PropertyCrowd came into being in 2014 with a £1 million campaign to crowdfund a student accommodation initiative in Southampton.
The firm relaunched as part of Global Alternatives in 2017 to offer the opportunity to invest in ‘institutional grade’ property deals. These consist of UK property-backed bonds, mainly senior and mezzanine tranches.
However, these funds are only available to institutional and professional investors, or those who can demonstrate that they are high net worth. Mind you, these are quite complex investments that will put off most inexperienced investors.
Despite targeting a more ‘sophisticated’ investor market, the information on the website is concise, straightforward and transparent. So far, deal flow has been slow to moderate, but, since the company really only got started in 2017, this is to be expected. Perhaps, of more concern, is a lack of information regarding profitability or progress to date.
Given the short time the company has been in business, it’s difficult to find many reviews on this particular IFISA provider. At Trustpilot for example, there’s just one review, albeit it a rather glowing one.
- Launched as part of Global Alternatives brand in 2017
- Returns expected between 8% and 13%
- Good transparency
- Robust risk management
- Minimum investment of £800
- LTVs typically in the range of 50%-60%
- No protection fund
- The only fee is an 0.95% annual admin fee on the ISA account
- No secondary market
- Loan terms between 6 and 24 months
- FCA approved
PropertyCrowd’s platform promises very attractive yields of between 8% and 13%. However, on the downside, these investments are only available to those who can demonstrate that they have a high net worth (minimum investment of £800 required).
The investments also appear to be quite complex, consisting of senior and mezzanine tranches of UK real estate secured bonds (as opposed to loan participation), so PropertyCrowd probably isn’t suitable for newcomers to the IFISA market.
There’s no protection fund or secondary market, for that matter, with these IFISAs, but a user-friendly online dashboard gives investors real-time access to data, as well as comprehensive documentation on the relevant properties, including survey valuation report and bond term sheets, so if you like to make your own informed decisions on your investment choices, this could be a good option.
Property Crowd Innovative Finance ISA
Property Crowd secure loans using a first or second charge against the underlying property asset.
Target Rate8-13% p.a.
£50 Cashback on your first investment
PropertyCrowd focusses on high quality securitised debt with short investment terms of six to 24 months. While there’s no protection fund, the company lets us know that due diligence is carried out international law firms, but doesn’t go into too much detail on how that’s done.
The investments tend to be well structured, and because these are bonds, there’s an independent custodian to hold cash and securities on behalf of investors. While this should reduce risk, should PropertyCrowd go out of business, again, there isn’t much detail on what safeguards are in place for investors.
There’s not a lot of information on the website to support the firm’s success to date, but the fact that many of the founders/shareholders are underwriting and investing in the funds themselves should elicit a vote of confidence in their target audience.
PropertyCrowd’s model does fill a gap in the market for well-heeled, seasoned investors and, certainly, if like to have some control over the investments you choose, there’s plenty of scope here. But, that complexity, along with a minimum stake of £800, means that newbies to IFISA investments might want to look elsewhere.
Updated: Friday, November 30th, 2018