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  • FIRST POST
    • barginfinder
    • By barginfinder 19th Aug 17, 1:57 PM
    • 325Posts
    • 83Thanks
    barginfinder
    Property Partner
    • #1
    • 19th Aug 17, 1:57 PM
    Property Partner 19th Aug 17 at 1:57 PM
    Hi

    I would be interested in hearing any from other forum members opinions or experience of Property Partner - I have invested a significant amount with them over the last few years and not been disappointed so far- in a time of low interest rates it seems to be a well run organisation with decent returns and relatively low risk - but sometime when things seem to good to be true .....

    I have around 20% of my total capital invested with them - perhaps I'm over exposed?

    Thanks in advance
    I need a better signature
Page 1
    • bigadaj
    • By bigadaj 20th Aug 17, 8:57 AM
    • 10,814 Posts
    • 7,137 Thanks
    bigadaj
    • #2
    • 20th Aug 17, 8:57 AM
    • #2
    • 20th Aug 17, 8:57 AM
    I'm not a fan of the property crowd funding sites, I don't think they're terribly risky but returns aren't fabtastic and there's a reasonable risk of some capital loss and illiquidity.

    I have a few per cent in p2p lending, but want higher returns though with probably slightly higher risk than sites such as these seem to offe.

    I certainly wouldn't want 20% but that also depends on the numbers, if that's a few thousand then potentially more understandable, a few hundred thousand then far less so.
    Last edited by bigadaj; 20-08-2017 at 10:59 AM.
    • theGrinch
    • By theGrinch 20th Aug 17, 11:27 AM
    • 2,847 Posts
    • 683 Thanks
    theGrinch
    • #3
    • 20th Aug 17, 11:27 AM
    • #3
    • 20th Aug 17, 11:27 AM
    if 20% is £1000 then no problem, but if £1m then I wouldnt. Not a fan of such investment channels
    "enough is a feast"...old Buddist proverb
    • barginfinder
    • By barginfinder 20th Aug 17, 11:33 AM
    • 325 Posts
    • 83 Thanks
    barginfinder
    • #4
    • 20th Aug 17, 11:33 AM
    • #4
    • 20th Aug 17, 11:33 AM
    I'm getting just under 4% dividends paid monthly with some capital growth, but as you point out, realising the capital isn't always an option, they do run a secondary market, but obviously the number of people offering to buy is limited. my primary reason for investing in this is to use the income to help fund a SIPP to boost my retirement fund. I thought by reinvesting the income but in a fund based SIPP I would benefit from the tax relief as well diversify my investments.
    I need a better signature
    • bowlhead99
    • By bowlhead99 20th Aug 17, 3:59 PM
    • 7,825 Posts
    • 14,292 Thanks
    bowlhead99
    • #5
    • 20th Aug 17, 3:59 PM
    • #5
    • 20th Aug 17, 3:59 PM
    my primary reason for investing in this is to use the income to help fund a SIPP to boost my retirement fund. I thought by reinvesting the income but in a fund based SIPP I would benefit from the tax relief as well diversify my investments.
    Originally posted by barginfinder
    So you are investing outside a SIPP and then using the proceeds of that investing to fund a SIPP? Why not just put the money into a SIPP in the first place and invest in diversified assets inside the SIPP?

    For example, lets say your marginal rate of tax is 40% so you get 40% tax relief on any pension contributions; to work with round numbers, every £10 gross investment in the pension pot only costs you £6 net contribution, or looking at it the other way around every £10 net investment gets you £16.66666667 gross in a pension pot.

    So let's say you have the choice of
    a) investing in something inside a pension getting you 4% growth a year, or

    b) instead investing outside a pension getting 4% with no tax to pay (covered by dividend and capital gains allowance) and then putting the proceeds of that endeavour into a pension later
    If you go route a), then you put £1000 into a pension on day one and it turns into £1666.6666. Then you get 4% growth on the £1666.7333 for the first year, turning it into £1733.3333. Then you get 4% growth on the £1733.3333 for the second year, turning it into £1802.6666

    Alternatively you could go route b), and invest the £1000 outside the pension so that after the first year it turns into £1040. Then at the end of that year you can put put that £1040 into a pension. As you get £16.6666667 inside the pension for every £10 contributed, and you're contributing an extra £40 over and above contributing the £1000 in the other example, you will get an extra £66.6666 on your pension pot in addition to the £1666.6667 you would have got for contributing £1000. So in total you would have £1733.3333 in the pension at the end of year one. Unsurprisingly that's the exact same as what you'd have got if you had just gone route a). So with the position at the end of year one being the same under route b) as it was with route a), it's not surprising that by the end of year two the £1733.3333 has turned into £1802.6666 just like it did in route a).

    So you are thinking that by investing 20% of your wealth in this specialist fund outside a SIPP you will generate more money to invest into your SIPP and benefit from tax relief which boosts your investment. But growing the money before putting it into the SIPP doesn't actually get you any more 'ending' money than if you had just put it into the SIPP earlier and grew it all inside the SIPP at the same rate (i.e. not bothered to grow it in this Property Partner product first).

    SIPPs have tens of thousands of investment options which can be held in any proportion you like, creating near infinite blends of risk and returns with plenty of diversification available, so it's very unlikely you couldn't find something inside a SIPP that would generate the same total % returns over the same time period.

    The drawback to the way you are doing it is that in my worked example above, ultimately you end up contributing more money to the SIPP if you grow the money a bit first, instead of just putting it in the SIPP at the start. For example instead of making a gross £1667 contribution (£1000 net) you are doing a gross £1733 contribution (£1040 net). And there are legal and practical limits on the total amount you can put in each year to benefit from the full 40% tax relief.

    What I'm getting at there is that obviously you can only contribute the extra £66.66 gross amount into your pension and get 40% tax relief on it if
    (i) you actually have enough salary /business earnings that you were paying 40% tax on, and
    (ii) you are not over the £40k annual pension contribution allowance between you and your employer.

    So, a lot of people if they already had capacity to contribute to a SIPP and get good tax relief on it right now, would just go ahead and do that, rather than doing what you are doing which is first buying an 'eggs in one basket' specialist investment product outside a tax wrapper, grow their money through that product, and use the income from that product to fund the investments into the SIPP.
    Last edited by bowlhead99; 20-08-2017 at 4:02 PM.
    • barginfinder
    • By barginfinder 20th Aug 17, 7:59 PM
    • 325 Posts
    • 83 Thanks
    barginfinder
    • #6
    • 20th Aug 17, 7:59 PM
    • #6
    • 20th Aug 17, 7:59 PM
    Thanks for the detailed reply - some very good points.

    I initially started investing in PP as an alternative to BLT property as the returns seemed similar but much less work and open to diversification.

    I'd never been a big fan of pensions due to the need to purchase an annuity but I was in the company pension scheme as they matched my contribution up to 5% - free money

    When the rules about pensions withdrawal changed, a SIPP became much more attractive, but I was still wary of having to pay tax on income over the personal allowance and this would include my state pension.

    My current thinking is that I can use my (from next april) 2K per year share dividend allowance with PP, and boost my SIPP with that income, meanwhile I'm trying move my other money into ISA's as efficiently as possible - I'm looking for a balanced spread of property (quite safe, reliable returns), Investment funds and shares (riskier but higher rewards hopefully) and cash - very safe and to be used when prices fall to avoid selling low (and also to be able to buy low) - I'm on the cusp of higher rate tax, my salary is just below the threshold, but interest on my savings outside of ISA's takes me over. Although I have been saving for a while, a recent inheritance has left me with significant extra cash to use wisely, I initially split it over several high interest savings accounts ( FSCS protection) and paid down my mortgage as much as I could without incurring penalties. I since switched to an offset mortgage so I'm paying very little interest now, but have access to funds if I need them, and am drip feeding other cash into S&S ISA and SIPP (as the market is so high at the moment I didn't want to just go in with it all at once) and I have some older cash ISA's with fixed interest deals of 2 and 2.4 % as well as a few current accounts paying 1.5 to 3% interest.

    I was looking for feedback on PP as I have added regularly to that over the last few years, and feel like its a good deal, but now you have made me look again at my strategy - I'd like to retire before I reach state pension age (16 1/2 years away) but with a decent income (circa 20k) that will keep up with inflation. I'm looking at the state pension (eventually) + an annuity (to give security) and then income from the rest of my pension to take me up to around 12K (the personal tax limit) + another 2K (tax free from property partner) + another 6K income from S&S ISA with a cash fund of 20K as a buffer - all based on current tax rules etc. That way I would have a min of 12k per year, and hopefully 20K per year without paying any income tax - I should be able to generate enough income to keep the capital so darling daughter can inherit funds etc as well as the house

    thanks again
    I need a better signature
    • takesyourchances
    • By takesyourchances 11th Mar 18, 5:33 PM
    • 620 Posts
    • 391 Thanks
    takesyourchances
    • #7
    • 11th Mar 18, 5:33 PM
    • #7
    • 11th Mar 18, 5:33 PM
    Slowly building up few holdings in property partner, anyone else adding the latest commercial property? I am at £250 per property at the moment, this would be the 4th for me.


    • ChesterDog
    • By ChesterDog 11th Mar 18, 6:51 PM
    • 881 Posts
    • 1,642 Thanks
    ChesterDog
    • #8
    • 11th Mar 18, 6:51 PM
    • #8
    • 11th Mar 18, 6:51 PM
    Not Property Partner, but I have investments with The House Crowd.

    I am quite happy with it all - although lately they are sparse for BTL investments, and the P2P ones don't have the same appeal for me: I have P2P elsewhere - but the return hovers at 6-ish percent, which is not great for the risk.

    However, I use it principally for the diversification from other investments.

    Edit: it's only about 4% of total investements for me.
    I am one of the Dogs of the Index.
    • takesyourchances
    • By takesyourchances 11th Mar 18, 7:00 PM
    • 620 Posts
    • 391 Thanks
    takesyourchances
    • #9
    • 11th Mar 18, 7:00 PM
    • #9
    • 11th Mar 18, 7:00 PM
    Not Property Partner, but I have investments with The House Crowd.

    I am quite happy with it all - although lately they are sparse for BTL investments, and the P2P ones don't have the same appeal for me: I have P2P elsewhere - but the return hovers at 6-ish percent, which is not great for the risk.

    However, I use it principally for the diversification from other investments.

    Edit: it's only about 4% of total investements for me.
    Originally posted by ChesterDog
    Thanks for your feedback, not looked at The House Crowd. I am also looking at the investment as some diversification, also a little property interest too I have and the idea of property partners concept appeals to me as a hold to term investment and see how the vote goes on each property after 5 years. I like it also as it is not P2P but shares in the properties.

    At the moment just buying £250 per property and this will be the first £1000 hit so will only be a small overall holding of all my investments and will just be adding in blocks like this. Will take a look at The House Crowd out of interest, but will most likely stay with just PP and keep it simple.
    • dunstonh
    • By dunstonh 11th Mar 18, 7:26 PM
    • 92,580 Posts
    • 59,889 Thanks
    dunstonh
    The issue with all bricks & mortar investments is liquidity. They all have the right to enter periods of suspension where you may not get access to your money for up to 6 months if there are insufficient funds to meet redemptions and a property needs to be sold (often at quick sale prices which can impact on all investors).

    This is why you see bricks and mortar property funds typically have sector weightings of no more than 10% of your overall portfolio. You do seem some daft investors go nearly 100% into these things though.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • takesyourchances
    • By takesyourchances 11th Mar 18, 8:31 PM
    • 620 Posts
    • 391 Thanks
    takesyourchances
    The issue with all bricks & mortar investments is liquidity. They all have the right to enter periods of suspension where you may not get access to your money for up to 6 months if there are insufficient funds to meet redemptions and a property needs to be sold (often at quick sale prices which can impact on all investors).

    This is why you see bricks and mortar property funds typically have sector weightings of no more than 10% of your overall portfolio. You do seem some daft investors go nearly 100% into these things though.
    Originally posted by dunstonh
    Thanks Dunstonh, good points made and on the liquidity the overall weighing being a lower part of an overall portfolio.

    It's not something I'll go heavy in overall either and your right some daft investors are nearly 100% in property including some of my friends who are nearly everything invested in BTL and when i mentioned pensions or stocks and shares ISA they don't have a clue. Interest or say I wouldn't go near the stock market, I find it quite shocking really as otherwise they seem quite switched on
    • takesyourchances
    • By takesyourchances 11th Mar 18, 8:36 PM
    • 620 Posts
    • 391 Thanks
    takesyourchances
    The issue with all bricks & mortar investments is liquidity. They all have the right to enter periods of suspension where you may not get access to your money for up to 6 months if there are insufficient funds to meet redemptions and a property needs to be sold (often at quick sale prices which can impact on all investors).

    This is why you see bricks and mortar property funds typically have sector weightings of no more than 10% of your overall portfolio. You do seem some daft investors go nearly 100% into these things though.
    Originally posted by dunstonh
    Thanks Dunstonh, good points made and on the liquidity the overall weighing being a lower part of an overall portfolio.

    It's not something I'll go heavy in overall either and your right some daft investors are nearly 100% in property including some of my friends who are nearly everything invested in BTL and when i mentioned pensions or stocks and shares ISA they don't have a clue, interest or say I wouldn't go near the stock market, I find it quite shocking really as otherwise they seem quite switched on
    • takesyourchances
    • By takesyourchances 22nd Mar 18, 6:00 PM
    • 620 Posts
    • 391 Thanks
    takesyourchances
    Has anyone on property partner invested in the latest student development in Lincoln? I bought £250 worth in the pre-order as part of building up a spread in blocks of £250 for now.

    The PBSA properties are providing decent yields. So far testing the waters mainly with property partner and I do like the set up for equity property buys for a smaller section of my overall portfolio. I have just £1250 invested overall, I might add a £250 next holding of the 19 units in Newcastle bring it to £1500.

    A little off topic, but on some financial blogs I was reading based in the States property crowdfunding was quite big parts of their portfolios, although the sites providing property crowd funding are much higher min buys. Interesting nevertheless I thought.
    • MysteryMan00
    • By MysteryMan00 22nd Mar 18, 7:06 PM
    • 133 Posts
    • 66 Thanks
    MysteryMan00
    Tax
    A problem I have with them is tax efficiency.

    The property companies are paying 19% corporation tax and then you have an income tax hit on receipt - which is a decent bit especially now the tax rate for dividends has gone up.

    Much better with a REIT, especially if you hold in an ISA or SIPP (which you can't with pty partner) as there is no underlying tax in the vehicle (the REIT), just tax when they pay out - which is £nil when it is received by an ISA or SIPP.

    The tax difference will make a huge difference to your investment pot over time. A huge one.
    • takesyourchances
    • By takesyourchances 22nd Mar 18, 9:39 PM
    • 620 Posts
    • 391 Thanks
    takesyourchances
    A problem I have with them is tax efficiency.

    The property companies are paying 19% corporation tax and then you have an income tax hit on receipt - which is a decent bit especially now the tax rate for dividends has gone up.

    Much better with a REIT, especially if you hold in an ISA or SIPP (which you can't with pty partner) as there is no underlying tax in the vehicle (the REIT), just tax when they pay out - which is £nil when it is received by an ISA or SIPP.

    The tax difference will make a huge difference to your investment pot over time. A huge one.
    Originally posted by MysteryMan00
    I understand regarding the corporation tax of running the business of property partner coming off returns. The dividends recieved would be tax free to £2000 if that is what you mean, after that taxed?

    I don't think I would be investing that heavy in PP to reach that and would be within the £2000. My other dividend paying investments (IT's etc) are in my ISA.

    I have been looking at Standard Life Investment Property Income IT as well for my income portfolio within my S&S ISA some point.

    Some of the yields on the US sites for crowdfunding was around 12% on those blogs.

    I was looking at PP as a small hands off BTL stream and hold to term for the 5 years and some dividends on the way and the student properties yields mixed in a little higher.

    But fair points made as well. I would like to add a REIT this year and the Standard Life IT has a decent yield at 5.35% and possible growth prospects.
    Last edited by takesyourchances; 22-03-2018 at 9:42 PM.
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