LandlordInvest specialises in matching landlords looking for financing with investors looking for a regular monthly income. The majority of loans go to landlords who, despite having a good credit record, are unable to secure traditional forms of funding.
Between them, co-founders, Filip Karadaghi, Nik Smirnovs and Joseph Vallender, have a solid track record in property, investments and venture capital, as well as some practical experience as landlords. Also at the firm are three advisors in the form of Reece Chowdhry, a management consultant and experienced investor, Rishi Khurana, an expert in financing, and Alan Gabbay, a director at O&H Group with an extensive track record in real estate and technology. Clearly, there’s a lot of experience and know-how in this team, but how does it translate when it comes to what LandlordInvest has to offer?
The element that stands out most on LandlordInvest’s blue homepage is the claim that investors can ‘earn up to 12% per annum’ – one of the highest potential rates of return we’ve come across in the IFISA market. But the question remains – is that figure actually achievable?
Based on the seven reviews at Smart Money People, it does look like customers are happy with the returns to date. Investors also seem fairly happy with the service they receive from the LandlordInvest team. The only downside appears to be the low availability of investment opportunities. These seem to get filled very quickly, which in itself, says the product is popular among investors.
Being relatively new, the company isn’t listed at Trustpilot.
- Launched in Dec 2016 – first loan completed Feb 2017
- £2 million invested in the first nine months
- Expected returns of up to 12%
- Secondary market
- No fees
- Monthly interest payments
- Transfer in from existing ISAs
- Minimum investment of £100
- Authorised and regulated by the FCA (Financial Conduct Authority)
LandlordInvest offer a very straightforward product. Once an account is opened, investors can review available loans and choose which ones they want to invest in. Loan parts remain on sale for 14 days and the minimum you can invest is £100. There are a selection of both residential and commercial property backed loans, so diversification is possible to minimise risk. Which as we’ll say later is a good thing.
That’s basically all there is to LandlordInvest’s product. Interest is paid monthly, there appear to be no fees (apart from selling on the secondary market) and the rates of return quoted are reassuringly high.
But, as you’d expect, those big returns come with a price in risk. Aside from the fact that the loans are secured with property, there’s very little in way of other protection. For instance, unlike other providers, there’s no provision fund or insurance against defaults or bad debt.
However, the firm is stringent when it comes to assessing borrowers, using the criteria of capacity, character and collateral – an approach commonly used in mortgage underwriting when assessing risk. ‘Capacity’ is an assessment of the borrower’s financial position in order to estimate how much they can safely borrow, ‘character’ is a review of past credit and ‘collateral’ is the loan to value ratio. Investors get access to all this information when it comes to choosing which loans to invest in, so you get to choose which you think are least risky.
There’s no doubt that LandlordInvest is offering some of the best rates in the market, but that does come at price when you consider the potential risk as there is no real provision made for defaults or bad debt. Nevertheless, with interest paid monthly, this will be attractive to those seeking a regular source of income from their investment. Experienced investors will also be attracted to the availability of a secondary market. Just bear in mind, there is a fee of 0.25% to sell a loan or a loan part on the secondary market.
LandlordInvest is a good option for those looking for short term investment and as it’s a very simple model that allows you to get started for as little as £100, it might be good for those looking for their first foray into the world of IFISAs. Just be aware of the risks.
Updated: Tuesday, December 11th, 2018