It’s often quoted that economists have predicted nine of the last five recessions. But the Cassandra tendencies of most economists are as nothing compared with those at the Bank of England, who seem to take a perverse pleasure in talking down the economy.

Last week the Old Women of Threadneedle Street predicted a 16% fall in house prices as a result of COVID 19, [1] compared with the much less hysterical figure of 7% forecast by the property market professionals (whose business depends on them getting these figures right).

Now, the Bank has never made any secret of its fondness for “cooling” the housing market (economist-speak for ‘talking down”), but why such a wild variation? A drop of 16% would compare with that of the financial crisis of 2008. However, two of the main factors which led to that historic drop – unavailability of mortgages due to the credit crunch and a lack of first time buyers – don’t apply today. Halifax and other lenders confirmed this week that mortgage products are available across a wide range of Loan-to-Values (LTV) [2] and after a pre-COVID surge in first time buyers [3], the sector came back even stronger after lockdown. The first-time buyer property portal, Share to Buy, reported its highest number of registrations in a single day following the Government’s easing of restrictions last week. [4]

Other property market professionals were similarly sanguine. MovingHomeAdvice.com said this week, “The fundamentals of the property market remain strong and with unemployment mitigated by the Government furlough scheme, cheap and available mortgage money and pent up demand from the hangover of Brexit, we argue that house-prices will not drop significantly anytime soon despite the anxiety of a market frozen by Covid 19 temporarily.” [5]

Nationwide, Halifax, Virgin and Santander have all made it easier for buyers to qualify for loans. Nationwide resumed loans at 85% LTV last Wednesday, while Halifax raised its LTV level from 80% to 85%.

Mark Harris, Chief Exec at SPF Private Clients said “Lenders are adapting and innovating,” observing that lenders have found ways to deal with some of the problems and “there is a willingness to lend. Problems have mostly centred around staff resources, handling the surge in mortgage payment holidays and those staff self-isolating who have children and no childcare”. [6]

Reflecting the general mood, Chris Sykes, mortgage consultant at broker Private Finance stated that this “is great news for the market and for borrowers who will have increased choice going forward. It also means the post-lockdown recovery should be swifter when some semblance of normality returns.” [7]

Regular readers will note that CapitalStackers anticipated a strong return to the housing market after people staring at the same four walls for two months searched for a change of scene. And sure enough, a mere two days after the housing lockdown ended, Miles Shipside, Rightmove director and housing market analyst reported: “The traditionally busy spring market was curtailed by lockdown, but we’re now seeing clear signs of returning momentum, with the existing desire to move now being supplemented by some people’s unhappiness with their lockdown home and surroundings.” Who knew? [8]

Rightmove recorded a 45% jump in visits on Wednesday following the Government’s lockdown-lift announcement on Tuesday, along with a 70% increase in email enquiries about viewings and 2,115 new property listings during the first five hours of trading yesterday. [9]

So where does the Bank of England wring its pessimism from? Might it be the Daily Mail, who wailed this week, “Desperate sellers are dropping the prices of their homes after a glut of properties flooded onto websites today as Britain’s housing market was reopened in a bid to get the country moving again during the lockdown.” [10] Well, yes – it’s undeniable that the number of houses increased when the block was lifted, but even the greenest of new estate agents would not call it a “glut”, any more than taking one’s thumb off a hosepipe could be called a flood.

But such figures would need to be rooted in reality, and the roots of the Bank’s mathematics would seem to be on rocky ground. Predictions of house price falls are realistically based on reports from estate agents of the actual discounts buyers ask for when they make an offer.

And the reality is that in March – according to Liam Bailey, Global Head of Research at Knight Frank – homes were sold on average for 98% of their asking price. Since then, sellers have been accepting offers at 94% of the asking price – a further drop of just four per cent. A far cry from the Bank’s extravagant 16%. [11]

To facilitate a drop of such magnitude would require buyers and mortgage lenders reluctant to take part  – neither of which seems to be happening – and those sellers already on the market becoming so desperate that they’re willing to accept such insulting offers, rather than just sitting tight and waiting for the generally predicted rise next year.

“The key question is,” says Bailey, “Will vendors accept discounts of more than five per cent? Some will, but there is growing evidence from the widening spread between average offers and the offers that are being accepted, that many simply won’t.

“If we add into the mix the fact that we have low new-build rates coming through in 2020, low inventory and low interest rates, it becomes less likely we will see significant further falls from 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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

A hugely viable building scheme that failed to launch through a pooled lending platform has raised all the funding it needed in 15 minutes through CapitalStackers.

Converting Charles House – a five storey former HMRC office in Preston – into 70 apartments, all priced at an affordable £90K to £130K (with 27 covered car spaces) certainly has its attractions for investors.

Particularly when you factor in that it’s sited in Winckley Square – traditionally a prime office address for solicitors, accountants and banks, a mile and a half south of University of Central Lancashire and a few minutes’ walk from the mainline rail station and retail centre. The square enjoyed a recent £1m upgrade and Charles House is just the latest of several buildings around the square to be converted to residential use.

The scheme targets the many first time buyers, young professionals and investors flocking to Preston’s revitalised city centre, but is also close to the M6, M65 and M61 interchange and just 40 minutes from Manchester and Liverpool via rail or road. The city’s railway on the West Coast Mainline can whisk residents to London Euston in as little as two hours fifteen minutes.

However, the initial failure to launch highlights the importance of matching the right sort of funding to the investment opportunity.

Contracts had already been exchanged on the site purchase when the P2P lender pulled out – although clearly not because of any problem with the deal.

The broker, Real Property Finance offered the deal to United Trust Bank, who quickly put up £3,966,000 to cover all the construction costs and brought in CapitalStackers – with whom they had successfully collaborated on other deals – to raise the mezzanine finance.

CapitalStackers Director Sylvia Bowden said, “We found absolutely nothing wrong with the deal itself – it’s one of the best we’ve come across. It’s just that longer term building projects aren’t really suitable for the pooled lending model. You need to ensure all your construction capital is in place before anybody lifts a trowel, rather than assume you can attract new investors once building is under way. Otherwise you run the risk of it falling out of bed like this one did”.

Managing Director Steve Robson added, “When RPF approached us, we did our usual deep and granular risk assessment and despite the COVID-19 situation we were bullish about raising the £750,000 needed in time.”

“Once again, our investors didn’t let us down and we’d like to thank them for continuing to support projects. Their appetite for deals remains as sharp as it’s ever been, but it’s important to point out that this isn’t just due to luck. Our due diligence has delivered for them time after time, and they have once again proved they have a nose for a good deal.”

The particulars of the deal certainly shine through. Aside from the £4.7m raised, the developer has put in £1m of his own cash and once completed, the scheme will generate net sales of £7.2m.

CapitalStackers investors had the choice of three layers ranging between a Loan-to-Value ratio of 60% (paying annualised interest of 9.66%) and 69% (paying 15.80%).

The conversion will be carried out by Empire Property Concepts, who have an impressive track record in completing similar developments, the original 10-person lift is to be retained along with most of the windows. A contingency sum of 11% is included in the budget costs and no structural works are required.

Naturally, the risk assessors have cast an eye at the dark clouds of COVID-19 hanging above the industry and built in a pessimistic assumption that perhaps 40 of the apartments will be sold in the 9 months following completion, with the rest taking even longer.

However, should any units remained unsold, CapitalStackers’ modelling shows that the project could be refinanced with more than enough interest cover from rental income. Rent receipts, after an allowance for voids and management costs would cover interest on a refinance mortgage of the senior debt by 173% even if no apartments were sold. The equivalent ratio based on aggregate debt is 139%. Furthermore, these ratios should increase as sales proceeds reduce debt.

On the other hand, the borrower is confident of exchanging contracts on most of the units before the building is even finished – primarily through targeting Buy-To-Let investors. The market rent has been independently assessed at £550 pcm for the one-bed apartments and £650 pcm for the two-beds. This gives a total gross market rent of £546K.

This deal is becoming typical of the kind of attractive pickings to be found in the COVID-19 climate. As more deals fail to launch, the CapitalStackers model is capable of ploughing on, thanks to its unwavering policy of nailing down all construction finance before work commences. It’s even become a source of comfort to the banks, knowing that when mezzanine finance from other sources fails, they know where to come for a fast (and steadfast) solution.

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

Is it any more than a coincidence that big players are pulling out of the retail P2P market at the very moment the new, tighter FCA regulations come into force? 

Both ThinCats and Landbay have publicly switched to institutional funding, citing the main reason as the dwindling cost-effectiveness of servicing individual investors. Both suggested that the retail sector was no longer commercially viable”. 

However, since others clearly continue to find it viable, the timing suggests other factors at play. The FCA’s tightening up of the rules  including appropriateness tests and investment limits imposed on Restricted investors was intended to remove the bad actors from the industry, to clean out the stables and bring the crowdfunders into the mainstream. And of course it will do that. 

However, as a couple of fairly significant babies are sluiced away with the bathwater, we’re left to wonder whether more of the good operators will be putting up the shutters and thinking it’s too much like hard work to try and boost the portfolio of Mrs Miggins.   

This would be an awful shame.  

At CapitalStackers, we’ve always welcomed tighter regulations. Since our own working practices have always been well above the regulatory minimum, we’re happy to have the playing field levelled to the highest degree possible.  

Let’s make no mistake about it – this is a great moment in our industry’s history. A defining moment. Where common sense finally anchored the helium-filled headlines. 

It’s not as if the new rules are particularly onerous. They boil down to “don’t sell things to people who don’t understand them”. Which is a pretty basic principle for organisations trusted with Mrs. Miggins’ life savings. 

As a responsible platform, we don’t want to be inviting investments from people who don’t fully understand the mechanics of risk and reward. Our business model is not, and has never been, dependent on catching the unsuspecting unawares.  

We actively seek people who understand that reward is an inter-related function of risk. As with the stock market, it generally follows that the higher the risk you take, the more chance there is of losing some or all of your money – but the higher the reward. However, athe fly half targets the flailing prop in midfield, sometimes a mismatch can lead to success. In some instances, a surprisingly low LTV ratio can bring a double-digit reward.  

The key is information. Monitoring and reporting. The P2P “outlaws” that have gone by the wayside have largely been characterised by a lack of both. Anyone investing in a CapitalStackers scheme, on the other hand, will have access to an Aladdin’s cave of information on the deal, the developer, and all the peripheral contributing factors that explain the terms of the deal. Not just before they invest, but throughout the life of the deal. 

Of course, it’s a shame that regulations had to be imposed from above to force the cowboys to stop shooting up the town. But it’s equally sad that a couple of decent operators have now felt all this is now beneath them, and that the game is not worth the candle. 

Landbay cited their need to “compete” with the banks. Founder John Goodall lamented that other P2P platforms were lending at higher rates while Landbay was looking to compete with banks whose mortgage rates are lower. 

“Our margins were being increasingly squeezed and we would have had to cut investor rates to compete,” he said. 

This is something that has never exercised us at CapitalStackers. The market is plenty big enough for the banks and P2P platforms not to tread on each others’ toes. We happily work in close partnership with banks on the same deals, sharing information and underpinning each others’ due diligence. Operating at different levels to push the same deal over the line, and our respective rates are set accordingly 

Most deals need the banks, and they need us, too. Some banks have even started to bring deals to CapitalStackers for us to help them make it happen. They’re comfortable that tightly-run P2P is a great enabler – and the small investor derives comfort from the fact that the bank is involved, because they know bankers understand risk and reward more than most. 

So it will be a great sadness if the regulations designed to remove the bad choices for investors also thinned out the good ones. There’s room for all of us, and educating our investors is not so big a burden, is it? 

We sincerely hope more operators who know what they’re doing enter the market as the regulations become the norm. 

But in the meantime, if any jilted investors are looking for a place to grow their stack of capital, you know where to come. 

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

What is it about CapitalStackers deals that sees them sold out so quickly to those in the know? 

 Anyone who’s ever tried to invest in a CapitalStackers deal knows you have to be quick on the draw to get a piece. They’re known for selling out fast – sometimes in minutes, and rarely more than a few days. 

 So in a market where even astute investors have been so publicly burnt (viz: Lendy and FundingSecure lenders), what is it that gives people such a voracious appetite for this particular property-based crowdfunder? 

 Certainly, interest has stepped up since they were dubbed the Safest 20% Returns in P2P Lending (https://www.4thway.co.uk/candid-opinion/the-safest-20-returns-in-p2p-lending/ ), but to be fair, deals were oversubscribed well before that.  

Of course, the mere scarcity of deals may sharpen the appetite of some. Since deals have to be very watertight indeed to withstand the buffeting from the CapitalStackers Due Diligence Team. Very few make it through – perhaps understandably since the CapitalStackers directors invest in every single scheme themselves – to the tune of £1.7 million at present (and almost £4 million in total to date). 

But then, seasoned investors are not swayed by mere rarity value. They tend to get down to the nuts and bolts.  

They’ll notice, for instance, the fact that CapitalStackers hasn’t set itself up to operate, as others havepurely as an alternative to the banks.  

And for very good reasons. 

Owned and managed by former bank property lending specialists, CapitalStackers is actually the only P2P facilitator that works in close partnership with banks, on the very same deals, sharing information, each doing their own independent due diligence and – crucially – allowing the bank to bear the ongoing liquidity risk in full In this way, it ensures all construction funding is in place before a sod is cut and any investor parts with a penny.  

This is deeply reassuring for investors, since they know that the success of each venture is fully self-contained and never has to rely on attracting funds from new investors to finish the project. It’s equally reassuring for them to know that banks are unlikely to wade into any deal this deep without serious confidence that it’s going to bear golden fruit. 

Anyone looking at the deal history will have been further reassured by the sheer volume and frequency of information. From the basics – conservative Loan to Value ratios; often lower than 50%, never above 75% – to what some might call pedantic; historic flood risks in the general area of the construction site (which actually proved its worth in a project in York a few years ago, which escaped the floods that deluged the city and returned an impressive 22.4% per annum to investors). In between, a huge volume of information is provided on the site’s dashboard for each deal, from the business history of the developers, surveyor’s reports, micro and macro risk analyses, builders’ inside leg measurements… 

And unlike some notable P2P platforms, whose interest rates are seemingly set as “headline” rates to attract investors, CapitalStackers’ return rates are calculated specifically through detailed analysis of all the above factors. This is the key to investors’ confidence. They know that the risk they sign up for is fairly and accurately priced into the return they will get for it. 

This meticulous scrutiny has produced an enviable record of returns to investors of between 8.5% and 22.5% with no losses (although as a prudent platform we would always point out to investors that one can never say never. However, since they personally have a lot of skin in every deal, it makes sense that the directors of CapitalStackers operate at an extremely high level of diligence and reporting).  

Hence, many investors, on being repaid, immediately reinvest in the next CapitalStackers scheme. Having begun investing with the confidence that they’re lending alongside the CapitalStackers directors who are lending alongside the banks, their confidence has been nurtured by a wholly positive, fully-informed lending experience and a fruitful result.  

And it’s why, if you do hear of a CapitalStackers deal coming up that you’d love to get a piece of, these are the quick-fingered competitors you’ll have to beat to get your bid in. 

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

Before the rotten practices of FundingSecure (and prior to that, Lendy) stink out the entire P2P barrel, allow us to offer a free professional opinion: we could have told you so. 

The FCA’s new, tighter regulations (https://www.thetimes.co.uk/article/peer-to-peer-lenders-given-last-warning-32tc32h2rwill certainly help clean out some of the bad crowdfund operators, but will clearly come too late for some investors.  

Of course, well-run P2P industry is a crucial cog in the post-modern economic machine. It gives good businesses access to funds that banks can no longer supply, and it gives investors access to opportunities that have erstwhile been closed to them.  

Stuart Law, the Chief Executive of Assetz Capital, made this point in the Financial Times recentlywelcoming the fact that “it is a fact of life now that these businesses have much tighter prudential standards and regulations to live up to.”  

We agree, of course. However, when he goes on to speculate that “smaller platforms” may struggle with consolidation in the sector, we take issue with him. 

“P2P lending is…now a highly regulated market”, he says, “which is good for investors with larger, well-funded platforms such as ourselves but makes things very difficult for under-resourced businesses,’ adding that “The smaller players are clearly struggling to keep up and the badly-run businesses are being scrutinised by the regulator.” 

This is clearly an over-generalisation – and the uncharitable amongst us might suggest it is made with mischievous intent. The phrase equating “larger” platforms with well-funded” ones is a non-sequitur. As is the suggestion that smaller ones are “badly-run”Anyone who knows their investment onions will be aware that size is no guarantee of good operation, or of sufficiency of funding. In fact, a major part of FundingSecure’s problem was its appetite for growth even in areas outside its experience. 

A report in The Daily Telegraph as recently as June 2019 pointed to spiralling defaults and repeated extension of loan terms. The platform, having been forced to sell a majority stake and address investors’ concerns by “reassessing” the entire loan book and promising “timely and meaningful updates” on loans, clearly saw no reason to ease off on growth and wait until its house was back in order, but issued a further 36 loans in May alone, adding £2.2 million to the mounting bonfire, and attracted 134 new investors. 

These investors joined despite the fact that anyone with a couple of idle fingers could have Googled reports like that on profitwarning.co.uk back in December 2018, which flagged, among other things: 

Increased defaults: Many property-facing platforms have suffered problems, particularly those whose loans rely on further development. The site seems to have shifted over the years to become more property focused, which explains this.
Poor Management: The nature of some of the defaults give rise to the doubts of the quality of monitoring given to loans by FundingSecure – perhaps they might be stretched too thinly staff-wise.
Poor Communication: There are no fixed times for updates to be given to investors. Often updates are not given at all, or when promised, missed out altogether. 

Or numerous Trustpilot reviews, such as this one from May 2018: 

Their recklessness with lenders’ money is criminal. Their valuations defy credulity and the resulting defaults end in catastrophic losses for investors with the company denying all responsibility for their dangerous lack of due diligence.  

And this one from November 2018: 

After lending now for over 9 months it is very clear that they are misleading investors…out of 40 investments that are due to be paid back with interest, 85% have not been??!! Updates are very poor and they are not making any attempts to…get back money for investors….They are taking on way too many loans and making their turn out of it to care about the lenders…avoid! 

This growth-at-all-costs attitude betrays a contempt for the fundamental obligations of handling other people’s money. FundingSecure moved away from what they knew – funding not-always-secure pawnbroking loans (in one notorious case loaning money secured on valuable paintings, and not realising the paintings had been sold partway through the loan term) – to (some equally dicey) bridging loans (which we’ve discussed before, in reference to Lendy). 

It’s not hard to see why it stopped giving full disclosure to its investors some time around April last year according to the investor complaints on Trustpilot 

It should be an irrefutable requirement of holding another individuals investments that before investors part with a single penny, you:  

  1. Rigorously scrutinise every fine detail of the deal;  
  2. Undertake a forensic examination of the borrower’s background (which FundingSecure publicly did not);
  3. Take clear, detailed soundings of the wider market; and,
  4. You continue to do all the above regularly, thoroughly and consistently throughout the whole of the loan term. 

And it is no less crucial that you give frequent, comprehensive and transparent information to the people whose money you’re holding. At CapitalStackers, these are fundamental principles – we have no interest in growth for growth’s sake. 

CapitalStackers is not a big organisation. Growth, we know, will come naturally if we maintain our diligence, choose our deals wisely and safeguard the trust of our investors. This is how we came to be named “the safest 20% returns in Peer-to-Peer lending” (https://www.4thway.co.uk/candid-opinion/the-safest-20-returns-in-p2p-lending). 

We’re not suggesting we’ve eliminated risk, but we do all we can to ensure that we, the platform, don’t become part of it. Of course there is risk involved in property lending  that’s what the interest calculations are based on (or should be) – but we take a huge amount of care to ensure our investors have all the information they need to clearly understand those risks and get good value for them. 

We also ensure investors’ understanding is predicated on full and clear disclosure of the facts – that is, the risk is priced into every deal. Over the years, our 120+ active investors have come to trust our risk assessment, which has produced not a single loss in £55 million raised since we first opened the doors. 

Now, that’s not to suggest we haven’t unearthed problems from time to time – but with our directors’ extensive banking backgrounds in specialist property lending teams, we have in place established procedures for tackling those problems promptly and efficiently, while all the time keeping our investors informed of how or whether the risk is changing. We’re experienced debt advisors – our lending skills having been fine-honed in our former lives. We know when to turn the screw, and how to help borrowers out of whatever hole they might find themselves in, and turn it into the foundations of something better.  

What’s more, our investors are not cast alone on the choppy waters of risk – the unique positioning of CapitalStackers is that we work in close partnership with banks on most projects. Allowing the banks to absorb the ongoing liquidity risk and ensuring all the funding is in place to complete the project before any CapitalStackers investor parts with a penny. This means we’ll never be dependent on bringing new investors down the line (a big no-no in our book), because every project is fully-funded from the start 

Consider the alternative. If a platform takes money from investors to start (and continue to build) a project on the expectation that further funding can be attracted from new investors as it progresses, then it’s taking a huge gamble with the initial investors’ money. There’s no guarantee that new investors will be found, and there is no lender of last resort. So if something goes wrong, it will be virtually impossible to finish the build, or to sell a part-built property. And imagine how easy – irrespective of the size of the platform – it would be for investors to get spooked by some unforeseen event, throwing the entire loan book into jeopardy. 

This is why we don’t take our investors into any deal unless we can see a clear, profitable exit. 

Furthermore, the point about partnering with banks is a fundamental point of reassurance to our investors. Not because we rely on their due diligence. We don’t. If anything, our own due diligence is stricter, not least because our own money is often involved. But because we analyse the deal together, price the risk together, raise money together and monitor the investment together – but then we take up different investing positions, complementing each other.  

And perhaps on a basic level, it’s reassuring for our investors to consider that banks only get involved in deals that they feel will return their investment. 

In fact, not only are we growing a steady reputation for funding deals that the banks like the look of – some banks have even started bringing deals to us to help get them off the ground.  

This sort of belt-and-braces risk management goes far beyond the proposed new regulations. But we don’t do it for compliance, we do it to protect our investors.  

So we don’t fully accept Stuart Law’s assertion that P2P is “now a highly regulated market which is good for investors – it’s not. It igetting there, but there’s still a long way to go.  

However, we do believe that the more astute investors are starting to be able to tell the good nuggets from the fool’s gold.  

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

Remember the high quality Chessett’s Wood development in Lapworth, which paid annualised returns of up to 13.8% after just 7 months? Or the luxury St. Bernard’s Road development in Solihull paying 14.06% on a very reassuring Loan to Value (LTV) of just 55%?

Well, for those who happily capitalised on those – or even those who missed out – CapitalStackers is pleased to offer a third opportunity to invest in the same highly respected developer – Avalanche Capital and their joint venture construction partner, HCD Developments.

It’s our strong belief that HCD’s distinctive quality of workmanship is a key factor in the early property sales on their previous schemes.

The current opportunity is to invest a total of £620,000 in the development of two large luxury houses, in an established and popular residential road in Solihull – just ten minutes walk from the prosperous town centre and its rail station with links to London and only six miles from Birmingham Airport. Target annualised returns will range between 10.44% and 14.33% for LTV ratios of 52% to 63%.

To be clear, this means that if Layer 2 investors were to suffer a loss, the property would need to

fall in value by 37%. For Layer 1 investors to suffer loss, the value would have to fall by 48% – making for highly attractive risk adjusted returns.

The bulk of the finance – £1.345 million for construction works – is being put up by NatWest and the Borrower has substantial “skin in the game” with its cash equity of £540,000. In addition, the boost in site value from the granting of planning permission amounts to at least £200,000.

The funding base case on which the deal and its risk ratios are structured, assumes both properties are built out and remain unsold for the term of the loan. This follows the usual cautious approach adopted by CapitalStackers. Our sensitivity analysis assumes that at least one buyer will be secured during construction, leading to one house being sold the month after completion – and the second house selling two months later, with the conservative as

sumption of both being sold at a discount of 15% to value. Even taking this into account, risk ratios remain conservative at 60% LTV for Layer 1 investors and 73% for Layer 2.

The site currently accommodates an unoccupied single property in need of substantial renovation, so the proposal is to demolish this and build two very high specification detached houses, on three floors with single integral garages and off-road parking.

Investors are invited to offer loans of £5,000 upwards when the bidding opens at noon on Monday 18th March 2019. This is expected to be an extremely popular auction owning to the quality and track record of the developers and the deal itself, so early participation is recommended.

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

Midwood House in Widnes town centre was bought by Osborne House Ltd for cash around three years ago and half the office space converted into 17 apartments to test the local market for short-stay, single tenants (think workers away from home on medium to long-term contracts, looking for a cost-effective alternative to hotels). 

The results were impressive. It was fully let within 2 months and, after costs and allowances, is yielding a solid annual income of £65,000. 

The gated apartments, available at an attractive all-inclusive rent of £567 per month, come with secure parking and are within an easy commute of Runcorn, Liverpool and Warrington. As such, they have proven appeal to businesses looking to save on staff accommodation or private individuals working away from home.  

Having proven the market, OHL are now converting the remaining space into another 17 apartments. This will double the net income to £130,000. 

Since the property is already generating income with good interest cover and Loan-to-Value levels, this presents a lucrative opportunity for all those who have invested. Investor returns have been pegged in the range 6.9% – 7.5% p.a. over 36 months. Net income from the first phase is sufficient to provide interest cover of 135% – meaning there would have to be a substantial fall-off in demand before interest payments are at risk.  

Once the refurb of the remainder is complete, the ratios will improve dramatically, with interest cover increasing to 250% and LTV falling from 65% to 35%. 

Of course, while the ongoing construction still carries a small degree of risk, in this case that risk is mitigated by the appointment of the same contractor as successfully completed the first phase works, along with an independent monitoring surveyor who is under a duty of care to CapitalStackers’ investors. And, of course, income will continue to flow from phase one pending the new units coming on stream. 

 

About the developer  

OHL is a highly profitable, conservatively-geared company with gross assets valued at £7.4 million in April 2018. Net worth is around £6.5m. The shareholder directors have been known to the principals of CapitalStackers for over 25 years. 

For HMRC compliance reasons, this deal is not eligible for pension fund investment. 

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

CapitalStackers investors were invited to benefit from the refinancing of a popular ongoing project, which was already at an advanced stage of construction, with practical completion scheduled for May 2019.  

The original auction for the Boothferry Road development in Hesslewest of Hull city centrewas sold out in 24 hours, with investors bidding returns between 11.07% and 14.45% for Loan-to-Values of 63.3% and 69.8%, respectively. 

Hampshire Trust Bank  the senior debt provider – had increased their facility to cover cost increases caused by:  

  1. bad weather – necessitating deeper foundations and a temporary road, and 
  2. cost inflation for materials and labour. 

Of course, cost increases are never ideal, but we regarded these as fair. However, the developer wished to access additional working capital and restructure the funding to allow them to expedite the second phase and take advantage of the current, very positive sales momentum.  

In considering their approval, CapitalStackers’ risk assessors were impressed by the experience of the team (Craig Swales and Steve Vessey Baitson of Applemont), and the high level of reservations on the houses (mainly from first-time buyers with no chain).   

Applemont is an experienced player in housebuilding and general construction around East Yorkshire and Hull. Their knowledge of the Hull owner occupier market is sound – and clear evidence of this is shown by the keen early sales interest in the Hessle scheme.  

Eleven reservations have been taken on the fifteen new houses in the first phase and, of these, only one purchaser has a house to sell. Among the initial purchasers are seven first time buyers and six have paid a reservation fee. Six viewings over a recent weekend suggest ongoing demand for the scheme.  

The agreed sales prices already exceed the Savills valuation by £27,500 and currently stand at £2,057,500 in aggregate 

Craig Swales of Applemont said of the new deal, “It’s fantastic for a small developer to have this facility and flexibility. The ability to refinance on the move gives us much-needed agility in a fast-changing world and CapitalStackers make it so easy to adapt our scheme and raise the right money when needed”. 

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

Berwyn View – the attractive and rewarding (for CapitalStackers investors) residential development in the pretty Cheshire village of Malpas – is moving forward with investors now funding Phase 2A of the development.  

Of the eight houses built in Phase 1 of the 22 unit development, five are already sold, two are complete and one is nearing completion (and under offer). Investors received annualised returns of between 10.70% and 15.62% in the nineteen months leading up to the refinance in August 2018. 

CapitalStackers orchestrated repayment of the first phase by refinancing with the original senior lender, RBS, enabling the developer to stay within RBS’s lending criteria and also free up some capital to start on Phase 2 infrastructure works. 

To say that the refinancing deal with this very talented developer was popular with investors would be an understatement – the new £810,000 loan for Phase 1B was fully subscribed in just 31 minutes! 

In parallel, CapitalStackers introduced Hampshire Trust Bank to provide the £1,456,000 senior debt for Phase 2A, and then invited investors to plug the funding gap of £275, 000. Within a Loan-to-Value range of 67% and 73%, these investors can expect returns of between 10.61% and 13.84%. 

The developer, Patrick Lomax, was equally happy  and effusive in his praise of the CapitalStackers process, saying, “Sylvia and Steve are just brilliant. Dealing with CapitalStackers is a very pleasant experience in what is by far the most difficult area of the construction business. They’re useful, helpful, informative and easy to talk to.” 

He went on to say, “It’s great that small construction firms have access to this kind of funding to get projects off the ground so that the big firms don’t get to dominate everything.” 

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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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477

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.
Call us on: Office: 0161 979 0812 | Steve: 07774 718947 | Sylvia: 07464 806477