Property Crowd is an ISA-friendly real estate crowdfunding platform that offers investors a chance to invest in “institutional grade” property deals from £5,000. They’ve been around since 2014, but relaunched with ambitious plans as part of Global Alternatives at the start of 2017. Those ambitious plans (a ‘cross-border property trading exchange’) were what first piqued my interest in Property Crowd, and I set up a call with one of their co-founders Charles Tan to understand more.
Expected Returns: First investments offered 10%-12% gross
Provision Fund: Not Applicable
Sell Out: Not yet but expected in the future
Minimum Investment: £5,000
Innovative Finance ISA: Yes
Property Crowd Review
You may have come across Property Crowd in the past, they originally launched back in 2014 with a £1 million campaign to crowdfund a student accommodation investment Southampton. More recently they became part of Global Alternatives and relaunched with an enlarged team at the start of 2017. Since then they’ve funded a number of short term property bonds, to date all 4 – 7 months, Senior debt (1st charge on property) and 10% to 12% annual return.
I had a call with Charles, a Singapore based co-founder (though the core team is London based), and he talked through the background of what they are doing with a demo of their platform. Charles came across as very open and confident in the quality of their investment offering. Some of the notes I made from the call:
- Rather than launching to smaller retail investors (e.g. £10 minimums) they are targeting the high net worth, sophisticated investors to start with and delivering them a premium service.
- Their investment focus is on high quality, senior debt (i.e. loans backed by 1st charges on property which take priority in the case of default).
- At the moment they charge no fees their investors, aside from the 0.95% (incl. VAT) annual fee for investments held in their Property Crowd ISA.
- Some of the founders and shareholders are underwriting/ investing in the loans themselves and have their ‘skin in the game’.
What is Global Alternatives?
Property Crowd is part of Global Alternatives. Global Alternatives is an owner and operator of independent marketplace platforms which intends to launch a global property trading exchange called Prop-X. The Property Crowd investments will be among the first tradeable investments listed on the Prop-X exchange.
Prop-X will allow investors to buy and sell debt and equity securities in international property investments, mainly the UK to start with. Potentially it would allow, for example, a HNW international investor that wants access to British Property investments to buy shares in a property SPV. Instead of just having the financials they’d be able to see photos of the property, valuation reports and the historic trading value. They could split their capital across a number of investments listed on Prop-X.
Property Crowd ISA
The limit for adding additional funds to ISAs in the 2017/2018 tax year is £20,000 per person. This amount is the total that can be invested across all ISA types: Cash ISAs, Stocks and Shares ISAs, Lifetime/HTB ISA’s and the Innovative Finance ISA.
Property Crowd were one of the first to offer the Innovative Finance ISA at the end of the 2016/2017 tax year. They have a 0.95% fee that covers the administration charges involved with running the ISA account. This charge is the result of charges levied by third party providers rather than an additional source of income. There is the same £5k minimum on the ISA as the general investment account.
With large minimum investments, I wondered how ISA investors would be able to plan to keep their loose change invested. Are investments offered in multiples of £5k only? Fortunately there is some flexibility on investment size once you meet the £5,000 minimum. Individual bonds are usually priced around £90, and you buy in multiples of 10 bonds (i.e. ~£900). The ISA is a ‘flexible ISA’, so you are able to withdraw and re-deposit any loose change in the same tax year with no penalty.