The Billionaires’ Property Investment Secrets
On Thursday 25th January Frazer presented a webinar entitled “The Billionaires Property Investment Secrets.”
You can view a recording of his presentation here.
As promised, we have collated all the questions asked on the night and provided our responses below.
If you have further questions please get in touch with our friendly member support team (Damian and Nigel) in the following ways:
Call: 0161 667 4264
We are here to help 9-6 Monday-Friday.
Questions and Answers
“Have you thought about offering a commission for members recommending other members?”
For occasional referrals, we can presently offer £50 for a referral, payable when the referred person invests. It is not payable in respect of family members living at the same address.
We also operate a more lucrative referral programme, based on a percentage of the amount invested for people who want to be more proactive. Please get in touch if you would like to learn more.
“In your Islington example*, does the property owner have no mortgage and owns all 900k value before the loan?”
When we are securing a loan by a first legal charge it will mean either the person has no other borrowing on the property (i.e. owns it outright), or our loan is replacing a current first charge.
*For reference the example referred to starts at 24:34 into the recording.
“What if they (the borrower) have a mortgage? Would you still lend?”
Yes. We would be classified as a 2nd legal charge (the 1st legal charge being held by the bank who extends the mortgage). In such cases we would lend to a maximum loan to value (LTV) ratio of 70% which includes the remaining balance on the mortgage. So for example:
House value = £500,000
Mortgage owed = £250,000
The maximum loan we would extend as a second charge would be £100,000. £500,000* 70% = £350,000 less £250,000 already owed)
“What if the property gets destroyed and is not insured?”
We always check for home insurance as part of our due diligence and would not extend a loan on a property that isn’t insured.
“20 mins into the presentation you talk about it now being available to the mainstream, as a virtual minnow investor surely you would be at the very back of the queue in the event of a loan becoming defaulted and therefore never seeing chunks of your capital again?”
The order of priority is the repayment of the first charge holder then the second charge holder. We hold the charge on behalf of all investors equally. The size of your investment is not relevant and you would be receive equal treatment to all other investors with the benefit of the same charge. So for example, once the loan is redeemed all investors are repaid at the same time. Two repayments are made, one returning your capital followed by a separate payment of interest normally a few days later.
“How can I invest in that ISA you mentioned?”
Now that we have achieved FCA authorisation, we are developing our Innovative Finance ISAs as a top priority. Our first ISA product is scheduled for launch in March 2018 so that investors have the option to invest in the 2017/18 tax year.
“Have investors ever lost money on a peer to peer loan?”
There have been zero capital losses for our members on any of our peer-to-peer, development loan or assured rental products.
A few years ago we undertook a speculative off-plan investment in Sutton, Greater London. That was highlighted as being very high risk and dependent on house prices rising during the development of the building. Unfortunately, that did not work out and investors did lose some of their capital invested. Investments based on achieving capital growth are always speculative and we made a decision to no longer offer such investments. Our policy is to focus on investments that produce predictable income returns.
“What do I get as proof of interest earned for my end of year accounts?”
The House Crowd issues a tax voucher detailing interest earned on each investment.
“Where can I see evidence of your past performance?”
Our past performance data is produced monthly and stored for our members to view in the ‘Blog’ section of the website. We will have a dedicated page for performance stats on our new website, scheduled to launch on 24th February.
“I’m not sure how to register on the website. Can you help?”
If you’re having any problems registering your account you can contact our Member Support team – Damian and Nigel. They can help you through the process and answer your questions. Our office hours are 9-6 Monday-Friday.
Also, you’ll be pleased to know we will be launching a brand-new website in February. Over the past 12 months we have recruited an in-house tech team who have been working to make everything easier for our members. We’re pretty excited about this development… Look out for more details soon!