Housing Speculation Reaches New High (Low)

[monks]

Appeared in our local paper this week:

PROPERTY investment firm, founded by a Hale resident, has bought its 50th crowd funded property with money raised from investors each investing as little as £1,000.

The House Crowd, founded by Frazer Fearnhead, encourages investors to ‘crowd’ together, each providing a small amount of money to purchase a property.

Initially launched as a website in 2012, The House Crowd has raised £3.3 million to date and has grown at more than 152 per cent in year two. The unique model uses no borrowings meaning that properties are free of any mortgages and therefore the risk is substantially reduced.

Frazer said: “The crowd funding industry is in its infancy but is gathering pace at a phenomenal rate as more investors become aware of the power of the crowd to deliver superb returns while enabling them to keep greater control of their money.”

Sale / Altrincham Messenger Story

[Eddie_George]

Appeared in our local paper this week:

Sale / Altrincham Messenger Story

These people will lose a lot of their money. I hope they don't blame crowdfunding, although I'm sure they will and will bleat for compensation.

[crashmonitor]

These people will lose a lot of their money. I hope they don't blame crowdfunding, although I'm sure they will and will bleat for compensation.

Well they can probably afford to lose it, houses are no longer somewhere to live but toys for investors of a certain age.

[19 year mortgage 8itch]

I hope Charles' insolvency is all ticketyboo now

http://www.propertytribes.com/minute-due-diligence-regime-before-opening-your-cheque-t-6953.html

And the business model, post FCA

[Wurzel Of Highbridge]

So who owns the houses then? Not the investors I can assure you.

I would assume that the company ends up in piles of debt then properties are sold off cheaply to the directors then the investors loose all.

[monks]

So who owns the houses then? Not the investors I can assure you.

I would assume that the company ends up in piles of debt then properties are sold off cheaply to the directors then the investors loose all.

From the "testimonials" section on the website:

"The House Crowd come across very open and transparent. Almost too good to be true, lol”

- I Hamilton

[billybong]

So who owns the houses then? Not the investors I can assure you.

I would assume that the company ends up in piles of debt then properties are sold off cheaply to the directors then the investors loose all.

It's Win Win Double Whammy time - for the directors.

[Bloo Loo]

no mortgages...true, but the owner has taken on debt to buy the properties...they lenders ( crowd funders) will be looking for a return and that return is based on the rental income backed by the asset value of the properties themselves.

Of course, there is a legal gap between lender and the property.

[billybong]

Frazer said: “The crowd funding industry is in its infancy but is gathering pace at a phenomenal rate as more investors become aware of the power of the crowd to deliver superb returns while enabling them to keep greater control of their money.

So seeing as how £1000 isn't going to buy a house giving available cash over to some company gives a person greater control of their money

Edited March 14, 2014 by billybong

[Smyth]

While this is a bit silly, short-selling property derivatives is probably an effective way to hedge against price rises and protect yourself from house price inflation. I dont know why more people dont do this.

You could also use them to speculate of course, and I imagine it would be a lot cheaper than what these people are doing since you avoid stamp duty and liquidity problems.

[The Knimbies who say No]

no mortgages...true, but the owner has taken on debt to buy the properties...they lenders ( crowd funders) will be looking for a return and that return is based on the rental income backed by the asset value of the properties themselves.

Of course, there is a legal gap between lender and the property.

Indeed, and if the yields are typical of what I see in the local rental market, it means sub 4.5% gross, and who knows what 'net', once the pros have their fees out of the rest along with the usual maintenance/voids etc.

[19 year mortgage 8itch]

Indeed, and if the yields are typical of what I see in the local rental market, it means sub 4.5% gross, and who knows what 'net', once the pros have their fees out of the rest along with the usual maintenance/voids etc.

Yields will be higher courtesy of housing benefit. £3,300,000 and 50 properties = £66,000 average. Bottom feeders.

This hale resident isn't buying in hale.

[porca misèria]

So the cycle of history repeats. Now that the building societies have become regular banks, someone reinvents them.

[Venger]

Yields will be higher courtesy of housing benefit. £3,300,000 and 50 properties = £66,000 average. Bottom feeders.

This hale resident isn't buying in hale.

Some people, perhaps mostly the yield hunting investors in such schemes, obviously think such houses are good buying value.

http://www.thehousecrowd.com/property-investments/

I personally do not. Nor am I yield chasing.

I do wonder who these investments appeal to the most. Wouldn't surprise me if it were older home-owners, trying to beat returns on savings. Older equity rich home-owners.... where in many HPCers minds, the majority of older owners only want lower house prices for the young.. for their children and grandchildren. (rolleyes). Perhaps I'm wrong though... may run through all types of investors.