It’s still possible to earn double-digit returns from P2P without excessive risk. Look beyond the trends and big data and you can uncover some lucrative gems.  

The recent AltFi “State of the Market” report July 2019 had some sobering words for investors – particularly from BondMason’s CEO Stephen Findlay and the restructuring expert, Damian Webb. 

The report largely based its melancholy conclusions on the slackening growth in the Big Four – Zopa, Funding Circle, RateSetter and MarketInvoice – which gives you a summation that, while statistically correct, is incomplete and unhelpful to the investor. A bit like telling us all cars are unreliable because you once owned an Austin Allegro. 

Yes, the Big Four comprise the lion’s share of the market, but they also cover a limited field of vision – that is, they chiefly deal in unsecured loansor those not secured on easily identified concrete assets (with the exception of RateSetter’s property book) 

BondMason announced recently that it was pulling out of P2P due to these diminishing returns, but in this report Mr Findlay is keen not to appear a total Cassandra. 

Surveying the £6 billion world of peer lending from his vantage point atop a £54m loan book, he contended that net returns in the 3% – 6% range are achievable today at acceptable levels of risk and that the market is settling into a low-to-medium risk spectrum.  

“I still think there are some good opportunities to earn attractive risk-adjusted returns,” he shrugs, “but probably at the more conservative end of the market”. 

 

High returns aren’t the only yardstick. 

Had Mr Findlay looked a little further, he might have found reasons to be a little more bullish There are still opportunities for canny investors to make double digit returns without going on a white knuckle ride of high risk. Just because a return is high doesn’t mean you’re at the crazy end of the market. On the other hand, it’s equally possible to earn under 6 per cent and have the investment catching fire in your hands. High returns aren’t the only yardstick, although the way some commentators paint it, you’d think they were. 

It’s possible, for instance, to find platforms like CapitalStackers where you can lend to developers sitting on a reassuring chunk of equity and with Loan-to-Value ratios as low as 55% – and yet still make double digit returns in the time it takes to convert an old warehouse into upmarket flats.  

It’s also possible, to find platforms that are totally transparent and view regular and granular reporting as the duty of care it is, rather than an onerous and grudging requirement. 

The report overlooks opportunities like these and the nervous investor, led by pronouncements that lump together such diverse  “property lending” products as bridging loans, buy-to-let mortgages and development finance, might think that all real estate] P2P is going to hell in a handcart. 

Particularly those that read the section written by Damian Webb. Viewing Mr Webb’s comments through the lens that he is an insolvency practitioner, may offer a little perspective. Were it possible to rub one’s hands and type at the same time, one can imagine Mr Webb doing just that here. 

“The sector is becoming more and more fraught with uncertainty,” he laments. ““Many of the alternative finance lenders have focused on markets that are underserved by traditional lenders or in spaces where traditional lenders do not operate. Banks and traditional lenders retreated from these areas due to the issues and losses they experienced during and after the financial crisis and consequently regard them as high risk.” 

Nowhere does he suggest that it’s possible to invest in platforms like CapitalStackers that work in tandem with the banks, partnering on deals whose risk the banks have every confidence in, allowing the banks to take the liquidity risk, and also to benefit from due diligence that is tighter and more thorough than any bank aspires to. 

He laments that the elements of the business lending market he’s come across professionally are often characterised by limited data, which makes underwriting inherently difficult or challenging. 

He bases these insights on “his own experience of dealing with impaired business loan books” (although not specifying markets, connections or backgrounds), which is a bit like an undertaker giving us his opinion on who’s going to win the World Cup. 

He goes on to adumbrate about property lending in particular, whose yields “have fallen dangerously low during Britain’s long property boom”. 

“In Birmingham, for example,” he says, “five years ago it was possible to achieve residential yields of 7 per cent to 8 per cent. You would be lucky now to get between 4 per cent and 5 per cent. People are investing in development projects on the basis of these low yields.” 

Of course, the hearty chuckles of investors who’ve been comfortably pocketing 12, 18 and 20 per cent in CapitalStackers deals in recent months will be drowned out by Mr Webb’s ululations.  

Likewise, his complaints that P2P platforms don’t own their assets and loans can’t be sold to retrieve capital will be met with puzzled looks by CapitalStackers investors who trade their loans openly in the platform’s secondary marketplace. 

Yes it’s easy to look at big data and find patterns that frighten you. But big data leads to bad maths. And bad maths leads to poor investment.  

So rather than wring their hands about the bad operators in this market (and some of them were – and almost certainly are – very bad), the astute investor can find opportunities by looking through the leaden headlines to find the gold in the cracks between.  

Of course, there are risks in any investment market, and in property development the biggest risk – not necessarily the most likely, but the biggest – is the possibility of property values crashing more than 25%, burning through the comfort blanket and leaving lenders facing a loss. And of course, this kind of financial apocalypse is entirely possible – but then, all risk should be priced in by prudent platforms, and it makes sense to check this before investing. 

However, in property-based crowdfunding, fortune can still very much favour the lateral thinkerSo don’t be put off by the headline rates; don’t automatically assume that high returns mean high risk; and above all, don’t swallow whole what the “experts” tell you. 

Even when the whole world feels like it’s going to hell in a handcart, someone, somewhere is making money out of it. 

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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

There used to be a game show on TV called It’s a Knockout, where amongst lots of other silly games, contestants – wearing daft costumes that made walking difficult – used to carry buckets of water across a slippery surface whilst being bombarded with water cannons or sandbags, to try and fill a receptacle at the end of the course.

Obviously, they spilt a lot along the way and were occasionally wiped out altogether and had to start again. But there’s no doubt that if they were dogged enough and did it for long enough, eventually they would fill the receptacle.

This often seems to me to be a good analogy for the stock market.

The award-winning financial advice website, “This Is Money” ran an analysis last year confirming much the same. If you’d invested over any ten year period over the last two decades (except two dodgy phases in the dotcom boom and the financial crash), you were 95% likely to turn a profit. And assuming you reinvested your profits, the average return generated would have been 70%!

Sounds like investment Nirvana, doesn’t it?

But let’s examine those figures a little more closely.

And – for now – we’ll set aside those periods of heart-in-mouth panic as you watch your stock slide and gnaw your fingernails away as you decide whether or not to leave your investments where they are. That’s all part of stock investing, seasoned veterans will tell you. Take your lumps like you take your jumps.

If we accept that you’ve ridden the roller-coaster, pushed your ticker back down to its rightful position each time the market bounced it up into your throat, fought against all your instincts to reinvest hard-earned profit back into the maelstrom from whence you’ve just extracted it…what are you left with?

A 70% profit over 10 years! Sounds like a lot if you consider that if you’d started with £100,000, you’d now be sitting on £170,000.

But over 10 years? If we spread that out on an annual basis and apply a little simple compounding, it amounts to just 5.45% per year. Is that a fair recompense for all the cardiac distress?

So is there an alternative? Property?  Well, it’s more secure, but again, it ties up your capital for years.

So if you could make an annualised return of three times that amount without all the turmoil and without the long-term capital handcuffs, wouldn’t you consider it? Heck, wouldn’t you even do it for twice that average stock market return?

That’s why smart investors have started looking at loan-based crowdfunding of property. Lending to screened-and-approved developers looking for investment to get their projects off the ground. Usually, they’ll have agreed bank funding for around 60% of the building cost and they’ll have their own equity to sink into it too. But the capital gap in between is increasingly being filled by crowdfunders on the FCA-authorised CapitalStackers platform.

And it can be impressively lucrative. Recent investors in a CapitalStackers funded development in York made annualised returns of up to 22.5% in just eight months.

More typically, investors in two current CapitalStackers deals are set to make annualised returns of between 10% and 17%. Those figures look even more attractive when you know that all CapitalStackers investors are able to choose their own return, predicated on the level of capital risk they’re prepared to take (although the risk itself is not terribly off-putting, given that the investment is secured on the property, the developer’s equity/profit is there to cushion any drop in value – and the Loan-to-Value on these deals is within a sensible range of 55% to 72%).

So how might this kind of investment compare with the stock market?

Well, taking a mid-point CapitalStackers investment as an example: If you were to start with £100,000 – on an agreed return of 13.5% – after one year, your nest egg would be worth £113,500.

After two years, you’d have £128,822.

Impressively, you’d have overtaken your stock market earnings in just over four years, and after ten years you’d be sitting pretty on £354,780. Which makes those nerve-wracked stock market investors with their £170,000 look like dabbling amateurs.

As with shares, you don’t need a huge amount to get started. The minimum investment in a CapitalStackers scheme is just £5,000 – but many invest a lot more.

And considering you can access your capital by selling your investment on the secondary market, it’s no wonder more and more of the smart money is moving to loan-based property crowdfunding.

Find out more at www.capitalstackers.com or
by calling 
Steve Robson on 07774 718947
or Sylvia Bowden on 07464 806477
or Tony Goldrick on 07788 373126.

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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 – the P2P property development lending platform – has raised a £2.25m loan to fund the purchase and development of a 24-unit residential block in York.

The entire funding was completed in just 14 days from engagement to the full loan being raised, and the development by Norstar Limited is projected to have a Gross Development Value of £3.2m.  Investor returns are pegged at between 8.5% and 23% p.a.

Steve Robson of CapitalStackers commented:

“This is a huge milestone in our development and singles us out from the competition as being able to perform swiftly and professionally when circumstances dictate.  Working closely with our investors and professional advisers to deliver the whole package within an incredibly tight timescale is a fantastic achievement.”

CapitalStackers allows a wide range of investors to get involved with large commercial building projects, from housing to offices– schemes that would otherwise be out of their reach except through REITs or unit trusts. The idea is to plug the funding gap between typical bank debt and the developer’s equity. CapitalStackers invites P2P investors to take a stake at a risk and reward level they choose, with typical returns of between 5% and 20% p.a. on completion of the project, around 12-24 months later. With the minimum investment being just £5,000 fully secured on the property being funded and on the back of high quality due diligence, this is proving to be a very popular investment vehicle.

This is the latest in a string of new projects funded by CapitalStackers, who are currently inviting investment in an exciting new residential development in Birmingham. The loan sought is £1.9m and returns will be between 7.7% and 17.2% p.a. over a 15 month term.

The development address is: Foss Place, Foss Islands Road, York, YO31 7UJ.

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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, the exciting new peer-to-peer property lending platform, has lured senior industry figure Sylvia Bowden to join its ranks.

Originally an investment fund manager, then a chartered surveyor running York’s second largest practice, Sylvia rose to prominence after switching to the banking industry and spending more than a decade structuring bank debt for property investments and developments. Her robust, cashflow-led approach to risk assessment and risk management have been the hallmark of her deals and make her a perfect company fit.

CapitalStackers’ Managing Director, Steve Robson, said, “I’m delighted Sylvia is joining us. The appointment affirms CapitalStackers’ growing presence in property finance”.

Sylvia said her decision to join CapitalStackers was driven by “a desire to make a difference”.

“Real estate finance has been in the doldrums for too long and initiatives like CapitalStackers will be the catalyst to get the country building again.  I’m really looking forward to writing new deals” she said.

Nigel Bennett, Chairman, said, “This is another step forward for the company and its plans to improve the funding options for property borrowers and provide attractive secured returns for investors who lend to them. ”

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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

There are a raft of tax provisions that are going to make individuals who lend money pay less tax, including:

From 6th April 2015 a £5,000 zero % band for basic rate taxpayers.

From 6th April 2016   £1,000 interest tax free for basic rate taxpayers (£500 for higher rate tax payers).

It is anticipated Peer to Peer lending will be allowed to be held in ISAs in the Government’s second 2015 budget next week.

Therefore, there is potential for an extra £6,000 per annum tax free income per individual.

Philip Eagle, Tax Director, Hallidays Limited

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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

Hundreds of UK property developers with attractive products are crying out for investors to plug the gap left by the banking crisis.

Big deal, you say. But possibly too big.

The hefty sums needed to fund a new factory or office block are simply out of the reach of most investors unless you go through REITs or collectives. But then you lose control and the thrill of involvement.

So for most of us, the grim reality of investing in property is slogging away at small residential stuff, shops and industrial units – with the attendant headaches of borrowing from banks, PGs and management headaches – not to mention the equity risk.

But a new service launches this week that might give you a considerable leg up into the headier heights of property Nirvana.

It’s the brainchild of two experienced former North-West bank managers who specialised for decades in the property industry. It’s called CapitalStackers, and it’s a brilliant solution to the small investor’s dilemma.

Very often, banks will lend 55-65% towards the cost of a viable project, but no more. The developer will obviously have some equity of his own, so it just needs someone to plug the gap between the two.

Obviously, that in itself is too big a leap for most investors. But here’s the clever bit.

Simply put, CapitalStackers “stacks” private funding on top of bank lending in order to reach the level required to finance a property scheme – in other words, it actually works with active banks rather than pushing them out.

Investors can then choose where in the “stack” of finance they’d like to invest – picking their own level of risk and return, which management team they prefer, which projects they’d like to get involved with – and they can even spread their risk at different levels within the same project.

It typically brings in returns of between 5% and 20% – and one of its most attractive features is that the investment is secured against the underlying property assets being financed.

It’s certain to be of interest to people looking to invest through their pension funds at a sensible risk/reward ratio. In addition to the bank’s due diligence process to get the project off the ground in the first place, the CapitalStackers team perform comprehensive risk analysis and ongoing monitoring of your investment.

Which means investors benefit in the following ways: (a) the lending risk analysis process is doubled up; (b) phased funding of ongoing construction is more suited to a bank than individual investors whose cash goes in first and gets an immediate return; (c) senior debt gearing means you can use your cash to access more or larger deals; and, (d) cheaper senior debt enhances the return on your investment.

So for the investor seeking more attractive risk-weighted rewards, this could be the future of property investing.

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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 – the hottest new concept in peer-to-peer lending – has added considerable weight to its board with the recruitment of new director Tony Goldrick.

The online platform specialises in property investment and development deals secured by commercial and residential real estate, so Tony’s considerable experience in both the banking and property sectors enhances the company’s powerful presence in this market.

After 30 years working for Royal Bank of Scotland, Tony spent the second half of his career in real estate finance – having established the bank’s first dedicated regional property lending team in Manchester in 1999. The success of the team led to expansion across the north of England, and at its height Tony and his team were managing more than £5.5bn of lending.

Tony is a well-known face in the real estate sector, with a wide range of contacts with developers, investors, property agents, banks, and other professionals.

Since leaving RBS in 2012, he has been advising a number of large regional property development and investment companies, and will continue in this role, complementing his involvement with CapitalStackers.

“This is an exciting addition to the board” said Steve Robson, CapitalStackers’ Managing Director.

“His experience and knowledge of real estate really complement our existing team and I look forward to working closely with Tony to push the business forward”.

As part of the pre-launch activities Steve Robson, Managing Director of CapitalStackers presented his new model at the highly successful Great British Private Investor Summit in London in March – unveiling an inventive template which augments traditional bank lending, allowing private and corporate investors to tailor their risk and return profile.

It’s likely to be a particularly attractive vehicle for investors, given that all loans are secured by commercial and residential real estate. The North West based firm has gained a lot of attention in this embryonic, but fast growing and dynamic sector.

CapitalStackers aims to be the first-choice destination for investors looking to finance property investments and development schemes. It’s the ideal platform for high net worth individuals or sophisticated investors with a minimum of £5,000 to invest, looking to achieve a better deal than the more traditional investment routes offer.

It is supported financially and professionally by Hallidays Ltd – a firm of accountants with an admirable reputation. CapitalStackers and Hallidays already have a successful track record in changing the world of property finance and information technology. In 1999 they set up pi-FRAME Ltd, a specialist software house which sells real estate lending risk analysis software to banks and property lending boutiques.

The CapitalStackers team have huge property lending experience and can introduce investors to well-structured and secured real estate lending deals, setting up relationships with experienced property entrepreneurs and giving attractive risk-weighted rewards.

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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

Steve Robson, Managing Director of CapitalStackers presented to a packed audience at the highly successful Great British Private Investor Summit in London yesterday, organised by Angel News. Some 250 high net worth and angel investors were in the audience listening to pitches from a range of crowdfunding and peer to peer lending platforms.

Following the event, Steve said:

“We are delighted with the response from investors to the business model and really encouraged by their level of interest in the platform.  The completion of two deals marks an important step for us and we now look forward to the formal launch to enable us to engage with the wider investment community.”

At a recent pre-launch event hosted by Hallidays LLP, CapitalStackers generated enough interest to complete its first two deals. The CapitalStackers business model seeks to engage with banks and allow investors to choose their preferred risk and return profile.  That, and the fact that all deals are secured by commercial and residential real estate, made the Stockport based firm stand out in this embryonic but fast growing and dynamic sector.

CapitalStackers and its website aim to be the destination of choice for investors looking to finance property investments and development schemes. These will be high net worth individuals or sophisticated investors with a minimum of £5,000 to invest and looking to achieve a better deal than through some of the more traditional investment routes.

It is supported financially and professionally by Hallidays LLP, a firm of accountants with an excellent reputation. This is not the first time these people have come together in the world of property finance and information technology. In 1999 they set up pi-FRAME Ltd, a small and specialised software house which sells real estate lending risk analysis software to banks and property lending boutiques.

At the recent pre-launch event, Steve Robson commented:

“Real estate lending has spent long enough in the doldrums. This initiative and others like it will go a long way to repairing the property finance market. Not only will real estate borrowers benefit from improved liquidity, so also will investors through achieving better returns. We are genuinely excited about the future.”

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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