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  • Peer to Peer Lending

    Is P2P practical for property joint ventures?

    Hi

    We have recently purchased our first BTL in a company (4 directors) and have identified a number of other decent properties in the same area.

    Raising funds in time will be an issue and I was considering exploring Peer to Pending, either for a whole project or for deposit, refurb etc.

    Does anyone have any experience in peer to peer lending to purchase property who could point me towards some research resources, or is willing to discuss their thoughts and experiences with me?

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    Ease quam videri

    To be, rather than to seem

    Hi Gary,

    We have a number of resources in the tribe you have posted in:

    Crowd funding - too easy to raise money? 

    Our first crowd funding raise

    Property crowdfunding - who is making money? 

    Those are just a few, but there are many more.

    Our P2P lending partner, Assetz Capital, offers property development loans.

    Hope that helps for starters?

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    Gary,

    I think you need to take a step back.

    If you need to raise equity, using a P2P platform is not going to work. You would be taking out a loan and the loan would appear as a liability on the company's balance sheet. If you wanted to use a traditional property lender, the presence of the other loan could be an issue. You need to disclose the source of the funds you are offering as equity and a P2P loan is not going to sound much like equity.

    Assuming you need more equity, look at crowd funding platforms which can facilitate equity from the crowd.

    Your company would be sharing with the crowd the up and downside of the specific project you wanted funding for. Not the parent company, just the SPV for the project. Sharing does not mean you need to share the profits equally. The crowd funded equity could have a priority over the company's position. You can also fix the return paid on the equity. Full disclosure of how the profits are meant to be paid out is disclosed up front. As it is equity, there are no Personal Guarantees or liabilities. A true, legal JV rather than any type of debt.

    BTW, I have no idea how 4 people can together to operate the business. There is a big, legal distinction between 4 people running a company pooling some of their own funds and other investors putting in cash. This topic is legal minefield given the FCA regulations. Be careful if you do not have an FCA advisor explaining where the lines are.

    If you use a FCA authorised platform which is authorised for raising equity (therefore, not a P2P authorised platform), they will be FCA authorised to provide advice on this topic.


    I have worked with a number of people who have legally and successfully raised equity. I avoid P2P or debt raises as I think there are many great lenders out there. Equity is the thing which is harder to raise legally. Happy to share what I know. I am not an FCA authorised person. Just a landlord with 35 years of experience and someone who has structured plus invested in a number of crowd funded equity deals.

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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.