A REAL CROWD PLEASER

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CROWDFUNDING OFFERS A NEW OPPORTUNITY FOR SAVVY PROPERTY INVESTORS

Buying investment property in another country can be daunting. Actually, buying anything in another country – with currency, culture, and other factors to consider – can be daunting. Even simple tasks like paying for a taxi can be stressful, so major purchases like property are often times too much for many to undertake.

Buying property abroad not only takes us far from our comfort zone but it also raises the stakes with the greater amounts of money involved. For many, however, the potential returns to be gained in cross-border property investment make that risk worth taking.

Suppose you could get those returns with everything else made easy. Would you be more willing to try investing overseas if the system of buying were simplified, the sums of money reduced and the risks spread out? For many apprehensive investors, crowdfunding is the answer.

Much like the popular crowdfunding initiatives that fund start-up companies, the popular concept now lends itself to property, allowing a group of unrelated investors to pool their money and ‘share’ in the investment. There are many reasons why investors might do this, including a reduced financial outlay that more closely matches their investment appetite, access to an asset class that may have been out of reach as an individual investor and the ability to spread small investments across more properties in order to reduce risk.

The entire process takes place online so there is no need to get on a plane, visit the units or even meet estate agents. In fact, when it comes to international property, crowdfunding is a natural fit because it allows investors to get into the property market for a fraction of what it might cost to buy an entire property.

THE ADVANTAGES OF CROWDFUNDING

Hands-off management – Some crowdfunding companies offer hands-off buy-to-let which makes the deal especially attractive to overseas investors who need never call anyone or have any involvement in the property whatsoever. Major expenses will have been accounted for in the initial survey, but even an unexpected problem not covered by insurance could be fixed and the money taken from future rental dividends.

Diversification of risk – The investment risk can be spread over multiple properties. While crowdfunded properties are no more/less risky than any other property investments, the opportunity exists to spread one’s investment across any number of properties. Instead of investing £30,000 in one property, an investor may choose to invest £3,000 in each of ten different properties.

Access to the UK property market – The UK is one of the most desirable property investment markets and crowdfunding opens up access to more investors than ever before because of its low entry amount. Although the UK property has experienced its share of shocks and disruptions in recent years, not even the worst recession in living memory has stopped the UK house market from rising.

Property selection – Investors typically have the option to choose a house, a flat or any combination of the two. Unlike a fund where investors have no choice in specific properties, crowdfunding investors decide on each property to invest in, which for most is far more interesting and engaging than simply reviewing numbers on a graph.

Exit strategy – A reputable property crowdfunding company will offer investors a guaranteed exit opportunity supported by independent valuers.

CHOOSING & INVESTING

Potential investors can simply visit a property crowdfunding company’s website to view the selection of properties available. Most are developments of several flats, further spreading one’s risk, and some have already exchanged contracts on the deal so they are confirmed to be going ahead. The most established companies have websites laid out with details on the funding target, how many investors are already signed up, the valuation, last year’s capital growth and the expected dividend yield. The company may also offer instant access to reports that would normally require an additional fee when buying a house as well as a report from an independent solicitor and a surveyor’s report that can run into dozens of pages explaining in detail the exact condition of the building and what, if anything, it will cost to remedy. Investors may also have access to a highly detailed explanation of the investment case with plenty of safety margin and the financial arrangements.

In addition to London properties, established property crowdfunding companies offer opportunities all over the country. In the old-fashioned way of UK property investment, one would have had to drive around the British countryside, probably getting lost, trying to calculate the quality of an investment from limited resources. Web access solves all that within a few clicks, offering access to high value, handpicked investments in the up-and-coming towns that the mass of international investors will have no clue about.

FOLLOW THE CROWD

Property crowdfunding has allowed previously-reluctant investors the opportunity to dip their toes in the water and enjoy the benefits of rental returns and capital gains, all without the usual cash outlay required for international property investing. Hassle free investments without the legwork — no wonder this platform has become such a crowd pleaser.

WANT TO KNOW MORE?

The Reserve has partnered with Herald Land to offer access to a reputable UK property crowdfunding partner. To request more information or an personal introduction, please contact us at member@thereserve-asia.com.

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16/F Chao's Building  |  143-145 Bonham Strand  |  Sheung Wan  |  Hong Kong
T: +852 33620 3157  |  F: +852 3753 1811  |  thereserve@infonation-asia.com  |  Data Policy  

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