Baltic property lending platform Estateguru* has just launched a round on Seedrs* to raise up to 2 million EUR in new funding at a pre-money valuation of 28.8M EUR . Estateguru was launched in Estonia 6 years ago and has since expanded into the Latvian, Lithuanian, Finnish, Portugeese and German markets. Using the platform 47,000 investors have funded over 1,400 loans with a volume of 202 million EUR for an average return of 11.8% (as per Estateguru statistics page). All loans are secured by mortgages. Estateguru says that so far all recoveries of defaults have returned 100% of the capital and just the length of discovery varied sometimes taking months, sometimes taking years.
Estateguru plans to use the raised capital to further develop the product, especially improving features for institutional investors. Estateguru* can build on the experiences it made in a two-year relationship with German Varengold bank which has provided a credit line to finance loans. A second goal is to expand into further markets. In a recent investor webinar CEO Marek Pärtel named UK as a potential market, stating Estateguru already holds the required licenses since last year. Furthermore Estateguru will implement integration with payment provider Lemonway.
Pärtel said in the webinar that Estateguru has doubled in size every year in the past and expects the fast growth to continue in the future.
British p2p property platform Kuflink* has been in operation since 2016. Previously accepting only UK residents as investors, the platform announced that they have enhanced their KYC/AML procedures and are now open to investors from anywhere in Europe. Interested investors can use a free UK bank account from Transferwise* Borderless or Revolut* (Smartphone required). And in exchanging money to GBP new TransferGo clients* can get a 10 GBP bonus when exchanging/sending at least 150 GBP.
Kuflink* offers short term property loans (usually 3 to 12 month), secured by a legal charge. They run a very generous 100 GBP cashback offer available by signing up through this this link*. Note that the landing page says 50 GBP, but I have negotiated with Kuflink that clients referred by P2P-Banking get 100 GBP (doubling normal cashback). VERY IMPORTANT: Read T&C and strictly follow them. E.g. the minimum investment of 500 GBP must be reached within 24 hours of first investment. While it is possible to spread your investment over several loans, be sure that you are in line with the T&C terms. You can find more cashback deals on this page.
Screenshot: Available Kuflink loans (selection).
Every loan offer comes with detailed information, including a valuation report. Since the start in 2016, Kuflink has originated more than 20 million GBP in loan volume.
Kuflink* does not charge investors any fees. Interest is paid on the first day of each month (for manual investing). There is an autoinvest option, but conditions are less interesting than on manual investing. Two features Kuflink lacks are a secondary market and a detailed statistic page (there is some information in the FAQ).
Blend Network is an online property lending marketplace that focuses on lending to established property developers in high-growth areas across the UK but outside London. Since its official launch in January 2018, Blend Network has already lend £1.5 million GBP to 6 projects across Northern Ireland, Scotland and Norfolk with an average fixed return of 12.2% p.a. Lenders can join for free and manage their loans through a user-friendly dashboard. Borrowers are double-vetted by both Blend Network and a sponsor before being listed on the Blend Network platform. In addition, Blend Network loans are only made against security to help ensure the protection of lender money in the default scenario.
What are the three main advantages for investors?
Access to niche markets: While most P2P property lenders focus in the London market due to its convenience, we focus in less crowded markets outside London that are outperforming not only the London market but also the average UK market. We have done loans in Northern Ireland where according to the recent RICS UK Residential Market Survey Report the outlook is considerably more positive than in some other UK regions, with prices rising, a growing number of potential new buyers active in the market, robust demand and overall stronger sentiment. Similarly, according to the latest UK House Price Index data, Scotland was the only UK region where average year-on-year house prices in 2017 where higher than in 2016 (In England, Wales and Northern Ireland the pace of price growth moderated, although more significantly in England).
High returns: Our focus in high-growth, high-yield pockets of the UK property market outside London enables us to return up to 15% return p.a. – right at the top-end of the P2P lending marketplace. Our average return for the 6 loans since launch is 12.2%, significantly above the average of around 8% return across other P2P property platforms according to our own calculations.
Strong due diligence and credit risk assessment: We pride ourselves by the strength of our due diligence process. Borrowers are double-vetted by both Blend Network’s Credit Committee and a sponsor before being listed on the Blend Network platform. Our Credit Committee is chaired by senior banker Charles Lamplugh who has 35 years of experience successfully winning and running corporate relationships for Lloyds Banking Group. In addition, Blend Network loans are only made against first charge on the security as well as personal guarantee from the developer.
What are the three main advantages for borrowers?
Access to finance: Most property lenders pulled out in places such as Northern Ireland after the 2008 financial crisis and many haven’t gone back yet, but paradoxically Northern Ireland is one of the fastest growing UK property markets. For small developers in those markets, getting access to finance is simply not easy. Small and Medium Enterprise (SME) developers have the flexibility and the desire to build on brownfield sites, to redevelop derelict buildings and to maximise the potential of property which may no longer be viable for commercial use. Figures from the Federation of Master Builders (FMB) House Builders Survey 2017 suggest that a shortage of available small sites, combined with a lack of finance, top the list of barriers facing SME house builders.
We bring knowledge and understanding of developers’ true requirements: We operate in areas where the constrained nature of most mainstream lenders has led to many opportunities for small developers being delayed, frustrated or lost. In contrast, we pride ourselves for our understanding of the true requirements in the development process. As one borrower put it ‘It was very refreshing to work with a company that understood the process well so could recognise the opportunities available and thus able to finance accordingly.’
No exit fee for early repayments: If our borrowers are able to complete their project before the maturity, great! They can repay the loan with no exit fee. It’s a win-win.
What ROI can investors expect?
Between 8% and 15% fixed return p.a. Our average since launch is 12.2% fixed return p.a.
Is the technical platform self-developed?
The platform was developed for us, we own it.
How is the company financed? Is it profitable?
The company has been self-financed so far. It is profitable but we have just decided to take the whole team on an offsite to Miami, so we spent all our profit! J J
What were the main challenges when launching your platform?
Frankly, our main challenge so far has been trying to explain why the returns are so good! In today’s markets, there are not many investments that offer an average of 12% return p.a. with no volatility. One might think it is too good to be true. It is not. The simple answer is that the UK housing crisis and lack of available homes is at its worst since the 1970s, and small developers with tight access to funding are willing to pay a premium to get funding for redevelopment projects and bridge loans. This is why we can pay up to 15% return p.a.
Do you plan to offer an IFISA?
We will assess this later in the year and decide whether we want to implement an IFISA for the next financial year.
Is Blend Network open to international investors?
Yes, it is. Our current lenders on the platform include a range of nationalities across Western Europe, the Middle East and Far East Asia.
Which marketing channels do you use to attract investors and borrowers?
The platform has already attracted a string of high-profile lenders among the high net worth bankers and hedge fund managers of Yann’s circle of personal connections. These have lent nearly 1.5M GBP since the platform launched and the proposal is attracting significant ‘word of the mouth’ attention among current lenders. In addition, we have prepared a 2-year strategic marketing plan highlighting the relevance of branding, social media, PR but most importantly word of the mouth by current lenders who are more than happy to recommend the product.
What factors do you see impacting the British property market in the near future?
We see Brexit as a key challenge (or in our case opportunity) for the UK property market in the next 2-5 years. The UK property market is a 2-speed market, with on the one hand the London market and on the other hand the rest of the UK market. We believe the London market is set to undergo a further correction due to being directly exposed to a number of sectors hit with Brexit: the financial sector and the global elite’s appetite towards prime London property ownership after Brexit. On the other hand, the rest of the UK suffers from an endemic housing crisis and lack of available homes: after decades of failure to build the homes the country needs, public concern about housing is the highest it has been for 40 years according to several heavyweight reports into Britain’s housing crisis.
Where do you see Blend Network in 3 years?
At Blend Network we are not trying to reinvent the wheel; we are simply offering an improved product for both lenders and borrowers. While we don’t want to be the only P2P property platform in the market, in 3 years we certainly want to be the best in terms of:
Returns – keeping our current position at the top-end of the P2P lending marketplace
Customer experience – continuing to enhance the functionalities on our platform to keep delivering top navigational and interface tools that our lenders love using
Access to deals – Continuing to source top deals for our lenders
Today I gained another 1,7% after selling an investment that I did held only a few days. I started using the Spanish property platform Housers in the beginning of August. On Housers investments into property in Spain and Italy are listed. Mostly the offered structure is that investors will benefit from rent income from the property and also capital gains achieved, if the property is sold at a higher price at the end of the investment period. The concept will sound familiar to those that are using the British platfrom Property Partner. But there are other offer types too, including fixed interest investments. The minimum investment is 50 Euro and terms range from 12 months to 5 years and longer.
There is a lot of information and statistical data about the properties and the property market in that town and neighborhood. The platform is easy to use. After signup, the investor needs to upload scans to verify identity and to connect a bank account. Deposits can be by bank transfer or credit card. I made a small withdrawal of 0.50 Euro via SEPA transfer to test withdrawal and the money arrived after 2 days in my bank account.
Current bonus: Sign up via this link and get 50 Euro bonus when you invest 50 Euro. Ends today (August 31st)! The bonus can only be invested, not withdrawn. Additional cashback of 1% on all credit card investments (you see that after you select a property to invest into. Ends today (August 31st).
Housers has a secondary market. Only properties in the “Saving” category can be traded – with the “MP” logo style mark. Sellers can set a premium (or) a discount. When I started in the beginning of August I had 50 Euro invested in the Monec property (pictured right) and wanted to try out selling. So I listed that at 1.74% premium and was astonished that it sold quickly. I had exited that investment only 8 days after making the bid. Granted the absolute profit was not spectacular: 78 Cents (50.87 Euro sales price minus 0.09 Euro sales fee – Housers charges 10% of profits), but it was 1.56% profit in 8 days. Mathematically that is an (X)IRR of 102%, but of course one can not calculate it that way as a reinvestment without breaks will not be possible and not every time a buyer will snap the part that quickly.
Nevertheless I got curious, if I could scale that somewhat and employ a strategy of flipping, that is investing and then selling fast at a premium. I invested in more parts of an Italian property opportunity (“Breda” in Milan). Yesterday the secondary market for this opportunity opened, and today I sold the first 100 Euro part for a 1.89% premium. I have listed the next 100 Euro part for 1.99% premium now.
There are three main factors for selling in my view:
Premium (typically buyer will buy the part currently listed at the lowest premium)
Part size: only full parts can be bought. I would expect it to get harder the larger the part is (but the seller can list part of his total holding, as long as it is at least the 50 Euro minimum)
availability of other offers, especially on the primary market
I have yet to experience a time where there are no offers on the Housers primary market. It will be interesting to see how that effects demand on the secondary market.
The majority of investors is from Spain, but Housers says there is large demand from investors from Latin America, too. I like the platform interface, it is easy to use. The UI is available in Spanish, English and Italian language.
Another property investment platform in the Eurozone offering a bonus is Estateguru. If you register via this link, you get 0.5% cashback on all investments in the first 90 days. Investments on Estateguru are into secured loans, not equity.
One of the property investments listed on Housers in the past
P2P Lending marketplace Assetz Capital today announced the launch of another account type. The Property Secured Investment Account (PSIA) is marketed as a way to invest exclusively in property backed loans with automatic diversification intended to help investors spread their risk across a diverse range of lending. Every single loan considered for this account is automatically selected or rejected upon the basis of the level of property security that it offers. The loans automatically selected for investment by this account are only those that have no expected loss in the case of that loan defaulting in the future, even after any estimated recovery costs.
The target rate for the Assetz PSIA account is 5.5%. (Interest is quoted gross at the target rate, although actual returns could be lower)
For decades buying houses, refurbishing them and selling them at a higher price and moving on to the next property seemed like a popular sport to Brits. Many of them see properties as investments and with house prices mostly moving up lots of them aimed to finance a property while they were young and then build a portfolio. With limited supply of new land with planning permissions this strategy worked well most of the times in the past, except when the market overheated and a real estate bubble popped.
There are downsides to this do-it-yourself approach:
Concentration of risk in one or few properties: if they underperperformed for what ever reason, the yield was sub-average
A lot of money, time and work required. The investor had to do everything itself as a landlord
Selection of new properties usually limited to a small region the investor lives in
British platform Property Partner allows everyone to invest in British properties from a minimum of 50 GBP. Investors select a listing, invest into a SPV (special purpose vehicle company) that pools the investment in the property. The SPV collects rental income and pays dividends to investors monthly. A useful table of the past achieved rental income can be seen here. In the green marked cases the actual rents are higher than the original forecsts. Potentially investors can also gain, if the value of the property rises.
The time span of an investment is 5 years, however investors can try to sell their parts on the secondary market, which allows discounts and premiums any time.
The platform allows the investor to diversify across multiple properties easily. The fee is 2% for investment (in new listings or buying through the secondary market). For management, advertising and letting Property Partner charges 12.6% of gross rent.
So far Property Partner has funded 311 properties for 43.9 million GBP with 9.100 investors participating.
For new listing there is a pre-order period, where bids are collected. If the listing is oversubscribed then each investor is allocated a lower proportionate amount of shares.
Each listing contains an investment case desctiption, property details, a floor plan, financials, a solicitor’s report and a surveyor’s report as well as the house price index (HPI) information for the area.
For the secondary market there is a ‘data view’ section which lists key indicators for the parts listed for sale.
Investors that do not want to pick listings can set up the auto-invest option which will automatically invest an amount the investor sets each month in 5 properties.
Investing from abroad
Property Partner allows foreigners (except for US residents) and corporations to invest. If you do not live in the UK but see the UK housing market as an investment opportunity Property Partner is a hassle free possibility to invest in british real estate. Non resident investors should consider using Transferwise or Currencyfair to avoid high bank fees and get a better currency exchange rate.
How to get 50 GBP cashback at sign-up
To get 50 GBP referral cashback, when you invest more than 1000 GBP sign up now via this link . To see available promotions by other platforms visit our cashback offer page.
Property Partner cashback confirmation at sign-up. To see it follow this link and sign up.