Here is how LendInvest compares to other platforms in my experience:
Platform Link Target Rate (%) My XIRR (%) Status Live Rating Review 9-12% -1.43% (estimate) CLOSED 0.5/5 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% CLOSED
4/5 Review Up to 13% 0.03% (estimate) CLOSED 2.5/5 Review Up to 8.5% 3.27% OPEN 2/5 Review 4-5% 4.56% OPEN 3/5 Review Up to 8% 1.89% OPEN 3.5/5 Review 4-7.5% 3.36% OPEN 4/5 Review Up to 8% TBC OPEN 3/5
What is LendInvest?
LendInvest began in 2013 as a spin-off of another finance lender specialising in bridging loans, which is basically short-term finance for borrowers. The company has continued to offer the same products. The major difference being that the funds for the loans are sourced from individual investors. Technology has allowed platforms such as LendInvest to aggregate funds in this way as well as administer individual investor accounts.
Despite the lack of publicity for LendInvest, they are a much bigger and mature company than other P2P startups. They have scaled up very quickly and in March 2019, £171m of loans were lent. This monthly volume is greater than the likes of market leaders Ratesetter and Zopa.
Part of the reason why this has gone a little under the radar is that LendInvest also have an institutional offering. This makes up the majority of the funds with most projects not becoming available for public funding. This is a little similar to the model of Landbay. However, this went institutions-only and closed to regular investors. For the meantime, LendInvest remains open to small investors.
Here is a table giving LendInvests features:
|Advertised Returns||Up to 7.5%|
|Investment Type||Bridging Loans|
|Available in ISA?||No|
|Active on forum?||No|
LendInvest Signup Bonus
At present there appears to be no signup bonus available.
Is LendInvest profitable?
LendInvest is a trading name of LendInvest Limited. Their last accounts covered the period of 12 months to 31 March 2020. These accounts show a sharp drop in operating profit from £3.281m to just £0.625m. The main cause of this was an increase in salaries as administrative expenses increased by c.£5m. On the statutory side, the figures slipped to a £2.2m loss due to a large exceptional cost booked as a result of an aborted stock market listing.
In terms of cash, they had cash reserves of £90m at the end of this period and no equity was raised. However the business appears to be standing on its own as its cashflow is not outweighed by its expenses. This is a much stronger position than other firms at earlier stages in their life. Many are dependent on cash injections coming in until they are profitable. It is clear that in the case of LendInvest, they are genuinely increasing the amount of business they are doing. Currently almost £800m of loans sit on their balance sheet, which is more than double the year before.
All in all, this is a much bigger business than many other P2P companies out there – the amount of loan assets here is larger than the listed Funding Circle.
LendInvest Operating Model
From the view of a smaller investor, the LendInvest experience is quite simple. You can sign up and add money to your account via debit card or bank transfer.
The loans offered by the platform are fairly simple to understand. Typically loans are of the bridging type which run for less than a year. The borrower is expected to repay the loan by means of either sale of the property or refinancing with another lender. We can see that type of lending may be ignored by the banks. This give companies such as LendInvest a captive market.
The massive loans contingent on development (which blighted platforms such as Lendy, Moneything and Funding Secure) are largely absent here. The main type of lending is for residential properties, although we do see commercial ones here.
LendInvest investments come in two tranches ‘A’, and ‘B’. The A loans rank ahead of the B loans, but pay a slightly level lower level of interest. Most loans on the platform so far are for the A-type loans. Whatever the tranche, all have first-charge security on the underlying asset. Interest is added to your account once per month and the loans are not amortising, which means that capital is paid at the end of the term.
The maximum LTV is a little higher than that of other platforms, going up to 75% LTV. However this hasn’t proven to be an issue so far, perhaps reflecting a better choice of loan. There is generally less information about the properties supplied to investors aside from the basic information. We don’t receive pictures, or a valuation report for instance. Neither are there any loan updates given every month.
Investments also have a little less flexibility than other platforms (even though the short-term nature of the loans means money can be recycled fairly quickly). There is no secondary market where loans can be sold. Once invested into a loan your money is committed for the duration of it unless it is redeemed early.
LendInvest also allow investors to invest in their bonds. This may be a better option for some. The payments are fixed and at a higher rate (5.375%) and do not have exposure to any individual property. However, they are for a longer term (maturing in either 2022 or 2023) so some platform risk has to be assumed.
How are funds protected?
As with almost all P2P products, investments in LendInvest are not covered by the Financial Services Compensation Scheme (FSCS). LendInvest also do not have a provision fund in place to cover loan shortfalls in the event of underperformance.
LendInvest Review: Pros
Great Track Record: Since commencing operations LendInvest have managed a large amount of projects with a very high success rate. With an overall massive loan book, management appears very competent.
Smaller loan sizes: Many (not all) loans are for smaller sizes in the region of hundreds of thousands of pounds, not millions. This reduces the risk of a rogue loan adversely affecting the stability of the platform.
Minimum investment: The minimum investment into any loan is set at £100, and with auto-invest turned on it should be possible for every investor to get a part.
Profitable company: The company making profits adds to stability and reduces (but does not eliminate) platform risk.
LendInvest Review: Cons
Slower loan flow: Loans are not as quick to appear here as with other platforms such as Crowdproperty. There are a still a couple of deals per month, but this can lead to a large cash drag as uninvested funds pay no interest.
Self-select not as good: The lower loan sizes plus increasing popularity of the platform makes this harder: loans tend to sell out to those who have auto-invest enabled.
Lower interest rates: Loans range between 4-7.5%, and probably a tad below similar offerings seen at Kuflink and other sites.
No ISA option: LendInvest’s loans cannot be held within an ISA (although you can hold the retail bond inside one).
LENDINVEST REVIEW: CONCLUSION
There is nothing flashy at all about LendInvest. But they appear to have many positives in a P2P world where we would like to reduce risks. Their track record of managing loans are excellent, they are a profitable company and appear to have ample cash reserves and backing. The trade-off here is a slightly lower interest rate, and slightly less information is available regarding loans. However (in my opinion only) this is quite worth it.
Disclaimer: This LendInvest 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).