Property investors looking to raise funds away from traditional bank and building society lenders have a new source of cash – crowdfunding.
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Crowdproperty is a new investment platform aiming to match investors with money with the target of raising £20 million within a year.
The web site is a new peer-to-peer lending platform designed to match make private investors with cash with property professionals, like developers and landlords.
The venture is fronted by Property Investor Network founder Simon Zutshi.
Investors can pledge sums from £500 upwards in deals offered by developers, buy to let landlords and property refinancing.
Up to 100% borrowing
Crowdproperty promises higher returns than sitting cash in the bank. The hope, says the platform, is to offer yields of between 5% and 11%.
The platform is inviting financial advisers to refer prospective investors for commission.
Crowdproperty is also seeking agreement from the Treasury to offer funds for wrapping in ISAs and other investments.
Zutshi has revealed the business model for the platform.
- Borrowers pay a 3% to 5% arrangement fee to Crowdproperty
- Lenders receive interest paid gross
- Borrowers can seek finance at up to 100% loan to value at an interest rate of between 9% and 11% or up to 80% loan to value at between 5% and 6% interest a year
- Crowdproperty secures all borrowing with a first charge against the property involved in the loan
Crowdproperty will carry out due diligence on all property projects – including valuing the property and poring through the business plan or loan opportunity.
Matching savers and borrowers
After vetting, the projects go live on the platform and lenders can stake cash towards the project.
However, borrowers only get the cash if the project is fully-funded.
After funding, the project is monitored to ensure the borrowing is spent on the pitched objectives.
Simon Zutshi, who is also a founder director of Crowdproperty, said: “The idea for Crowdproperty comes from understanding that property professionals are facing a tough time raising finance from the banks and savers are not happy with low interest rates.
“More money needs to flow into property to get some of these unfunded projects off the ground. It seems sensible to match lenders who are dissatisfied with the interest rates on their savings with property professionals who need their money to make profits.”
Zutshi added that Crowdproperty aims to become the leading British peer-to-peer lending platform for property professionals in Britain.
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