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 A P2P Real Estate Crowdfunding Comparison Guide

Peer to peer ISA (p2p) lending has been around since the year 2007. It has come a long way as it provides borrowers with lower interest rates compared to a financial institution. On the other hand, p2p ISA had provided investors with the opportunity to get high returns compressed to if they lent money through bonds. For this purpose, there are several Innovative ISA providers available in the market.

Crowdfunding has become one of the biggest investing trends. It provides a few certain huge returns being made in the p2p real estate lending marketplace. Every day new real estate crowdfunding platforms are entering the market which makes it hard to choose the right one. If you are thinking of investing in real estate crowdfunding, then there are a few things that you need to know about before you get started.

Things you need to ask yourself you get started?

The platforms available usually are all quite different. So, it all just comes down to your personal preference. Answer these questions so you can decide on the right service.

  • Are you an accredited investor? If you are not an accredited investor, then your best bet is the platforms which provide a private Real Estate Investment Trust (REIT).
  • What kind of property are you interested in? you need to decide whether you want residential fix and flips or commercial real estate. There are some platforms which offer both.
  • Are you opting for debt or equity? There are some platforms which provide both debt and equity.
  • How much do you want to invest? A minimum investment can range from £0 to £50,000.
  • What is your desired time horizon? The terms for real estate deals ranging from a few months to years.

Comparison of Best Real Estate Crowdfunding Platforms

In this article, we are going to breakdown the currently best real estate crowdfunding platforms and how they can stack up together against each other. we have thoroughly reviewed this, and you can select the right service for yourself.

Property Moose

Property Moose allows the investors to invest in real estate properties directly through the SPV (Special Purpose Vehicle) or else invest in the loan notes. The SPC is essentially a UK limited company. The income which you will receive is also paid in the form of dividends. You can join the Property Moose platform free of charge. The platform charges free on any funds raised which covers the cost in raising the fund, carrying out due diligence, investigating the properties, developing software, marketing the property, organising the initial renovation and management and expert customer services.

So, with property Moose you can invest and manage the asset every day without any hassle and since the renter is outsourced to trusted partners. The cost of this is just 10% of the monthly rental income. The cost is deducted from the rent before it gets distributed to investors at the end of the quarter. The platform gets a 15% profit fees on sale which ensures that they are incentive in order to provide strong investment opportunities. The platform only makes money when investors do. This profit is taken from the gross profit before it is distributed to the investors. For instance, if a house worth £100,000 increases 10% in value and the exit of the property is at £110,000, and then there is £10,000 profit. So, the platform profit fee is 15% which means £1,500. The remaining profits of 85% (or £8,500) would then get distributed to investors in proportion to their stake with the £100,000.

The gross profit is basically the total amount of money made from an activity. The gross profit represents a full return before there is a deduction of any fees or costs. Whereas, the Net profit is the amount which is left over after the profit fees deductions. Property Moose displays all of your projected returns as the net of all fees, hence you get a clear understanding of the potential returns. Also, there are no other hidden costs and there is also a breakdown of financials attached to every listed property.

At the end of the investment term, the investors will vote upon the exit strategy. If the property is solely on the open market or if it is sold to the crowd the proceeds from the sale are paid to the investors which exit the investment.

Property Partner

Property Partner provides investors the opportunity to invest in real estate properties directly or else in the recently introduced development loan bonds. The site creates a company or every purchased property and then the investors can buy shares in that company. Majority of the properties are geared. The platform only lists the properties at 50-60% loan to value for the purchase price. They purchase multiple units at a discounted priced comparing to buying the units individually, adding more downside protection. In addition, reducing the risk, they only gear multiple unit properties since these offer a more stable rental income stream to service the mortgage. With property partner you can manually select the investment opportunities which you want to pursue or select, you can choose one of the three investment plans and have the platform Auto Invest for you.

• Growth plan (8.5%+)

• Income plan (6.5%+)

• Balanced plan (7.5%+)

These investment plans are ideal for those investors who have less than €50,000 to invest. Because at these levels it does not make sense to spend a lot of time researching every opportunity and making manual investments.

With property partner investors pay:

• A one-off 2% transaction fee on the invested funds

• A sourcing fee of 2% + VAT of the buying price. This is disclosed in the section of ‘Financials’ of every property.