SUMMARY OF CROWDPROPERTY REVIEW: CrowdProperty have gone under the radar a little. Other platforms have offered bigger interest rates, and/or more spectacular developments. The recent failures in the higher interest rate field have brought platforms such as CrowdProperty into focus. Their impressive track record of no losses and thorough project vetting is looking favourable. Interest rates have slightly declined here but are still a little bit above competition such as Assetz and Kuflink for similar loans. Minimum loan amounts are also good, especially for those utilising the auto-invest function.
Here is how CrowdProperty measures up against similar platforms, together with real-life returns:
|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%||0.03% (estimate)||CLOSED||2.5/5|
|Review||Up to 8.5%||3.27%||OPEN||2/5|
|Review||Up to 8%||1.89%||OPEN||3.5/5|
What is CrowdProperty?
Established in 2015, CrowdProperty is another lender catering to the crowded space of property-backed loans. It offers returns of up to a competitive 8%. Many sites have sought to reduce risks seen by only offering mortgage or bridging loans. CrowdProperty differ, and also take on other types of loans such as development loans.
Many readers will be aware that these types of loans and be fearful. The complications surrounding them were chiefly responsible for the failure of platforms such as Lendy or Moneything. CrowdProperty have sought to reduce the risks around these loans by having a more stringent vetting process. Having hands-on expertise at the company is another diffrentiator (something the above two platforms lacked). As such, projects can be monitored a little more competently. If projects do go wrong they can be potentially be completed, rather than automatically handed over to the administrators.
So far they have earned a good reputation, as they boast a 100% payback rate.
Here is a table which details CrowdProperty’s features:
|Advertised Returns||Up to 8%|
|Minimum Investment||£500 (self-select)|
|Available in ISA?||Yes|
|Active on forum?||No|
Is CrowdProperty profitable?
CrowdProperty is a trading name of CrowdProperty Limited. This company has been incorporated since 2013. The most recent accounts were filed on 31 December 2019 and cover the period of 12 months to 31 March 2019. Retained profit and losses increased by a small amount of roughly £50,000 but this figure is negative, implying a small loss. Cash in the bank declined sharply from over £600,000 to £41,000, but the overall net asset position was down by a much smaller amount (from £615,228 to £562,230).
No new funds were raised by the company in this period. In the year before almost £900,000 was raised by way of shares. This was carried out on Seedrs. Whilst at the time it was said that this would supercharge the company growth rate, it does appear that a further injection of capital will be required in the next financial year.
Crowdproperty Review: Operating Model
Once signed up, you can fund your account via bank transfer. CrowdProperty offer two investment methods: either Self-Select or Auto-Invest. In turn, either of these can be held standalone, or within an ISA or SIPP. Project flow on the platform appears to be good. There is usually a days notice before the project goes live. This arrives by email with a link to view the loan particulars.
One obvious thing that stands out about the platform is that they go to further lengths to describe their projects. Many have comprehensive write-ups, photos and valuation reports. For bigger investments which rely on development, this is often accompanies by a pre-recorded webinar which gives CrowdProperty further chance to sell their projects. This level of detail is not seen on many other platforms. There is also good detail to the pipeline, and an average number of projects per month is around 10-15.
There is a large disparity between minimum investments. The Self-Select product carries a minimum investment of £500 which is relatively large. The Auto-Invest also requires the same, but this can be split into 10 which gives a minimum pledge size of £50. This lower size makes the platform attractive for both big and small investors.
There is no large variation in interest rates however. This is not a platform which seeks to offer the very high rates seen on other platforms. Even for development loans a more typical rate will be between 7%-8%.
One thing we have noticed is that the platform carries many more non-amortising loans than others. This means that interest is not paid monthly, but at the end of the loan term. On one side, this increases risk (as at least you have some of your money returned). On the other hand, arguably this is a more realistic mirror of cash flows in property, as monies are not received until something is sold.
How are funds protected?
As with virtually all P2P platforms, investments are not covered by the Financial Services Compensation Scheme. CrowdProperty offer a notional ‘Shield’ but this is not a provision fund which covers loss. It merely refers to that they offer a rigorous due diligence process, take first charge securities and have a large amount of expertise in the sector.
So far this has worked out perfectly. From their 100+ projects, only 3 were late and these were fully repaid. There have been no cases of default yet, and the anticipated default rate is just 1%.
Crowdproperty Review: Pros
There are several things to like about CrowdProperty:
Good track record: We like that there has been a solid focus on safer loans, and a demonstrable track record so far and believe that other platforms headline rates of over 10% have led to this being under the radar.
Lower-risk loans: These generally are first-charge based loans with lower LTV than the 70% minimum. For developments, the background of the developer is also taken into account, something which would have helped other platforms.
Quality information: The plethora of information given with loans is very detailed and among the best in the industry.
Good interest rates: At up to 8%, I would estimate that these are a little (but not a lot) ahead of the average industry returns.
There are also some things to be wary of:
High minimum (for self-select): The £500 minimum charge for self-select loans is relatively high. This can be mitigated by using the auto-invest tool. With bridging loans typically on the smaller side (£500,000 or less) demand can often exceed supply leading to the loans selling out very quickly.
No secondary market: It is not possible to sell your investments to others (or buy others loan parts). With loans of up to 18 months, your money can be stuck in the platform for a relatively long time. You need to consider if you may need the cash before then.
Platform requires investment: A slight risk is that the platform is still in growth mode, and may see strategy drift in order to ramp up deal flows.
Non-amortising loans: You may need to hold the loans to term to receive the interest.
CONCLUSION OF CROWDPROPERTY REVIEW: 8% for first-charge property loans did not look great a couple of years back.But if the recent platform collapses have taught us anything, it is that a solid 8% is better than a risky 12%. CrowdProperty’s record since they began is an exemplary one. Yhe choice of loans they provide to investors does mitigate risk, in that many are small and not development based. With a wide range of investment types from SIPP to ISA, this is likely to suit many investors. The lack of secondary market and minimum investment for self-select loans may put off some others.
Disclaimer: This Crowdproperty review 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).