Whilst getting a foot on the property ladder is a dream for many, rising house prices, falling wages and Brexit uncertainty are just some of the factors preventing would-be homeowners taking the plunge. However, with the advent of crowdfunding, investment in property may be about to become a lot more accessible.
Crowdfunding has become a viable investment strategy in several sectors, with property being the latest to gain real traction. Just like equity or debt crowdfunding, property crowdfunding businesses allow investors to club together to buy a property or invest into buy-to-let mortgages. Most sites organise everything, taking a cut of the investment as commission, buying each house through a special purpose vehicle and allocating shares to investors.
Online property search Zoopla have become the latest business to enter the crowdfunding sector, with the recent launch of its Zoopla ‘Invest’ site. The site have partnered with Landbay, allowing anyone to invest from as little as £100 into buy-to-let mortgages. The new venture also offers a tax-efficient first online property ISA, in partnership with Bricklane, allowing savers to invest from £100 to own a stake in a UK property.
Zoopla’s founder Alex Chesterman believes that “investment has never been available to the masses before in this way” before.
“For those looking to get onto the property ladder or saving towards a property purchase, the ability to ensure that their investments keep pace with the property market is essential”, he added.
Property Moose was one of the first sites to offer property crowdfunding, and initially raised capital through an equity crowdfunding campaign on Crowdcube, attracting an investment worth 281 percent of their target.
Property Moose offer well researched properties with strong forecasted financials, such as estimated rental yields and capital growth for the 2 to 3 years it typically holds the property for, allowing investors to calculate their return on investment.
If a property attracts enough potential investors, Property Moose will buy the property on their behalf, issue a share certificate, carry out any refurbishments to the property, look for suitable tenants, collect rents, maintain the house and take care of the sale of the house if investors choose to sell it after the minimum period.