The fallout from Lendy’s reported woes has launched a flotilla of lazy journalism, poorly-informed opinion pieces and Chicken Licken style warnings to investors.

Meanwhile, experienced investors in property finance are merely rolling up their sleeves and getting on with business as usual. Risk is part of life. Understanding which risks, how much of each to take and the price you exact for it is how an investor makes money.

This much would seem obvious, but not, it seems, to the jittery herd of financial journalists commenting on this particular situation.

The spectrum of real estate lending is broad and varied.

At one end of the scale we find investment loans, which tend to have strong covenants on long leases and a robust income stream that services the debt.

At the other end – bridging loans, which are short term, with repayment coming through either a sale or refinancing following an event such as the granting of planning permission.

Generally regarded as the Bellwether of property lending, bridging lenders are usually the first into the market cycle and often the first to drop out. Lending tends to be at credit card rates, since until permission is granted, there are too many unknowns (including the financial cost of any Community Infrastructure Levy or S106 Agreement – the charges that local authorities make on new developments to help fund infrastructure, schools or transport improvements – vital to support new homes and businesses in the area).

In between is a vast and multifarious landscape, taking in low-risk borrowers with low risk deals to high risk borrowers with high risk deals. It also – crucially – includes well-run platforms operating in the higher risk space that give plenty of information, have high levels of due diligence and price the risk fairly so that investors can make informed decisions.

Somewhere in this Big Country is Lendy, ploughing along in its covered wagon, braving the arrows and potholes as it goes.

Now, I don’t intend to comment specifically on Lendy’s business, save to furnish enough background to give us some perspective on the case:

Lendy recently appealed to the regulator after one of its borrowers threatened to sue. They claimed Lendy failed to give notice on loans and arrange further funds. Concerns were also raised over the fact that £112m of its £180m loan book were at least one day late. As we understand it, this deal was not a bridge but an expensive development facility.

Now, to the uninitiated, this will set all sorts of hares running. But those who regularly walk the streets of the bridging world will know that what looks like a situation going wrong is probably expected and planned for. It’s a way of increasing returns – on what, in the US, is often described as “hard money”.

With developments, just because a project is taking longer than expected, it doesn’t necessarily mean the deal is deteriorating. Lots of factors determine the progress of construction – some beyond anyone’s control, like weather.

But financiers know this, and also that when deals go beyond the due date, the interest continues to accrue. Sensible lenders will also build delays, cost increases and falling values into their sensitivity analysis but still impose a fairly tight schedule on the borrower.

Whether the 12% return Lendy investors get is enough to cover their risk is a matter for them. The reality of the market suggests that if investors are getting 12%, then the borrower is paying somewhat more – and you should ask yourself what kind of borrower is happy to pay this much for their senior debt (CapitalStackers borrowers are charged substantially less). But I will say that this is an area where the astute investor should take very great care to ensure his own risk is adequately compensated for – and to be clear, the key risk is this:

Any investor taking part in a deal that is not fully funded at the outset is entirely dependent on new investors coming on board to pay the contractor, without which the project will fail to complete.

In our view, certainty of completion is a fundamental prerequisite of any property deal. It’s inconceivable that we would expose our own investors to the risk of a development that may never come to fruition.

We have no intention of letting our investors take the liquidity risk when a big, strong bank can take it for them.

This is the main reason why we choose to partner with banks as part of our strategic business model. We raise the funds necessary to plug the gap between what the bank will lend and the borrower’s equity. And we make sure that our investors’ funds are deployed after the equity. The banks commit to the finance up front, so we can be sure the funds are in place to finish the job.

Certainty. Right there. Locked in before an investor parts with a single penny.

And while it follows that this means our investors are not in the First Charge position, they’re certainly rewarded appropriately for their Second Charge position, with the added comfort that comes with the removal of doubt, and the fact that a bank sees the deal as worth investing in.

This is the main reason why CapitalStackers’ default rate remains at zero. We always run our financial analysis on the assumption that everything is built out before anticipating any sales revenue after a conservative sales period. That means we get to the end game without having to rely on new funding coming in. We believe that not to do this would be to take an insufficiently conservative view of the world.

Among the other reasons are:

1. As we’ve established, our investors are never invited to take part until all funding is in place to complete construction.

2. We don’t move until detailed planning consent is secured. We stick to “Oven-Ready” deals – otherwise the outcome is too opaque. Pointing P2P investors to deals before this point is somewhat irresponsible, unless the risks are made extremely clear, and/or the Loan-to-Value ratios are very low. But even if they were, we just wouldn’t do it anyway.

3. We secure regular information and updates from our borrowers and monitoring surveyors (which is then passed on to our investors). So at all times, the people who fund our projects are fully aware of what risk they’re taking, whether that risk is changing, and what they will earn for taking that risk. So they’re fully informed to take whatever decision they want to take. And if they’re involved in a deal and decide for whatever reason they don’t want to be, they can advertise it on CapitalStackers’ secondary market and seek to recoup their capital.

This should all be meat and drink to experienced investors, though. This is how the banks have always done things: information + risk = appetite + return.

Of course, there will always be bad deals and bad operators, despite the best efforts of the FCA – it’s a fact of life. But among the rest, it’s a question of assessing the risk, and deciding how much money would make you comfortable enough to take that risk.

In other words, there’s no such thing as a bad risk – just ones you’re happy to take, and the ones you’re not.

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

AltFi wants us to say what we think about tighter regulation – we think it’s more important to say what our customers think.

So here’s a follow-up to our blog of 28th September, and in response to this AltFi article on 8th October.

The useful and informative AltFi website – fast growing into the oracle of the alternative and digital finance industries – has reproached FinTech companies such as ours for “timidity” in the face of the FCA proposals to tighten regulations – in particular, to limit the amount that “unsophisticated” or first time investors can invest. It says we should have galvanized our investors to sign their ‘Trust the Investor’ petition.

Perhaps so, but it’s not a good look for an industry to cry “foul” at the first signs of a professional framework being put in place. Responsible platforms, who are meticulous in the way they conduct business on behalf of their investors, should welcome regulation that brings the less stringent operators up to their own standards. We’d rather the playing field was levelled from the top, because improving practices (and the resultant public perceptions of our industry) benefits all of us. Rogue operators benefit no-one, and they should be forced to pull up their socks or bow out.

So we didn’t feel it our place to take umbrage at the proposals. Our opinion is hardly relevant. What is relevant, however, is the opinion of those who invest their hard-earned nest eggs into platforms such as ours. Do they feel their money is secure? Do they feel they’re fully informed of the risk involved? Are they sufficiently updated?

And – most important of all – do they feel the need for the FCA to further protect them against P2P practices?

This, we felt, was an ideal opportunity to canvass the opinions of CapitalStackers investors. How do they feel we’re doing, and do they want for more tightening?  It appears not.

We were pleased to see that our investors gave us an average score of 9 out of 10 when asked to rate the information we provide, our risk assessment, due diligence and our clarity and transparency. Our risk management deal pricing and general security were scored at an average of 8.5.

However, when asked to what extent they would welcome the FCA limiting the amount they could invest came in at an average of 2.5.

But it’s not for us to put words into our investors’ mouths. We’ll let them tell you what they think of us in their own words.

Here are the responses we received to our questionnaire. The comments are anonymous, and we’ve edited one or two for length, but we’ve left them exactly as they were submitted, warts and all:

I totally oppose the FCA limiting the amount that anyone can place with CapitalStackers without taking the advice of an IFA….The fact here is that CapitalStackers carries out due diligence on all projects handled, and only when satisfied with the outcome of same, then moves a deal forward providing detailed information to its investors.
I think CapitalStackers explain the risks and rewards well. There is no requirement for the FCA to become too involved.
I trust CapitalStackers to invest wisely.
I think the website could be made slightly more user friendly and make it easier to find important information, perhaps a side bar explaining each area and how to locate that info. As regards the FCA limiting the amount people can invest, that must depend on how sophisticated each investor is and whether they fully understand the risks involved. In that respect, perhaps there should be some examples of what can go wrong with a property loan and a worst case scenario potential loss situation.
If the FCA does decide to limit the amount people can invest, 10% is too low. 20% or 25% would be better. However, as a sophisticated investor, I have been cautious anyway and not invested more than 10% of my portfolio. Once the channel and Capitalstackers have proved themselves and loans have been repaid with the agreed interest, I will invest a greater proportion of my portfolio, though still maintaining a good mix of asset classes.
I would not describe myself as a sophisticated investor, but I always believed that the whole point of peer to peer investments was that it enabled people like me to participate in investing directly compared to other types of investment from which we are excluded. I started investing in peer to peer about 12 months ago and I have been pleased with the outcome so far. I had absolutely no previous knowledge or understanding and carried out my own research before committing any money to investments on peer to peer platforms. I avoid any platforms that do not appear transparent or are too complicated to understand. I am capable of making my own judgement on this and do not need the government to take control of my investment decisions. I should add that in spite of the fact that my knowledge and understanding has been acquired through my own research and I am definitely NOT a professional or even greatly experienced at investing – the ONLY time I have ever lost money was by following the advice of a financial adviser. Since that time I have ‘gone it alone’ and over the past few years I have successfully increased my capital through investments that have been entirely my own choice.
I invest with confidence in CapitalStackers. They have a very experienced team in both finance and building development. As they are very selective in their choice of investment deals and, from my own experience, I’ve found CapitalStackers to be meticulous and diligent, I would not agree with limiting the amount one can invest. It should be a personal choice.
As an experienced investor and owner of a commercial property portfolio [I am] very comfortable with proportionate risk and due diligence by CapitalStackers. The individuals involved in CapitalStackers have my complete confidence and for that reason I am happy to keep investing.
I think the FCA should spend time checking that p2p websites are providing transparent and accurate deal information so that investors can make properly informed decisions, rather than trying to dictate what people invest in them.
This type of funding seems very transparent and well explained compared to others.
Well run peer to peer funder which understands its market
Most investments carry risk and an individual has to take responsibility for his/her decision.
I know what I am doing and don’t need to be nanny-ed by an organisation that was unable to spot the last financial crash.
It’s not up to the FCA to determine what clients do with THEIR money. All they should be doing is providing the right framework, governance and controls.
I like the CapitalStackers model as second charge funding for developers, alongside (though behind) mainstream lenders. The info available is very extensive & thorough. Actually, I would like to invest MORE in CapitalStackers, but opportunities are few and far between and often fill quickly – literally sometimes within minutes of release.
Restricting P2P access for retail investors strikes at the heart of the concept of the innovation of a market by the people for the people. FCA role should be to police the platforms to ensure high standards and enable market choice for investors.
As usual the controlling body, rather than addressing the real issue, is trying to abdicate responsibility by yet more layers of bureaucracy. The best way for the FCA to protect the investor is to investigate the poorly operated providers and apply severe sanctions and penalties and, where necessary, withdraw authorisation. It is the responsibility of the FCA to do this, not restrict the investment options of individuals in a free market economy. If the FCA had confidence in their own regulatory regime and their policing of the businesses falling within it, a more obvious methodology to protect smaller investors would be to extend the financial compensation scheme to cover this sector. Assuming this is done at the same time as policing the whole sector effectively and weeding out the providers who fail in the Financial Times article this would reduce the risk to smaller investors at the same time as boosting the businesses who are operating as responsibly in this sector as any other mainstream investment falling within the FC scheme.
Limiting the amount invested by regulation is unnecessary. The advice currently given, (10% until familiar) is sufficient.
I’m more than happy to invest my money through Capitalstackers. The information they provide me allows me to assess the risks as thoroughly as possible. Armed with such information it is up to me whether I invest or not. It is also up to me how much I invest. It is my responsibility and the buck stops with me. The FCA should ensure points 1 to 4 of the blog are met by all P2P platforms.
CapitalStackers is a very highly professional p2p platform and by investing in construction loans, I know the associated risks which are also explained on the platform. CapitalStackers’ risk assessment allows me to choose between loans by having the relevant and detailed information about them. Returns are high but CapitalStackers provide a very detailed illustration about the investments’ features and the entailed risks. There are only two things I complain about: the first is the limited numbers of available loans and the second is the entry level of £5000. I would prefer £1000 in order to have a better diversification.
The detail of your dealing room is exceptional. There is a learning process to understand the CapitalStackers offering but once understood it is, in my experience as a lender, excellent.
Regular updates provide clarity and reassurance, very detailed information provided.

 

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

£400,000 was raised in just one hour to help fund a bucolic waterside development of 22 houses in the pretty Yorkshire market town of Thorne, within a 45 minute commute of Leeds, Hull and Sheffield.

CapitalStackers investors stand to make annualised returns of between 10.28% and 12.92% against Loan to Value ratios of 51.1% and 54.4% respectively.

The development has attracted senior funding of £3,386,050 from United Trust Bank. The developer, SPG Property Services Ltd, has introduced the entire site as security, which has outline planning consent for a further 57 houses, in addition to the 22 being built in phase one.

The scheme has been well-planned and priced by this experienced developer of 15 years standing. The picturesque setting of Thorne, known locally as “Little Holland” has two railway stations, excellent motorway connections, good schools, sports clubs, shops and a decent range of pubs – factors which will account for the fact that 13 of the 22 houses have already been reserved and the agents have received over 100 enquiries before the marketing has been fully launched.

Phase one is a mix of 3, 4 and 5 bedroom houses, plus two bungalows, each with a parking space and all priced between £135,000 and £250,000.

CapitalStackers’ due diligence presented the investors with a comprehensive analysis of risks, mitigants and sensitivities.

Investors can expect to be paid out by November 2019.

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Blog Deals Investor News Press Releases

CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

CapitalStackers investors can look forward to a return of up to 14% from a development of nine luxury flats in an established and popular residential road in Solihull.Front Elevation

The project is the latest scheme by Avalanche Capital – the successful team that some will remember repaid investors early when their spacious Chessets Wood dwellings were built and sold ahead of schedule in December last year, paying annualised returns of between 9.8% and 13.8% after just 7 months.

This latest scheme is to be built on the site of a large, unoccupied dwelling which will be demolished to make way for spacious, well appointed 2 & 3 bedroom apartments ranged over three floors.

The construction finance of £2,025, 000 is being provided by NatWest and the developers are contributing £900,000 of their own funds, leaving a crowdfunding opportunity for CapitalStackers investors to raise £930,000. Investment bids are invited from as little as £5,000.

“Excellent” levels of profit are expected – the site has already seen a substantial rise in value following planning permission, and confidence is further enhanced by the appointment of John Shepherd Estate Agents (who have previously sold Avalanche developments at better than appraised values) as the selling agents.

Deal Infogram - St. Bernards Road by Avalanche CapitaWe have adopted a conservative figure of £5.8m pending formal valuation, which results in a respectable Loan-to-Value ratio of 55%. It’s worth noting the agent anticipates selling for around £6.3m.

Given the above factors, investor demand will be extremely high when bidding opens at noon on Tuesday 10th April – so if this sounds like the right sort of investment for you, please don’t miss out.

So that you’re ready to invest when the auction goes live, if you’re an existing member, you can familiarise yourself with the details of the deal now by clicking here. If you don’t yet have an account, you can sign up here.

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

Building begins this month on a sympathetic development of 2, 3 & 4 bedroom stone houses in the Nidderdale Area of Outstanding Natural Beauty.

Gregory Property Group – who have an excellent track record of successful developments over the last 30 years – have completed the drawdown of £504,000 funding for the first 11 houses, which is the first phase of 22 dwellings in the sought-after, picture-postcard village of Dacre Banks.

The development augments the area by adopting former vacant commercial land – and when completed will have a value of £5.8m. This will furnish annualised returns for CapitalStackers investors of 12.6% to 17.1% over 18 months – at Loan to Value ratios of 65% and 74% respectively – depending on which risk layer they have chosen.

As well as arranging the crowdfunded segment of the loan, CapitalStackers also negotiated the construction facility of £2m with Hampshire Trust Bank, one of its senior debt relationship lenders.

Sylvia Bowden of CapitalStackers said “it’s encouraging to find that we’re attracting new investors with each new deal published. The list of registered members continues to grow, with an average investment size of around £67,000 – although it is possible to invest as little as £5,000 with CapitalStackers. To meet the growing demand for investment, we are trialling a new policy where CapitalStackers invests in developments itself and then releases loans onto our secondary market, to make opportunities available for recently joined members”.

Not only does this exceptional development further adorn one of Yorkshire’s foremost areas of outstanding beauty – it will enrich and diversify the local population. It will attract a mix of young professionals, families and downsizers lured by rural village life, and commuters to Leeds and Harrogate, it also offers further proof of the escalating popularity of loan-based property crowdfunding as a consistent route to double-digit returns.

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.


A new development in Yorkshire could net you up to 17% return from a minimum investment of £5,000.Aerial View

CapitalStackers is inviting crowdfunding loans to help launch a development of 11 homes along with the purchase of additional land with detailed planning permission for a further 11 houses in a popular location.

Dacre Banks is an English village in the Yorkshire Dales, with the archetypal features of a cricket green, a popular pub, traditional shop and church, plus the added boon of a medical centre.

Homes tend to be highly sought after in this Area of Outstanding Natural Beauty set amid stunning moorland scenery and a tapestry of lush green meadows – just 11 miles from Harrogate and easily commutable from Leeds. Furthermore, historic planning restrictions and a shortage of new build properties have created a healthy build-up of demand.

InfogramGregory Property Group, very experienced developers operating since 1985, have created a scheme with broad appeal – a selection of 2, 3 & 4 bedroom houses (including 5 ìaffordableî homes – two available in the first phase), designed to attract a diverse mix of young professionals, families and older downsizers lured by rural village life, and commuters to Leeds and Harrogate. The houses will sell for between £249,950 and £375,000 (although sales agents have advised that prices may be 5% higher) with a total value for the 11 homes in Phase 1 assessed at £2,794,000 and the whole development at £3,858,584.

Senior funding of £2,340,000 has been secured from Hampshire Bank Trust, so CapitalStackers investors are invited to fill the balance of £504,000, in loans of £5,000 upwards, for returns of between 12.65% and 17.18% for a Loan to Value range of 65% to 73%.

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

Chessetts Wood

Two large, luxury houses in Solihull stand to make a tidy sum for CapitalStackers investors. The crowdfunded development – already 58% subscribed – has attracted a lot of attention from existing CapitalStackers investors, many of whom have already made up to 22.5% last year on the platform’s  Foss Place development in York, which paid out early after only 8 months with a Loan-To-Value ratio of 76%.

The Solihull deal comes in with an even more attractive risk ratio of just 67% LTV for a return of 12.59%, and 51.9% LTV returning 10.02%, with the senior funding being provided by Natwest (who have, of course, already carried out their usual due diligence checks).

The development of these two highly-appointed 5-bedroom homes in the sought-after residential area of Lapworth comes courtesy of the experienced Avalanche Capital team, and has already received unsolicited offers from two keen buyers. The groundworks are already complete and building is due to be finished in October this year, at which point investors will be paid back capital and interest.

Investments are invited in the form of a loan, fully secured on the properties, and investors are free to choose the level of risk and return. The minimum investment is £5000 and the CapitalStackers platform is fully authorised and regulated by the FCA.

How do I Participate?

Just take a few minutes to set up your account and we’ll expedite you through the regulatory Know Your Customer process. You can then view full deal details online. If you need any further explanation or help with bidding, just call Steve Robson on 0161 979 0812.

Click here to find out more and get started. We look forward to welcoming you on board.

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Blog Deals Investor News

CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

Malpas

CapitalStackers is now inviting investors to participate in a prestigious development of eight highly desirable detached houses in a deal which is expected to yield up to 17% annualised returns with attractive LTV ratios. Click here to download a fact sheet.


The development is only a short walk from the 18th century market town of Malpas, Cheshire – a friendly village community within commuting distance of Chester and Wrexham, and close to the Ofsted outstanding Bishop Heber High School..

A number of listed buildings dotted around the immediate area (including the Grade 1 Church of Saint Oswald), lend the site a rare traditional charm. And since the developer has in-house design capability, each of the homes can be partially bespoke to the purchaser’s requirements which has sparked early interest from buyers with plots already being reserved off-plan.

The Gross Development Value of the scheme is £5.1m, with Royal Bank of Scotland providing the senior funding of £1.58m.

This leaves plenty of room for CapitalStackers investors in this triple layer deal, with target returns pegged at between 10.3% and 16.9% per annum over an anticipated investment term of 22 months and with corresponding Loan to Value ratios of 55% to 73%. CapitalStackers investors will be secured by second charge behind RBS on the development site supplemented by a first charge on some additional property.plot-3-drawings

The development will naturally appeal to a broad spectrum of investors, from conservatively positioned pension funds to those with a higher risk-and-reward appetite, so early involvement is recommended. The minimum investment is £5,000.

For more details, visit www.orchardhouseproperties.co.uk or watch the Orchard House Properties 3D Video here.

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

The Oakapple Group – a Leeds development company – has begun converting the former 4 star Balmoral Hotel in Harrogate into 14 luxury apartments, with the help of funding raised by P2P lending platform CapitalStackers.

The 1image-living-space2,500 sq ft landmark Victorian building on Franklin Mount is being sensitively converted into one and two bedroom elegant apartments ranging from 600 to 1300 sq ft. Completion is scheduled for September 2017 and residents will enjoy on-site parking and original architectural features. The property was built around 1890 as three Victorian villas, converted into a guest house in 1981 and became the Balmoral Hotel in 1984. Oakapple received planning consent in June 2016.

For the developer, the funding solution allowed more effective use of equity. CapitalStackers introduced the senior debt from Hampshire Trust Bank of circa £2.3m and raised the additional £515,000 required within a week of posting the deal. The developer anticipates selling for in excess of £4m.

image-bathroomSteve Robson of CapitalStackers comments, “We are delighted to be playing a significant role in the sensitive conversion of such an imposing and historical building within the centre of Harrogate. Investors will look forward to receiving returns pegged at between 11% to 15.5% per annum within the next 14 months”.

CapitalStackers matches investors direct with developers seeking finance on specific projects. The company aims to plug the funding gap between typical bank debt and the developer’s equity. Investors typically receive double digit returns up to 20%.

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.

If you were going to invest your life savings, your pension, your inheritance, you’d want to know it was relatively safe wouldn’t you?

Before you took the plunge, you would hope to weigh up the balance of risk versus return and make an educated and informed decision about where and with whom you invest? Do you play safe and potentially get a lower return or do you take a higher risk and reap the financial benefits faster?

This concept isn’t new of course – for centuries, people have taken perceived risks with their money. Some have struck gold, others have had their fingers burnt. And most have harvested returns somewhere in between!

In 2016, how do you make an informed choice and how important is transparency in this process?

We at CapitalStackers believe it is more important now than it has ever been. Investors are becoming more and more sophisticated and quite rightly, they demand transparency, whether investing £5,000 or £1 million.

Technology has also had a huge impact on the way people invest. Investors have direct and easy access to investor platforms and they should also have direct and easy access to any information necessary to weigh up risk and return. No matter how much you wish to invest, with whom or how experienced you are, transparency allows you to make a properly informed choice.

P2P lending and alternative finance companies are revolutionising the traditional banking and lending industries. According to the FCA, £2.7bn was invested on regulated crowdfunding platforms in 2015, up from £500m in 2013. But with change, often comes competition and uncertainty. Over the last few months there have been widespread calls for tougher regulation and control. Concerns predominantly focus on whether consumers understand the risk they are taking, especially those who are less experienced or knowledgeable.

There is also some confusion over the differences between the ‘pooled’ lending approach and direct peer-to-peer lending such as that arranged by CapitalStackers.  With pooled lending, investors are provided with only part of the picture such as headline risk parameters and no detailed financial information about any of the borrowers or the deals. The upside is that risk is often spread across the loan whole portfolio, but investors are entirely dependent on the platform’s management.

Direct lending such as that arranged by CapitalStackers means absolute transparency and decision making independent of the platform management. Investors choose both the deal and the loan amount – and they have access to detailed information on the specific risk and returns.

Recent press headlines airing concerns with the alternative investment sector, such as those made by Lord Turner, are only a generalisation and don’t reflect the diversity within the P2P market. There is a vast difference between investing in a tech start-up through an equity crowdfunding platform and secured lending against bricks and mortar, for example. At CapitalStackers, we only arrange loans to experienced developers, many of whom have already raised part of the funding requirement through a mainstream bank and gone through their independent due diligence process, as well as our own stringent checks. No investment is without risk, but those made through CapitalStackers are carefully analysed, managed and transparent.

We have always been open to scrutiny and detailed information is provided to our investors up front providing the same level of clarity on the deal as the bank and the developer have in assessing its viability. This transparency is the foundation upon which CapitalStackers is based and the reason why our investors continue to re-invest.

John Thornley, MD of Fairhurst Estates, has committed funds to a variety of property backed investments over many years in the commercial and residential property sectors. As well as investing directly he now also invests through CapitalStackers. As an expert in this sector he was pleasantly surprised by the amount of detailed financial information provided on the platform. “I literally had no further questions which is unusual. All the information I needed to make an informed decision was provided up front”

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CapitalStackers is authorised and regulated by the FCA. Investment through CapitalStackers involves lending to property developers and investors. Your capital is at risk. Investments through this and other peer to peer lending platforms are not covered by the Financial Services Compensation Scheme. Unless otherwise stated, returns quoted are annualised and gross of tax.