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  • Peer to Peer Lending

    Crowd funding - too easy to raise money?

    Grace Charles has received planning permission for the Surrey Street project. This was the first GCP planning project funded on SimpleCrowdFunding.co.uk. For those who did not hear about it prior, the campaign was run to raise equity so planning permission could be obtained for a (listed) commercial to residential conversion project. The crowd funded the costs and shares in the profit. The campaign was also designed as a way to learn while investing. The minimum investment so you could have full access to the process and information was £100.00. Less expensive than many courses one might buy for the same level of learning.

    Given it is 22 Dec 2017, let me declare that Santa arrived early.

    Subject to the conditions in the planning consent and subject to exercising the option to purchase the site so development can proceed, the shareholders who funded planning will be paid their investment plus profit. A list of expenses, including taxes to be paid by the SPV, will be made available to the shareholders. Similar to the expenses and profits where shared with the shareholders in a different GCP planning project (The Garages).

    If anyone wants to discuss how to raise funding for planning, the way you build a tribe of shareholders and other lessons learned, post your questions here. There is plenty that people can learn about being open and transparent while funding joint venture deals using an FCA-approved crowd funding process. You can even learn about how to deal with the well meaning yet ill-informed people who want to attack your project.

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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.


    John , that's a good result to turn it around from the refusal and credit where credit is due. There are still risks ahead & no actual profit is in the investors pockets yet and as we know from the Denison House project nothing is guaranteed.

    I say it is a 1-1 draw for planning gain as the garages project failed at planning gain but you say a small profit was made once sold.

    Merry Christmas to you & your family.

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    It seems Nicole Bremner agrees with the title of this thread:


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    Due diligence, due diligence and more due diligence first. No consideration for evolving market conditions?!

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    Just an up-date on Nicole's Harrington Gardens project.

    After being on the market for several months, it failed to sell and has now been put on the rental market.  Investors have been told that their money will be tied up for around 5 years until the market recovers.



    When getting involved in these projects, it's important to understand if there is a "Plan B" and how that will affect your investment and when you might get a return, or even your original capital back.

    If you need your money back within a certain time frame, then this type of investment might be much higher risk for you than for someone who doesn't.

    Related topic:  Nicole Bremner / East 8 / SimpleCrowdfunding

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    I can't say I'm surprised it turned out this way to be honest.

    Far too much blind faith was being placed.

    If I'd invested a substantial amount, I'd be livid. Fortunately,  I didn't.

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    Online agent 99home – which charges sellers a standard £99, and landlords £49 – says it is planning to float on the stock market in 2020, as it crowdfunds for the first time.

    With 30 days still to go, it has overshot its £295,000 target and by yesterday evening had raised £301,140 from 52 investors.

    99home puts a value of £9.8m on itself, according to the pitch on Crowdcube.

    Full/source article

    Comments:

    "Unbelievable lol. A few months ago this business, via a PIE email, were advertising for new people to join their team.

    I looked at their website, and ended up with tears of laughter running down my face. It was full of spelling and grammar errors, made up words, dreadful photography and copy that read like it was written by my 7 year old. The piste de resistance was a photo of a bathroom with a lamp plugged into the wall".

    "You’re right. The spelling and grammar was so bad that I took a screen shot of the site and discussed it on my LinkedIn. I was genuinely horrified.  I’m staggered people would take this business seriously. A fool and his money…".

    "So what happens when they realise £99 is just a smidging too low to make a profit?

    Do they rebrand to 3k homes?

    Joking aside, this is why crowdfunding needs to be regulated.

    This along with other offerings, investors have little or no chance recouping their investment."

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    I just wanted to cross-reference some observations by experienced portfolio landlord Angela Bryant, who, about two years ago, started investing money into crowdfunding projects.

    These comments are from this thread divergence:

    "It does seem to me though that the property world has gone mad... There's a lot of people doing weird things in property now and gurus more fantastical creatures than ever, appearing to have god-like powers particularly in the Development arena!  But it's so at odds with what I see in 'the real world': What sites are available, at what price, and how much competition is there including from ordinary people who just want a self-build plot with no profit required?!

    I thought that having a fair bit of cash would serve me like some kind of shield but no, people with no money are now being taught to do developments with other people's money - and they're hungrier than me!  (Hunger games, anyone? No thanks!"

    "Before crowdfunding there were financial barriers to entry in development, and having money put you on the right side.  But the wall has been torn down by crowdfunding, which is great for those without money!"

    "Yes, I'm basically referring to crowdfunding with that comment.  It's not a criticism, but an observation...

    Before crowdfunding there were financial barriers to entry in development, and having money put you on the right side.  But the wall has been torn down by crowdfunding, which is great for those without money!

    (Maybe it's a slight exaggeration to say they have 'no money', but very little required!)".

    "It's surprising how much money is 'out there'.  Simon Zutshi recently decided to limit investments for the first five minutes on his crowdfunding platform to £5,000 as they had so many complaints from investors who missed out because they sell out so quickly!"

    "I went to a development event recently, where it was explained - on the assumption you are the developer rather than the investor: "As the developer of course, you will want to 'pay yourself first' and you surely deserve payment for your project management skills and your time." So basically, the premise was that having taken investors' money, you pay yourself a handsome wage (er, from the investors' funds!)  

    It was further explained that investors would be last in the queue should things go wrong, whether to the extent of a 'true' loss or just insufficient gains to pay out investors, or pay them any interest... er, given you paid yourself first!

    That was very off-putting and has made me much more wary.

    It is of course always wise not to invest more than you can afford to lose in these things!  And to be careful who you back!".

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    This is from the Sunday Times today:

    One of the country’s leading peer-to-peer sites took out a loan with a property lender that was listed on its own platform and has since gone into administration.

    Crowdstacker, a member of the Peer-to-Peer Finance Association (P2PFA) alongside companies such as Funding Circle and Zopa, borrowed £250,000 from Amicus Finance in 2016.

    Amicus, which had borrowed more than £15m from Crowdstacker’s “crowd” of users since 2015, went into administration in December, with investors owed millions of pounds.

    https://www.thetimes.co.uk/edition/busin...-bkvc0cnpp

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    Wow!  That seems almost fantastical.  Crowdstacker borrowing money from Amicus and Amicus borrowing money from Crowdstacker.  As the article says, I am sure P2P lending will come under further scrutiny.

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