Lincolnshire block of flats pulls in £843K in fastest crowdfunding yet

Gone in 643 seconds! Lincolnshire block of flats pulls in £843K from property investors in fastest crowdfunding yet

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A block of flats in Lincolnshire has been snapped up in just under 11 minutes on crowdfunding platform Property Partner, underlying investor appetite for buy-to-let.

The buy-to-let specialist crowdfunding platform listed an opportunity to invest in 42 flats in a converted mill at 12.30pm on Wednesday, last week. 

Just ten minutes and 43 seconds later, 308 investors had put in a total of £843,100 – setting what a world record for the fastest crowdfunding ever, according to Property Partner.

The fundraising, which works out at £1,311 per second, smashed the previous record set by Crowdcube, when it crowdfunded itself on its own platform in July 2014, raising £1.6 million in 16 minutes. 

Need for speed: Investors crowdfunded 42 flats at Sandars Maltings, Lincolnshire, in just over ten minutes

Need for speed: Investors crowdfunded 42 flats at Sandars Maltings, Lincolnshire, in just over ten minutes

The Lincolnshire deal saw Property Partner nearly double its previous personal best, set when a two-bedroom house in Surrey was backed within 35 minutes in May.

Property Partner’s new record listing offered 42 out of 48 flats plus the entire freehold of a Grade ll listed Sandars Maltings building in Gainsborough, Lincolnshire. 

The smallest investment was £50 and the biggest was more than £100,000 and investors  are set to receive a rental income dividend of 5.89 per cent a year.

Only 40 per cent of the property development was crowdfunded, with the rest mortgaged on an interest-only basis at a 60 per cent loan-to-value at a five-year fixed rate of 4.50 per cent.

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The popularity of crowdfunding  

Crowdfunding platforms have become a popular way to enter the buy-to-let market without the responsibilities of becoming a landlord. There are no tenants to manage, nor mortgage to repay.

Instead, you invest money that goes towards buying a property, with a group of like-minded investors, and earn income from the rent. 

In the case of Sandars Maltings, Property Partner organises all aspects of the property letting, from maintenance, finding tenants and collecting rent.

 Room with a view: Only 40 per cent of the property development was crowdfunded

 Room with a view: Only 40 per cent of the property development was crowdfunded

Interiors: Property Partner organises all aspects of the property letting, from maintenance, finding tenants and collecting rent.

Interiors: Property Partner organises all aspects of the property letting, from maintenance, finding tenants and collecting rent.

Crowdfunded:  Property Partner lets investors crowdfund a buy-to-let property, from as little as £50

Crowdfunded:  Property Partner lets investors crowdfund a buy-to-let property, from as little as £50

Who is Property Partner?

There are already several platforms that will let you invest in buy-to-let through crowdfunding.

You can either use a platform that crowdfunds buy-to-let loans and matches them to landlords or one that actually purchases a property and rents and manages it on your behalf.

Property Partner lets investors crowdfund a buy-to-let property, from as little as £50, and also sell some or all of their share of the investment on a secondary market - providing a buyer can be found.

Investors get their share of rental returns on a property and if its value rises then they can try to sell out for a capital gain.

There is a five-year exit point per property, during which investors are able to take profits and walk away.

All investors pay a one-off transaction fee of 2 per cent of their investment and 15 [per cent (12.5 per cent plus VAT) is taken off rent before it is provided as income to investors.

Beware the risks

Obviously, as with any investment, there are risks involved in putting your money into crowdfunded property development.

You are investing in a relatively illiquid asset - there is no guarantee you will be able to sell out early if you need to.

By investing in this opportunity, you will effectively be banking on property values and rental income rising.

Unlike with traditional buy-to-let investment, you have no control over who the tenants are and so you'll have to trust that the agent does their job properly and tenants will be vetted and pay their rent.

Property Partner is regulated by the Financial Conduct Authority so it has to take steps to protect your money.

Each property investment is structured through a special purpose vehicle that is separately ring-fenced from the assets and liabilities of Property Partner, as well as from any other property investments on the platform. So if the platform were to go bust, your investment is unaffected.

However, if Property Partner were to fall into financial distress, an alternative manager could be appointed to continue management of your investments. But this may create more uncertainty as you may not know who they are and what they plan to do with the property.

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