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  • Peer to Peer Lending

    Journalist seeking insights into views on P2P

    Hi

    I am a journalist writing an article for Peer2Peer Finance News on property investing.

    I am looking to get an investor perspective on the pros and cons of property investing, particularly through peer-to-peer lending platforms?

    Are there particular benefits or downside to investing in property through P2P compared with using a syndicate, fund or going direct?

    What do investors need to look out for when investing in property and how does P2P help/hinder this?

    It would be great to have your views.

    Feel free to leave a comment below, preferably with your name and any relevant profession.
    Kind regards

    Marc Shoffman

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    Hi Marc,

    I have had dealings with three P2P organisations. 

    One of them, Crowd Property, offers sensible rates of return for what appear to be secure investments.  Their track record is, as far as I can tell, exemplary.

    One of the others, Funding Circle, I no longer invest with because you no longer have any choice as to which projects you can choose. It is also, from my point of view, overloaded with property projects, bearing in mind that it started out as a commercial/industrial P2P.  Some of the early projects looked risky to my eyes, with projected returns that looked "too good to be true".

    The third one, which I shall not name for reasons that will become clear, is, I think very risky indeed.  I invested a small amount in the company itself, rather than in the P2P property projects they run. I did this so that I could see "from the inside" whether it looked like a stable company with secure investments. The share price is currently a tiny fraction of the the share price when I invested, and the returns offered to P2P investors look "generous".  It is noticeable that they have not grown at anywhere near the same rate as Crowd Property (with which I currently have no relationship). The company announced last year that it had gained extra funding, and that this would overcome the share price issues.  About a year down the line I am still waiting - I'm not holding my breath.

    Whilst I have made excellent returns on my investments in P2P, I am very dubious about the number of Property P2P companies that have piled into the market.  I believe that a number of these companies will fail at some point, and that investors will find that the property on which their money was secured isn't worth enough to give them back anything like a decent proportion of their investment.

    If there is a property crash, I am sure that many of these P2P companies will fail along with the projects they run.

    So what is the risk of a property crash?  As I invest in residential BTL and SA I'm not too worried (although I still worry a bit), as the BTL rents should still come in.  If I were in commercial property I should be terrified.

    Could Brexit/Arcadia/New Government cause a residential property crash? I don't know, but I am currently taking a very risk averse view.

    I suggest you talk to a few of the P2P organisations, taking a look at their balance sheets, loan rates and growth rates.  As indicated above, there are some that are run in a professional manner with transparent business processes, and there are others...


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