How 126 investors bought this £212,900 property in 35 minutes
05-25-2015
The craze for buy-to-let investors to club together to buy properties is catching on: the cash for this Surrey flat was found in half an hour
Richard Dyson
Investors clubbing together to buy property to let is a growing trend with a number of crowdfunding websites offering variations on the theme.
There is clearly appetite. One site, Property Partner, which launched five months ago, has already raised £3.5m and spent it on 12 properties in and around London.
The latest deal a two-bed flat in Byfleet, Surrey was listed on the site yesterday. The hoped-for yield on the property is 6.55pc.
And 126 investors contributed the £212,900 asking price in 35 minutes.
It is just another facet of the huge growth in buy-to-let, where investors' total property values are about to top £1 trillion.
Property Partner works by issuing "shares" in individual properties to individual investors. Their shares entitle investors to income from the property and to any future capital gains in proportion to their ownership.
If you want to sell your shares in future, as a way of withdrawing your money, the hope is that other investors will buy them from you. There is a "resale" facility on the website but the ability to sell will depend on there being interested buyers.
Otherwise there is a five-year "exit point" per property where investors can take profits and walk away.
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Property Partner is just one model of buy-to-let crowdfunding.
Other, longer-established sites include House Crowd, which targets higher-yielding properties in the north west. It was founded in 2012 and has bought 130 properties. Most of the properties here offer higher rental returns typically because purchase prices are lower or the properties require more work.
House Crowd is currently fundraising for several purchases including a £770,000 block of flats in Stockport and a five-bed HMO (house of multiple occupation) property in Barnsley.
An alternative to crowdfunding is to invest via a peer-to-peer lending website such as Landbay or Lendinvest. Here, your money is lent to property investors and small-scale developers. You benefit from the interest they pay, as with other P2P sites.