Brickowner with a real estate development project (32.66% yield)

I have already written some stuff on Brickowner in the past. Brickowner got my attention on Seedrs, where they were raising funds. Meanwhile they successfully had two funding rounds in which I invested as well. So I am a (minor, 0.0001%) shareholder oft he marketplace. I tell you this for transparancy reasons. I will express my own opinion impartial.

What did Brickowner achieve so far?

Besides the two mentioned funding rounds there are already 4 projects financed, two are still funding at the moment, although one (Nash) will close imminently I guess. Yet 44 to 59 investors have participated in the projects and the investment sums were between GBP 35k and GBP 101k, relatively small. I already invested in some of those projects.

What’s the current project about?

The current project, Regent House, blasts the prior projects in terms of volume (1.7 Mio GBP) and expected yield (32.66%). The prior projects only filled very slowly, so how on earth shall such a big project be funded? I remind you that Brickowner does not originate the project itself, but works together with asset managers which want to open their projects to retail investors. This case is special as Brickowner provides its platform to a real estate developer and does the administrative task for him by handling the investments and client onboarding. This can increase growth drastically for Brickowner, if more such projects can be launched.

The project itself is a commercial property which will be converted into an apartment building (one to two bedrooms) with a retail space on the floor ground. The rebuild should take about 12 months. A part (1.7 Mio of 5.8 Mio GBP) is being financed through Brickowner.

What are the risks?

It should be clear that you don’t get 30% yield without risk in only 12 months (btw 3% comissions is deducted up front from your investment). Investors participate as equity investors through a SPV. So if there are problems, this will reduce the expected yield and it might turn in to a loss. There might be delays which means that your capital is bound for more than 12 months. A lot can go wrong (but it does not have to of course): Anticipated sales prices are too high, generally cool off of the property market etc.

As I see it, the rest of the needed capital is being raised with a senior bond which has a superior claim on the assets before the SPV investors are in the queue.

Conclusion

I have already invested in this project, knowing that I could lose money if all goes wrong. This has to be clear to everybody who considers to invest (and is applicable to investments in general). I don’t want to be a naysayer, but I find it crucial that the risks are understood (especially in this case). I believe in this project; this is why I put my money in there.

For new investors there is a cashback available. If you register through this link and invest at least GBP 1’000.- (does not matter if in one project or 10 different over time) you will get GBP 50 as a reward (I get a commission myself). If existing Brickowner investors ask themselves why they did not get a notice about this project from the platform. Easy answer: First the Brickowner people and involved parties will invest. Then it will be publicly announced. I like this mechanism as it builds trust (to me at least) if the people in charge are in the same boat with me (risking their own money).

Real Estate Investments with p2p part deux (UK)

Some time ago I gave you an overview of Baltic and European real estate p2p marketplaces. Today I will continue with an overview of the British p2p platforms from the real estate sector. There are so many that I won’t be able to cover all of them.

Different funtionalities

Firstly I would like to make a distinction: Mainly there are two different types of marketplaces. You are either lender and invest in loans and get interest for that, or you become equity owner and participate from the objects earnings and value growth. What all marketplaces have in common is that you better have a UK GBP account in place (for most it is mandatory). If your are no UK resident, the Transferwise Borderless Account (review only in German to date) provides a free UK GBP account for you. Many platforms offer a cashback or sign up bonus to new investors. Check my overview to see which platform offers what kind of bonus.

Loan-Marketplaces

Lendy (aka Saving Stream, interest up to 12%)

Lendy is one of the older p2p marketplaces and has successfully funded loans for a multiple hundreds of millions. With this marketplace you invest in loans and get your interest added monthly (if your loan is current) to your account. This works still fine. There are many loans in default at the moment. This doesn’t necessarely mean that there will be losses to investors. To date all loans in default were handled and investors did not loose a penny. Given the increase in defaults declared I am not sure if this situation will remain. I guess investors need to prepare to some losses, as the provision fund in its current state is not able to cover all losses. Customer support has never been their strength, and it has never been quick or friendly. But they managed to get worse during the last months. More on Lendy’s functionality here… and nearly I forgot, there is a secondary market in place.

Collateral (Interest up to 15%)

Actually Collateral has started as an online pawn shop and took watches and jewellery as security. Over time they moved towards property lending. According to the platform they are still interested to have watches etc as loan collateral, but the supply is not there at the moment. If this is true or it is just that property deals are more lucrative because of the deal sizes… I don’t know. I would understand the platforms move into property but would really appreciate some pawn loans for diversification. It remains to be seen how good the property deals are as they just started some months ago. There is a secondary market.

Landlordinvest (Interest up to 20%)

Landlordinvest offers the highest max returns. The CEO stated in an interview that they would like to create a balanced risk return portfolio as a strategy, so not all loans will be really risky. I have already noticed a loan with single digit return, but also others in the range of 17 to 20 percent. As the platform began its operations only beginning this year there is not much of a track record available. What I can say is that some loans were redeemed (early) and no default occured so far. The deal flow is limited but gets better month by month. The funding period takes time due to few investors on the platform, but the bids get a cashback of 3 to 4 percent (annualised rate) for compensation of the waiting period. A secondary market is live since the beginning.

Funding Secure (Interest up to 13%)

Funding Secure as well started as a pawn broker like Collateral, but already in 2013. After some loans the property part took over and there are few other loans now. There is a huge loan supply, raingeing from several thousands to several 100k. The loans are announced by email some hours or a day prior launch date on the platform. The platform has to deal with lots of defaults which comes not as a surprise to me, as they are in business for more then 4 years now. Secondary Market is available.

Moneything (Interest of up to 14 percent)

The Things, how the employees refer to them selfs are very involved and do a lot of things the correct way for Moneythig. The founder Ed (thing ;)) and his familiy handle the communications very well. They recently had to deal with three defaults, but informed transparently. One of the defaults was handled in the meantime with no loss to investors. The other two are followed closely. For me this marketplace behaves exemplary towars its investors and communicates really well. It seems they know to handle their business. Of course there is a secondary market available.

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Equity-Marketplaces

Property Moose

Property Moose came to my attention nearly a year ago. The platform offers fixed rate loans rarely. Mostly they offer buy to let (BTL) or buy to sell (BTS) projects. Investors participate from the rental earnings and the value increase at the point of sale. There are yield projections which in my opinion mostly do not match what really will be earned, the value growth depends on the market development. At the end of a project period there will be a poll if the property should be rented again or be sold. Each investor has a vote for every pound invested, so the bigger investors have more influence. A secondary market is available.

Property Partner

Property Partner is somewhat comparable to Property Moose, but mostly does BTL projects. The properties are in a higher segment and the projections about the yields is more realistic. Secondary Market is available.

Uown

Uown is also in the business of buy to let properties with a sale when the projects predefined term ended. It is a really new platform which has only completely funded one project and two are still in the funding phase. There is not much to tell about, besides that there is no secondary market at the moment. I will invest GBP 20 in both open projects to gain some insights. 20 GBP is the minimal investment amount.

Brickowner

current Brickowner project

And there is Brickowner which cannot be placed in any of the above categories. Retail investors can invest in projects which normally would only be open for big hitters or institutionals. Now we can invest alongside the pro’s, and this with as little as GBP 100. The projects vary, there are BTL, BTS and sone sort of loans. Currently there is one project open for funding, where we can invest in a portfolio of loans issued to developers. The duration is set at 2 years with a 7.5% annual yield. The advantage of the project is that the Lead Manager (Nash Asset Lending) participates with 10 percent of its own money. In case of losses, these 10 percent will firstly cover any occuring losses, so they build a buffer. Further Nash Asset Lending will cover any losses above these 10 percent, should it be necessary. They are convinced that their projects are of great value, so they offer this additional security. We could say that there is some sort of buyback in place. I cannot tell how financial stable Nash Asset Lending is, but I trust Brickowner’s due dilligence in this case, as any loss for Brickowner Investors would be fatal to the platform. If you are interested in Brickowner, use this link for registration and get GBP 50 as soon as you have invested GBP 1k in total. This offer is not timely limited.

Brickowner with the next equity raise and some platform news

Some months ago I introduced Brickowner to you through an interview with CEO Fred Bristol. At that point in time Brickowner was raising money on seedrs with an equity sale. Now the platform made some progress but needs another cash injection to develop further (I am myself a tiny minority shareholder), which presents an opportunity to get on board as shareholder as well. At the moment the funding is about 80 percent complete. If you decide to invest in some equity you need to keep in mind that this is a longterm investment with the possibility of a total loss. There is a lot of risk associated with start-up investment.

Ok, what does Brickowner actually do?

Different to other platforms investors get the chance to invest alongside large and institutional investors with a minimal investment of GBP 100. Normally such projects are reserved for the big hitters and the entry investment is mostly 25k at least. This is a whole new opportunity. Brickowner charges 3 percent up front plus an annual fee of 0.75 percent. This sounds like a lot, but given the several year term of these projects the initial fee can be split and assigned yearly which means that with a 4 year term the actual yearly management fee is about 1.5 percent. It is normal that such projects have some entry fees.

So far 4 projects have been funded and a fifth is coming soon

Not that much, huh? I agree, but Fred released a statement on that point on seedrs which I find very interesting and encouraging. He stated that they only want projects which match their criteria (quality etc) and that not every asset manager is compatible with their set of rules. They are setting up processes to scale the business in the future which should be very cost effective for investors. He reiterated that he and his team will favor fewer but great projects then a lot of them meeting not their standards. Interesting times lay ahead of us. The coming project is a bit different then the previous projects.

coming project

With this project you lend funds to a loan portfolio which helps real estate developers to finance their projects. The projects are secured with mostly first and second mortgages with maximum ltv’s of 67.5 percent. There will be an annual distribution of interest which amounts to 7.5 percent per annum (two year term, so 2 x 7.5 = 15% total yield expected). This project is therefor more like a bond, as we do not profit from an increase in price of the real estate. The projects are supervised by an experienced developer who will at least invest 10 percent alongside Brickowner investors in every project. There is a sign up bonus for new investors: You get GBP 50 if you sign up through this link and invest at least GBP 1k (I get a small provision on that, but it is of course free to you). Given the longer funding period, Brickowner is offering 3% cashback (p.a) on invested funds until the project is fully funded.

Conclusion

For me Brickowner is operating in a niche and seems to be a good alternative for retail investors to get a foot into institutional projects. What is important to me is that you make your own picture before you invest. In this special case this is more important to me then ever as I am involved with the platform (although only as a tiny shareholder).

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My Top 10 platforms 2017 (as of 30.06.17)

At the end of last year I already published my top 10 platforms (in German only, sorry). After the first half of 2017 I draw up an interim balance. The listing reflects my personal opionion and can (and of course should) be seen different by any reader. I start with the Top 5 and give an explenation below the table for the placings.

rankplatformreturn (XIRR)link to reviews
1Robocash14.21%Robocash
2Grupeer13.87%Grupeer
3Lenndy13.69%Lenndy
4Mintos18.21%Mintos
5Viainvest12.88%Viainvest

Robocash

Maybe this choice seems rather surprising, as the platform only started in February, but I would like to share my thoughts which led mi to this decision. Firstly I see a will for improvement at Robocash. Seconly the interest rates are attractive at 14 percent. Last but not least a don’t have to be active. I check in every 2 weeks or so and then I do nothing 😉 The AI just works fine, this is passive investing. The only shortcoming is the self imposed limit of 10k per Investor. But at some point this will be lifted.

Grupeer

Again, this may come as a surprise, but I like the platform and see it as a sleeper (ok, not so secret anymore 😉 ). I guess the platform gets overlooked sometimes, which is actually a good thing for me, as I can profit from the cashback offers. The platform works fast and the interest of up to 14% is nice. Grupeer plays in the top division with those rates. Shortcomings are the missing AI and secondary market. But this will change this year.

Lenndy

Again a new platform in the top 3. Sadly there is no secondary market at Lenndy nor an AI available. Up to 15 percent interest rates covered with buyback is best. Many investors seem to have a problem with paysera handling the transfers. I can understand this to a certain degree, it is somewhat painstaking to open and get your account verified, which I experienced myself. After that everything is fine and fast. Transfers are faster then from my bank account. Although I will make no friends in saying that I like paysera, I still say it 😉 Paysera (for me) is much better then its reputation. Maybe this will cost me some readers, but hey, I rather write what I think then appeal to the masses.

Mintos

Last years top rank has lost some ranks. This due to inconsisentency in both the interest rates and loan supply.The first half of 2017 was minted by increases and decreases of interest rates and shortage and oversupply of loans. So my criticism is: What is an AI worth to me if the input parameters always vary? At the moment it seems like the situation is stable at Mintos, and they understood that investors money will be withdrawn if the interest rates fall permanently below 12 percent or the money is waiting for action on the account. I reall do hope that we see less volatily during the rest of the year. In my rating I excluded the fact that Eurocent, a loan originator, is in trouble with liquidity issues, but I want to comment on that situation. It was clear that at some point one of the many loan originators will get in trouble. What surprises me is the speed at which it happened. Eurocent was added just some months ago, and now they seem to have liquidity issues. I ask myself how good the due dilligence was in this case….

Viainvest

Actually Viainvest is a contennder for the top spot. But why did I place it on the 5th rank then? Firstly the platform is too bureaucratic for my taste. Investors need a proof of tax residency otherwise some none refundable withholding tax is applied. So far so good. Get the certificate and it is okay I thought. But then there came polish loans, on which in any case withholding tax is applied. Ok they seem to be offsettable with the tax return, but this takes time, and I did not see any proof so far that this actually works in reality. Further the loan supply was declining for a short period of time, but that improved really quickly. My funds always were invested and reinvested without delay. The AI works smoothly though I can close with a positive statement 😉

rankplatformreturn (XIRR)Link to reviews
6Estateguru10.25%Estateguru
7Lendix7.38%Lendix
8Collateral12.78%Collateral
9Lend5.67%Lend
10Linked Finance8.95%Linked Finance

Estateguru

Estateguru gained one position and is looking into the top 5. I really liked the platforms evolution which surprised me in many aspects. Firstly the loan volume has increased and a lot of loans matured and were paid back in full. There were some loans which were paid back after maturity, but that lies in the nature of bridging finance. Real Estate development cannot be considered an exact science. There can always unforeseeable circumstances occur. What makes me happy is the fact that Estateguru strides along and has introduced a recent updates tab for its loans. With this improvement we can see what is going on if a loan is late.There is still room for improvement, but it seems to be on track.

Lendix

Lendix loses some ground but is still ranked at the very good 7th seed. The loan quality is really strong (I only invest in French loans though). At the moment I hold 32 projects in my portfolio, and every project has paid its dues so far, no delay so far. The main reason for the seed in the lower band is, that there hardly were any new loans on the marketplace until March. Somewhere around March/April the supply increased. Surely the foreign expansion has helped to increase the loan supply. As per Lendix’ stats the picture looks bright in these regions as well, but for me, it is too early to make a conclusion on that.

Collateral

I really do like Collateral. The interest is always paid on the 1st day of the following month, the support is fantastic really quick and the interest rates of up to 14 percent are great. I can’t rank the platform higher at the moment as they went more and more into real estate financing and away from their roots. There are many other platforms that offer the same kind of loans. I really like their pawn like loans, so I hope this niche does not dry out completely. Some of their car loans defaulted, but they were handled really well and investors lost no money. This is a big plus, we see that , at least their pawn loans are valued correctly.

Lend

On the 9th a Swiss platform. LEND started in 2015 and has shown an impressive growth story. I personally have met the founders of LEND and am really positive towards them. My investments are continuing, and are remarkably good given the Swiss low interest environment. I guess we will see much more good news in the coming months. I am aware, that for most of my (English) readers this platform is not of interest, but I do like them so I place them in my top 10. Maybe still worth checking out for you, it may give you some insights, how the Swiss p2p market ist working and evolving.

Linked Finance

Linked Finance convinces with its loan quality. Until now, no late repayments nor defaults. What I don’t like so much is that the investors are charged a 1.2 percent annual fee. During the last few weeks there were fewer loans added to the market place. Reason for that? Increasing competition in Flender or others?

On the outside looking in….

Here you find some platforms which I like, but could not already put them into the top ten. Leading the way of the “outsiders” is Flender, which makes a great appearance, but it is to young and I have not made enough experience with it to allow them to the top 10.

This is it from my personal top ten after the first half of 2017. Different opinions are always welcome and I am ready to discuss them with you in here. Just post.

Interview with Brickowner CEO Fred Bristol

“Disclaimer: I have participated in the Brickowner seeding round on seedrs and therefor holding some equity (0.025%) of Brickowner. I guarantee to report objectively about Brickowner, but for transparency I decided to share this information with you. “

I was able to ask Fred Bristol, Brickowner CEO, a few questions which he answered. You can read the interview below. Many Thanks to Fred for answering in such detail. If you can’t wait to invest, Brickowner is offering cashback GBP 50 on your first GBP 1000 invested (click link).

1) Could you tell me a little bit about the story behind Brickowner? When and by whom was the idea born to create a p2p platform?

Brickowner was founded in 2015 by myself, Fred Bristol, and Toby Stone. Since university I have invested and managed property, both in the UK and abroad. In early 2015 whilst I was researching and investing in property I saw opportunities for others to invest alongside me. Simultaneously Toby (co-founder) was looking for ways to save for a home purchase, with the return on cash from banks so low, his savings were depreciating relative to property. These two problems led to the idea for Brickowner.

After a bit of discussion and research, we found that such difficulties were a recurring problem experienced amongst our friends. Toby’s experience and work with start ups led to a discussion around the potential of crowdfunding and after being introduced to a number of these platforms, I realised that a similiar platform could help others save for property and invest alongside professionals. Obviously the property crowdfunding market has matured a lot since then.

2) The p2p/crowdlendling&funding market has gained traction during the last couple of years, do you think this will persist?

Fred Bristol, Founder and CEO

I think the growth of the sector is an indication that every day investors are looking for new ways to invest their money, after years of receiving savings returns that don’t beat inflation. Changes in technology mean that such investments are easier than they have been before and provide people with a level of control they haven’t ever been offered. If I logged into Brickowner now, I could tell where my money was invested, the fees charged and my projected return over the investment period, such transparency isn’t provided by banks and most large fund managers, due to the older technologies used and the disparity between the return they receive vs. the interest they offer.

Given the above, it is easy to see why the crowd-lending/funding market will continue to increase, if we compare the EU market to the US we still have a long way to go before our crowdfunding markets experience the same maturity. By 2025 crowdfunding is expected to increase by 300% globally, the EU will experience a greater proportion of that growth if we account for it’s size now when compared to the US and Asia. My view personally is that people will use a number of preferred and trusted platforms to invest in the future, moving away from a single savings account, with p2p/crowdlending/funding platforms meeting that need. Brickowner aims to become the trusted property investment platform in this regard.

3) You are raising some capital on seedrs. Will this be the last round, or can interested investors expect more rounds in the future?

The decision to raise money on the Seedrs platform was made because it allowed anyone access to an invest in our business, this is a principle we’ve applied to property investment and wanted to use in order to grow ourselves. We found quite often people who invested were passionate about our performance and really bought into our platform and vision.

If there is a need to raise further capital for Brickowner, we will likely continue to use Seedrs as a platform for this. There is likely to be another round after this present round. This will give people further opportunities to invest and support the business.

4) There are already other p2p platforms in your segment, such as property moose, property partner etc. Why is Brickowner better or how is it different?

I feel that Brickowner differentiates itself in a number of key ways:

– We have built our platform from scratch working with users to ensure that our platform is as easy to use as possible, we truly believe everyone should be able to invest in property and technology should support rather than hinder this.

– Unlike the other platforms you mention we are working with experienced property asset managers to source and manage the opportunities, thereby giving people access to property investment opportunities they wouldn’t otherwise be able to access.

– we are providing our users with a broad range of opportunities within different property sub sectors, not just residential

5) Congratulations to you for having funded your first project by investors some weeks ago. A second one is now in the funding phase. What can we expect in the next weeks?

Thank you! We are currently looking to work with our investors to ensure we are providing property opportunities that they want to support. This means that over the near term we will ensure that properties are sufficiently diverse to allow investors to spread their money between different investments and also find out what types of property interest them. Given the feedback so far it is likely that we will potentially look at professional HMOs (houses in multiple occupations), where a single home is rented to multiple professional tenants in the coming weeks. In the medium term we are planning to offer a number of commercial property developments as well as further residential opportunities.

As we work with some of the leading property managers in the UK, we are able to offer a wide variety of property investments with strong capital growth and income potential. The diversity of property offered is one of the key differences between our platform and others.

6) Are you happy with the speed the projects are filling? Are there any institutional lenders interested to invest via Brickowner?

Our projects are filling steadily now, and I am happy with the speed in which people are investing. We have been keen to ensure that new users have had a good investment experience. At present we are not speaking to institutions in terms of them using our platform. We are focussing on providing the best possible service to individuals. Other time we may also look at ways we could also incorporate institutional users for our platform.

7) When do you expect break even?

On current projections we are expecting to break even at the beginning of year 3, this obviously depends on a number of factors, including whether we feel it is in the best interest of our shareholders to delay break even in order to grow bigger quicker in a shorter timeframe.

8) Is there anything else you would like to let know my readers?

We are currently offering new investors £50 for their first £1000 (click link) invested, given that we have funded our first property, we will shortly close our second we wanted to show new users how easy our platform is to use! If your readers have any questions please contact hello@brickowner.com or visit the site www.brickowner.com

Saving Stream changed its rules (for the better)

Recently Saving Stream announced a change of their rules. Further the second default was processed without any shortcoming for investors. Let’s take one thing at a time:

Purchases without funds on account now only possible on primary market

Saving Stream offered through the INPL system (invest now pay later) a possiblity to invest without even having sufficient or any funds on the account. This has come to an end, at least on the secondary market, where loans only can be bought, if the investor’s account is sufficiently funded. The primary market (pipeline loans) is not affected by this change of rules. One can still  subscribe for the desired amount in new loans and gets the assignment (or even partially, depending on the demand). Afterwards you still have 48 hours time to fund your account, as it used to be. This may be a little bit annoying for investors, but this step seems quite logical as you should only be able to buy something (and get interest) if you have the funds available. From Saving Stream’s viewpoint I can fully understand this measure.

Some new notations and their functionality

On the secondary market you can see on the rearmost column the interest status, in this case it is IOA (see picture below):

IOA (interest on account): Interest is paid in advance and will be credited to the investor’s account on the first day of the month. Everything is okay here.

SBL (serviced by Lendy): Saving Streams platform operator is Lendy ltd. During this status the interest is being serviced by Lendy. The borrower is delayed 1 to 90 days. This does not mean that something bad is around the corner, but it might be an indication that not all will go as planned.

IA (interest accruing): Interest is still accruing, but not credited on the investor’s account anymore. This happens if a loan is late  91 to 180 days.  Again, this does not mean that the borrower does not pay in the end, but it might be an even stronger indication that something might go southward.

DEF (default): Loans which are overdue for more then 180 days are considered as a default. These loans can still be sold, but are placed within the default tab and therefor no longer visible on the secondary market.

These change of rules has lead that 3 loans  (PBL074, PBL075 & PBL081) als have been marked as defaults. Now we have a clear understanding of which loans on Saving Stream are marked as default.

PBL020 – default was settled

It has took a while, but in the end the loans was processed and all investors have received their capital plus interest. So, as to date no investor has ever lost a single penny by investing with Saving Stream. The downside is, that the provision fund has covered a lot for investors in this default and is now low on money. So maybe with the next default, investors might suffer some losses. So look closely in which loans you are investing and monitor your portfolio.

If you would like to give Saving Stream a try, then register here. You can for example use Currencyfair for the money transfer and currency exchange and get a 30 Euro bonus in doing so (if you use the previous currencyfair link and transfer more then 400 Euro or the equivalent in any other currency).