I first came across CapitalRise when researching Innovative Finance ISAs: they were among the first to offer a working IF ISA product. From what I saw, CapitalRise target property deals in the the high end luxury London market. This is an example of one of their latest investments, a £19million development opposite the Royal Courts of Justice in London:
I reached out to Uma Rajah, the CEO of CapitalRise, with some questions about their platform, the ISA and the investments they offer.
Key Facts (General)
Expected Returns: 10-14% pa (for the ISA, 10%-18% in general)
When did you launch? July 2016
Total Investment to date: £4,000,000
Any New Customer Cashback Offers? Yes, for limited time periods we run a Refer a friend scheme (it offers 1% of the first investment amount paid to both parties). Enter ‘Neil McGee’ as you register as a new customer and you will both receive 1% of your first investment amount as a thank you payment. T’s & C’s apply.
Key Facts (CapitalRise ISA)
Minimum Investment to open ISA: £1,000
Minimum Investment per loan/investment: £1,000
IF ISA Fees: None (the ISA costs are built into the Rate of return for ISA investments)
Is it a ‘Flexible’ ISA? Yes
Do you allow transfers in from existing ISAs? Not yet –but this is coming soon
What type of investments do you offer?
CapitalRise’s mission is to disrupt the old way of investing in property and give investors easy and direct access to real estate investments of the finest quality which aim to generate attractive returns of 10-14% per year. Our investments have been located in iconic locations such as Eaton Square (Belgravia), Grosvenor Square (Mayfair), Knightsbridge and on the Strand.
How did it all begin: what is the background to the platform?
CapitalRise was conceived by Alex Michelin and Andrew Dunn, who have spent the last 15 years acquiring, funding, developing and selling over £1bn of real estate in the most sought after locations in the UK and globally. During this time, they experienced first-hand how much time and money is wasted by both investors, in trying to get access to great real estate investments, and property entrepreneurs, in trying to raise funding. So they decide to create a solution and in 2015 created CapitalRise. I then joined as co-founder and CEO of CapitalRise bringing a wealth of experience in financial technology and have built a highly experienced team to passionately pursue our company’s mission.
What makes you different from the other options: your ‘USP’?
We provide customers with –
- Exclusive opportunities; exclusive access to high quality property assets that were previously only available to institutions and very wealthy individuals.
- No fee service; we don’t charge fees to invest, we generate revenue from the fees we charge the developers to borrow.
- Transparency; it is one of our key values.
- Peace of mind; investments have been thoroughly analysed and carefully selected by our expert team with over 75yrs and £1bn+ of real estate experience between us.
- Confidence; the founders invest their own personal money in every deal alongside their investors to demonstrate their belief in the quality of the investments.
Is there any sort of Provision Fund/ Insurance against bad debt?
Our investments are typically secured against property with a legal charge over the property asset so in the event that a borrower cannot repay the investors can collectively (together with the bank who typically holds the first legal charge) force the sale of the property in order to generate funds in an attempt to repay their investment and return.
We always state the amount that the property would need to fall in value versus its forecast sales value in order for our investors’ capital or return to be at risk. This will vary by investment and is typically 33-39%. To give this number some context, in the financial crisis of 2007, the worst recession since 1930, London prices fell by about 25%.
Is there an Early Sell out option or Secondary Market?
We don’t yet have a secondary market but this is on our product roadmap for this year. If an investor would like to exit from their investment before the full term has expired we would endeavour to find an investor to buy their investment. There is a 3% fee for this service.
Automated Investment: How easy is it for Investors to maintain their Investment?
Our investments are for a fixed period, typically 1-2yrs and the investors’ capital and return is normally repaid at the end. Should they want to reinvest their funds at this point in an available deal we would enable customers to do this with ease.
How is Brexit impacting your sector?
Brexit has created uncertainty and uncertainty is not good for any business. However, we have found that the fall in sterling has more than offset this perceived uncertainty and Prime London property is now much more attractive – cheaper for them in dollar terms – to overseas buyers and investors. Recent Knight Frank report quotes London as being 15% cheaper for buyers denominated in US dollars.
If you don’t charge investors fees how do you make money?
We don’t charge investors fees to invest, we generate revenue from fees that we charge the borrower, they vary but are typically around 3% of the loan amount.
What plans have you for the future?
This year we plan to launch a number of new products and features as well as many more investment opportunities. We plan to launch our equity product, a secondary market, ISA ‘transfers in’ as well as many more investment opportunities.
Our last investment opportunity was fully funded in 71hrs. It was a £1m raise for a development in Knightsbridge. Because of the popularity of our investment opportunities we provide our members with early access to invest, 1 day before the public launch of a new investment. This is one of the benefits of becoming a member of CapitalRise and we will be working on offering more member benefits in the months to come.