties, as it reduces risk to the investors, but them having enough faith and trust might be a problem that needs overcoming.

When I get time I plan to see what all the various schemes offer see if a hybrid scheme comes to mind. At the moment I am treating it as an interesting scenario, I think all sorts of problems will come out of the woodwork that create obstacles.

I have said this lots, but the UK needs a big residential company. A FTSE 100 that is in the top 10 or even the top 5

It can be done with some rich folk jump starting it, or maybe a larger number of small landlords. eg if you could find say 100 landlords with 20 properties each and mix them all into one company with 2000 properties and from there hit the road and try to convince more landlords to trade in their properties for shares.

If it could grow to a £6 Billion net asset company it would put it towards the middle of the FTSE 100. Landlords own over £1.2 trillion of peoperty in the UK and a lot of it is mortgage free so just getting 0.5% of them together into a company would be enough. You also would not need to get 0.5% of landlords together just a fraction of that the landlords who own 5-100 properties who would rather turn it into a liquid share investment


lots of pros to it

funding could be direct via issuing own bonds
economies of scale
extremely liquid
lower taxes (no ~6% stamp duty or legals just buy a few shares in an isa of the residential property company)


its beyond my ability but there is something there for someone with the contacts and money.

Mistermeaner

Why would that be better than cashing in on all those assets now and starting a company that makes bespoke blind cords that glow in the dark (so you're not scrabbling around in the dark mornings)

I think the yield on blind cords would be better

padington

Mistermeaner wrote: »

Why would that be better than cashing in on all those assets now and starting a company that makes bespoke blind cords that glow in the dark (so you're not scrabbling around in the dark mornings)

I think the yield on blind cords would be better

The nation needs landlords, not everyone wants or is capable of owning property. The only issue is that some landlords are perceived to be fair weather landlords and for the sake of regular house price inflation, with no house-of-cards crash, the fair weather amateur landlords are being encouraged to leave the party before stormy weather approaches.

The government loves the idea of everyone owning property ( or shares ) and private landlords over state provision, it just thinks that there is a safer (and maybe ultimately more democratic ways of achieving this).

Whether the nation needs glow in the dark blinds, I'm not so sure. Lights sensitive to motion however might be a goer.

I would suggest you try crowd funding it.

Mistermeaner

It's blind cords. Glow in the dark blinds would be self defeating

Just don't see it with the houses. For a start you would be competing with housing associations who get free houses free money and tax breaks.

chucknorris

cells wrote: »

I have said this lots, but the UK needs a big residential company. A FTSE 100 that is in the top 10 or even the top 5

It can be done with some rich folk jump starting it, or maybe a larger number of small landlords. eg if you could find say 100 landlords with 20 properties each and mix them all into one company with 2000 properties and from there hit the road and try to convince more landlords to trade in their properties for shares.

If it could grow to a £6 Billion net asset company it would put it towards the middle of the FTSE 100. Landlords own over £1.2 trillion of peoperty in the UK and a lot of it is mortgage free so just getting 0.5% of them together into a company would be enough. You also would not need to get 0.5% of landlords together just a fraction of that the landlords who own 5-100 properties who would rather turn it into a liquid share investment


lots of pros to it

funding could be direct via issuing own bonds
economies of scale
extremely liquid
lower taxes (no ~6% stamp duty or legals just buy a few shares in an isa of the residential property company)


its beyond my ability but there is something there for someone with the contacts and money.

I totally agree with you, I think that there is a good potential business there (even if done on a smaller scale, as mine would be), but I've realised that I'm doing it yet again, I'm supposed to be looking forward to and planning for my retirement, not finding myself new things to do. It seems like a good idea, but it is for someone at a different point in their life to me, full of enthusiasm and willing to put a lot of effort into making it work, over an extended period of time. It would be a big responsibility and task to take on something like this, and ensuring that all the investors get good returns. This would have been right up my street 10 or 20 years ago, but not now. It isn't easy for me to switch to retirement mode, it doesn't come naturally, but that's what I need to be be doing. Simply selling my properties over the next 10 years, and investing the equity into a passive investment is what I should be doing, so as they say in dragon's den 'for that reason, I'm out'.

buglawton

So many FTSE companies have layers of management and take ages to make small decisions. They often seem to exist mainly for the benefit of the upper management. Shareholder value worsens as overheads mount. Also, one large landlord could severely distort/monopolise a local rental market (like a large new Tesco affects local shops).

No, I think that small hands-on landlords are much more efficient. The bad or inefficient ones should get weeded out by the marketplace and the lenders.

cells

buglawton wrote: »

So many FTSE companies have layers of management and take ages to make small decisions. They often seem to exist mainly for the benefit of the upper management. Shareholder value worsens as overheads mount. Also, one large landlord could severely distort/monopolise a local rental market (like a large new Tesco affects local shops).

No, I think that small hands-on landlords are much more efficient. The bad or inefficient ones should get weeded out by the marketplace and the lenders.

there would be no way to have ONE landlord in the land, if all the uk rental properties were put into one company it would be worth more than £1 trillion and would be the most valuable company in the world

I think there is room for a pure residential REIT in the FTSE 100. Or rather two such companies, one London focused and one rEngland focused. with about 30,000 properties each. Although they would both be big companies their combined stock would be just 1% of the private rental market, 0.5% of the rental market and just 0.2% of the housing market.

Regarding the cost structure. I see no reason why it has to be high cost with dozens of directors drawing multimillion pounds each. I would see it closer to a large letting agent and expect it not to cost more than 10% of gross rent to run. Probably closer to 5%. So if it were a £10B company making £500m in rent the cost to run the company would have to be below £50m a year and ideally closer to the £30m a year mark.

cells

chucknorris wrote: »

I totally agree with you, I think that there is a good potential business there (even if done on a smaller scale, as mine would be), but I've realised that I'm doing it yet again, I'm supposed to be looking forward to and planning for my retirement, not finding myself new things to do. It seems like a good idea, but it is for someone at a different point in their life to me, full of enthusiasm and willing to put a lot of effort into making it work, over an extended period of time. It would be a big responsibility and task to take on something like this, and ensuring that all the investors get good returns. This would have been right up my street 10 or 20 years ago, but not now. It isn't easy for me to switch to retirement mode, it doesn't come naturally, but that's what I need to be be doing. Simply selling my properties over the next 10 years, and investing the equity into a passive investment is what I should be doing, so as they say in dragon's den 'for that reason, I'm out'.

how would you go about it?

I can not see it as possible unless you already happen to be a big landlord or quite a rich individual. Like a lot of businesses once at scale funding and equity would probably be easier to get (I mean things like pension funds or private equity handing over £100m for 100m shares and then going out and buying 250 homes to back that up)

but on a small scale a landlord trying to convince others to hand over hundreds of thousands or their properties in return for shares would be a very difficult proposition.


PS: if its going to take you 10 years to dispose of your properties and you think you could pull this off in 10 years....maybe give it a go?

chucknorris

cells wrote: »

how would you go about it?

I can not see it as possible unless you already happen to be a big landlord or quite a rich individual. Like a lot of businesses once at scale funding and equity would probably be easier to get (I mean things like pension funds or private equity handing over £100m for 100m shares and then going out and buying 250 homes to back that up)

but on a small scale a landlord trying to convince others to hand over hundreds of thousands or their properties in return for shares would be a very difficult proposition.


PS: if its going to take you 10 years to dispose of your properties and you think you could pull this off in 10 years....maybe give it a go?

I want to start winding down work/business etc.fairly soon, when I typed that last post, I was thinking that I'll be 70 (yikes) in only 12 years time. So I really should start appreciating my health and fitness and making the most of life, and definitely not creating more work for myself. I'm not in any urgent hurry to get rid of the properties, but I will start when the base rate gets to about 2.5%, at that point I will probably sell 2 (of my 4.5 investment properties, my wife has more, but she is younger than me), I'll hang onto the others for a little while, just to maintain portfolio diversity. But I can see the others going within a decade.

abinanthanb

cells wrote: »

securitisation is a good idea all it does is bundle mortgages and offer it to investors. the underlying risk is no higher or lower it just shifts the risk from the bank to individual investors which is a good thing because in many ways the state if it likes it or not has to stand behind its banking system while individual lenders (buyers of these securities) can go to hell

Last time it was only the individual investors who got burned, oh wait that's not the truth...