Summary: As their name suggests, BridgeCrowd offer the investors the opportunity to invest in bridging loans for (mainly) residential properties. This is quite a competitive marketplace nowadays with several firms offering similar products which has had a downward pressure on rates earned and deal flows becoming slower. That being said, BridgeCrowd have a good track record so far and have closed plenty of deals and (as of 2018) had a admirable performance ratio of all loans being returned with interest and capital. Ultimately this won’t be for everyone, as the minimum investment is large.
Here is how Bridgecrowd compares to other platforms in the property space. Do note that the product types and quality of security can vary quite a lot, and as a result the returns may not be strictly comparable.
|Platform||Link||Target Rate (%)||My XIRR (%)||Status||Live Rating|
|Review||Up to 16%||-5.4% (estimate)||CLOSED||1.5/5|
|Review||Up to 7.2%||7.23%||OPEN||4/5|
|Review||Up to 11%||5.72%||OPEN||4/5|
|Review||Up to 13%||3.90% (estimate)||CLOSED||2.5/5|
|Review||Up to 8.5%||4.46%||OPEN||2/5|
|Review||Up to 8%||TBC||OPEN||3.5/5|
What is BridgeCrowd?
The BridgeCrowd have been in operation since 2014, and provide short-term finance for bridging loans secured by property. Their history goes back even further than this as previously they arranged bridging loans in 2010 although the source of finance was not P2P. They might be correct in their assertion that they are the experts in their field, and this is backed up by an unblemished (as of 2019) record of no investor losing capital or interest.
Their investor offering differs slightly to other platforms. They have not chased riskier development loans (which have indirectly caused the demise of other platforms). However, they offer the higher-risk return proposition in the form of non-first charge loan. These pay more in interest with the caveat that it is only paid if other debts are cleared first. As we have seen in other platforms, the dreaded second charge loans have led to complete wipeouts.
Here is a table summarising BridgeCrowd’s features:
|Available in ISA?||No|
|Active on forum?||No|
I have no position here so monthly updates are not provided.
Are BridgeCrowd profitable?
BridgeCrowd state that they are a trading name of Social Money Limited. According to Companies House, this was incorporated in 2012. The last set of full accounts in reduced format was uploaded on 5 January 2019. It is hard to read too much into these types of figures, but it implies a rapid expansion to the business as debtors increased from £12.8m to £24.6m. The net asset position was £1.36m with cash reserves at £2.71m. Encouragingly the profit and loss reserve increased from £278,000 to £1.36m.
Is there an introductory offer?
There are no current offers for new investors, although you will be able to gain a £250 referral fee if you do refer a family member or friend that goes on to invest at least £5,000 (family or friends living at the same address not included).
How to invest with BridgeCrowd
Once you have registered with BridgeCrowd, you need to fund your account which is only possible via bank transfer at the moment. Once you have done this, the funds appear in your account and you can view the loans available. The information is fairly detailed, and you will be able to see the valuation report, loan particulars as well as the repayment schedule and security type of the loan. There is also a secondary market here, where users can sell current loans.
The minimum investment is £5,000 (unless a remaining loan part is smaller than this) and investment loan values are on the smaller side, as the loans are for genuine bridging and not development. Thus, loans can fill very quickly here and it is not rare to see nothing available at all. Unlike other platforms, BridgeCrowd are fairly good at giving investors notice about future loans and the ‘Pipeline’ section is kept regularly updated.
With loans being used for bridging, the repayment profile is that interest is paid every month with capital returned at the end. The durations of the loans are typically very short-term ones of 6 months, but may be extended if unforeseen delays happen.
How are funds protected?
Bridgecrowd investments are not covered by the FSCS (Financial Services Compensation Scheme), nor is there a provision fund covering bad debts. Instead the design of the loans is what Bridgecrowd calls the ‘safety rules’: each loan is secured with a charge against property, at low loan to values (usually under 70% to market value, but the majority of loans are 60% or under).
Of course these types of promises have been seen before by the likes of Lendy, but in BridgeCrowd’s defence loan-to-values are more accurate in straight bridging situations as surveyors do not have to account for the final development value (which may be dependent on other variable factors such as cash flows). This offers a greater degree of certainty to proceedings. This is evidenced by their recent record which (as of 2019) has provided a 100% paying of all capital and interest.
Pros of BridgeCrowd:
There are a few things to like about BridgeCrowd:
Straightforward loans: With loans being used for bridging purposes, there is a clear defined entry and exit and valuations are likely to be more accurate. This is also more likely to lead to less volatile returns as problem loans are easy to clear up.
Higher interest rates: The platform caters for those who would like a higher degree of risk, offering interest rates above 10% for their second charge security loans. Returns are variable for first-charge loans but still are a little above the 5% rates seen on other platforms.
Good track record: It is difficult to argue with their track record which has boasted no losses so far over a multi-year period. They are also regarded positively by the investing community. The business also has plenty of experience in the bridging field.
Cons of BridgeCrowd:
There are also a few things to be wary about:
High minimum loan size: This may not apply to some, but the minimum loan size of £5,000 would be enough to rule out smaller investors.
Low project size: Many bridging loans are typically in the size of hundreds of thousands of pounds, which coupled with the minimum size may make it difficult to get invested.
Low liquidity: Deals are not that frequent, although the pipeline is kept regularly updated. The platform attracts a slightly different type of investor and secondary market liquidity is very thin.
BridgeCrowd appear to be a great example of a P2P platform that has found their niche and stuck with it and stuck to quality loans rather than quantity. Their accounts suggest that at present this can also be done sustainability as they are profitable. Second charge loans have gotten a bad reputation in this industry due to the possibility of a 100% loss, but their track record suggests that they are careful in choosing well and investments are well managed. The very high minimum investment of £5,000 is likely to put off many smaller investors and whilst the demand is there at this figure this doesn’t appear to have to change anytime soon.
Disclaimer: This article represents my own opinions and should not be substituted for investment advice. Please research before you invest with any firm. Typically P2P investments are not covered by the Financial Services Compensation Scheme (FSCS) in the way bank deposits are, and there are no guarantees that you will receive the returns advertised (or even a return at all).