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Crowdfunding... the smarter way to invest in property
A Guide to Crowdfunded Equity Investments
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My name is Frazer Fearnhead. I’m the Founding Director of The House Crowd.
We welcome transparency at The House Crowd. So let’s be clear, an investment of £1000 is not going to magically transform you into a property tycoon.
What it will do is put you on the property ladder, give you a share in a well selected investment property, managed by property professionals allowing you to start building a secure financial future for you and your family.
If you put another £1000 in whenever you can afford it rather than spend it on gadgets or letting it sit idle in a bank account, then you could soon find yourself with a share in a number of real properties and a decent additional income, not to mention the capital growth that you may benefit from
You can do all this via crowdfunding investments offered on our website.
Risk Warning: Your capital is at risk and your returns may vary
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What is Crowdfunding
Wikipedia describes crowdfunding as “the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the internet to support efforts initiated by other people or organizations. Crowdfunding occurs for any variety of purposes such as film production, recording albums, funding small business…” and now, with the arrival of The House Crowd, property investment.
We were the first company in the world to start a property crowdfunding platform. We now offer both debt (peer to peer investment and equity (share) investment.
This guide deals just with equity investments. You can download our peer to peer guide at the end of this booklet.
Equity Investments
Perhaps you already know that property can be a great investment, but don’t want to deal with all the problems managing properties can bring.
If you want the sorts of returns you can potentially earn from property investment but without the hassle - we can help you. We bring like-minded people together to invest in property. All the SPVs (Special Purpose Vehicle) and properties we offer are vetted by experts with over 20 years of property investment experience.
You own a share of each property you invest in via an SPV and the SPV does everything for you, so you can spend your time doing what you enjoy.
BANK
Risk Warning: Your capital is at risk and your returns may vary
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How It Works
When you invest in SPVs via The House Crowd you will be acquiring a share in a company that owns the actual physical property free of any mortgage.
Your are investing in the purchase of real bricks and mortar. You can even visit your properties if you want to - though we would ask you not to disturb the tenants!
Transparency: You will have an online account where you can see the properties you have invested in. You will also be able to view all relevant legal and financial information pertaining to your properties.
When investing, it makes good sense not to put all your eggs in one basket. That’s one of the advantages of property crowdfunding. You can spread your available money and your risk over several different properties.
The SPVs that offer investments on our website often find properties at competitve prices, refurbish, let and manage them for you. You can receive a regular income whilst you watch your assets grow.
Most SPVs buy the properties with a view to holding them for at least two years to give investors a possible mix of rental income and capital growth. As a shareholder you get to vote on when they will be sold.
Risk Warning: Your capital is at risk and your returns may vary
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There are also deals which the SPVs have bought with the intention to develop and sell on quickly. These will be clearly marked on the website.
Best of all, property crowdfunding is hassle free. The SPVs do absolutely everything for you including dealing with all the problems landlords usually face. So there will be no midnight calls for you from tenants demanding you come and fix a toilet.
All you need to do is go to our website and follow the simple step by step process and register with us as a certified investor.
Risk Warning: Your capital is at risk and your returns may vary Risk Warning: Your capital is at risk and your returns may vary
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Your Security
Your money is always transferred to a regulated solicitor’s account where it is held by the solicitor and used to pay for the property purchase. Once that is complete, your security will lie in the underlying value of the property.
A separate SPV is set up for each investment so your investment is ring-fenced should anything happen to The House Crowd Limited.
You will be receive a share certificate in that SPV company and a copy of the Articles and other legal information detailing your rights.
As a shareholder you have a legal share in the assets of that company (i.e. the property) in proportion to your shareholding.
Your Estimated Returns
When investing, there is always a balance between yield and capital growth. Most SPVs focus on high yielding buy to let properties. For example, the areas in Manchester or Liverpool where a lot of SPVs buy properties purchase properties produce particularly high yields – sometimes 10% or more. Whereas in some areas of London, you would be lucky to achieve 4%.
However, investing in lower yield areas can have benefits in terms of capital growth especially in a fast rising market. It’s more speculative but is attractive to some investors.
Risk Warning: Your capital is at risk and your returns may vary
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The founders of the company are Frazer Fearnhead and Suhail Nawaz.
Frazer FearnheadBorn into a family with two generations of property investment experience and estate agency ownership, Frazer has been an active property investor since 1994.
In 2005 he started The Armchair Property Investor which won the North West Development Agency / EN Magazine Best Start Up Award in 2006. Frazer subsequently sold Armchair to Braemer Group plc in 2007 for £2.25M.
Between 2007 and 2008 he has worked in a business development role as non-exec/ consultant with a variety of SMEs (including several in the property industry) and in 2010 was one of three finalists nominated for the Trafford Business Person of the Year Awards.
Noticing the success of sites such Zopa, Funding Circle and Crowdcube, Frazer came up with the idea of adopting crowdfunding in order to democratise property investing and allow anyone to build their wealth through property.
Suhail NawazAfter attending City University London where he obtained a BSc (Hons) in Property Valuation and Finance, Suhail returned to Manchester where he studied for an MBA.
He then worked as a surveyor for a large commercial practice in Manchester during the early 1990s, before managing his family’s portfolio and investing in property in his own right, cutting his teeth on developing large Victorian properties. In addition, he is experienced in converting former commercial premises into flats and Houses of Multiple Occupancy. In his 19 years experience as a residential landlord and developer he has experienced the good, the bad and the ugly side of property investment across a varied array of residential property types.
Suhail has been friends with Frazer since school and they started working together in property in 2010.
All other key staff members can be found on the website here.
Risk Warning: Your capital is at risk and your returns may vary
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Risk Warning: Your capital is at risk and your returns may vary
Reasons to Invest
Get your foot on the property ladder for just £1000
● Build your own hassle free portfolio
● Reduce your chances of a costly mistake
● Utilise our contacts to find the best available deals
● Let experts vet all your property investments
● No tenant hassles
● Simple exit: You may sell your shares whenever you like or vote to sell a property
● Spread your risk - you can easily spread your money over several different investment properties
● Choose your investment to suit your circumstances - short or long term projects
NB: There is no guarantee as to when you will be able to sell your shares and you may not be able to find a buyer. Likewise property is an illiquid asset and it may not be possible to find a suitable buyer
The Process
Our crowdfunding model groups people together to invest in property. The structure used to accomplish this means you are actually investing in shares in a Special Purpose Vehicle (a limited company called an SPV) that will own the property outright free of any mortgage, unless stated otherwise
The legal information pack that is issued by the relevant SPV for each investment sets out the estimated returns you can expect, your rights and protections as a shareholder and all the associated risks.
To comply with FCA regulations, before you can access the information about any investment, you need to register with us and certify that you understand what you are investing in.
As a registered user, you will have full access to the investment information and the legal packs for every SPV containing all relevant information.
You will also have your own account (‘My Portfolio’) where you can see which properties you have invested in.
Invest
When you have decided which SPV you would like to invest in, just complete the simple online Share Application Form and submit it to us along with your ID for Anti Money Laundering purposes. (You should simultaneously transfer funds to our solicitor’s regulated client account).
Ownership
Your money will be held there (protected by the solicitor’s insurance) until the property is purchased, when it will be invested (via your shares) in an actual physical property.
Each SPV manages all necessary refurbishment works. They then let and manage the properties, so you need do nothing at all. They will keep a contingency fund to cover maintenance and repairs and you will never be asked to put in more money.
You have full access to all the relevant legal and property information via the ‘My Portfolio’ section of the website including surveys, Land Registry documentation, legal reports and financial information.
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Risk Warning: Your capital is at risk and your returns may vary
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Your Investment Return
You will receive your dividend from the relevant SPV in accordance with the relevant investment pack.
Dividends will vary depending on the rental income received. Some are paid quarterly, some annually. You can choose to invest in the ones that best suit you. After the expiration of the minimum term, the SPV will value every property each year and you can track the value of your property portfolio via ‘My Portfolio’
… Just sit back, relax and watch your portfolio grow.
Exit
You may sell your shares to a third party at any time, provided you can find a buyer. But you must be aware that shares in an unlisted company do not have a defined secondary market and you may not be able to find a buyer. The SPV will stipulate a minimum time that the property will be held for, after that time you and other shareholders
can vote annually on whether the property should be sold (based on the annual valuation). If there is over 50% in favour of a sale, then the SPV will put the property on the market at the agreed price.
As soon as possible after the property is sold you receive the return of your capital and your share of the profit. Please note we can offer no guarantees as to when a property will be sold
The Next Step
You will need to become an accredited investor before you can invest. To do so you will need to sign a self-certification form testifying that you are either a High Net Worth Individual, a Sophisticated Investor or you are sufficiently experienced and knowledgeable to understand the investment and its risks. This is a legal requirement.
Visit the registration page on our website to learn more about this.
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“The House Crowd is a radically innovative organisation that is transforming the way people can invest in Real Estate. Through crowdsourcing investors can be exposed to higher returns by participating in markets that had, traditionally been exclusive to institutional funds”Mr L.A. Huerta
“I think property investment is the safest thing in the long term. I do not want the bother of being a landlord anymore. The House Crowd is a brilliant idea - The investment without all the hassle.”M. Nicholls
“A simple & transparent way to get Involved in buy to let without the hassle of being landlord or needing a large deposit to get started” G. Gunn
“Many people like me want to own property but without the
hassle of being an active landlord; The House Crowd make it
easy and offer a level of expertise most amateur buy-to-let
landlords cannot match. What’s more, unlike other property
investment schemes THC provide very transparent process” Mrs.P. (Channel Islands)
“Followed this investment for over a year before being satisfied of its genuineness. Good returns very good, clear communications and very open makes it’s very good investment”M.N. Gibraltar
“If you’ve not delved into property investment yet, this is a great way to start! Moreover it allows you to take a small step with a small amount of money. I also liked that the Housecrowd invests in some run-down areas and so contributes to the regeneration of those areas. The real draw for me on top of all that is the accessibility and light-hearted tone of the communication which makes it feel fun rather than weighty and serious”EL London
“A simple way to get into the Buy to Let market. No need to be wealthy. Invest whatever you can afford. But miss out on all the hassle of being a sole landlord. Competent and relaxed management; good communication...With a sense of humour as well!”P Callaghan. (Nantwich)
A Selection Of Testimonials
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Risk Warning
An investment in property and unlisted shares contains risks. You may not get the returns expected and your capital is at risk.
Diversification
Your investment in property and unlisted shares should only be considered as part of a diverse portfolio which contains investments of different kinds and where you do not put too great a proportion of your capital into one particular type of investment.
Capital risk
The market value of property can go down as well as up and the return of your capital would be dependent on a sale of a property which is not guaranteed.
Costs or tenant risk referred to in the section headed ‘dividend risk’ above could impact on capital returns as well as hidden defects or other unexpected costs relating to a property.
Dilution
Any further issue of shares by a company (which may be required for further fundraising) would dilute your investment.
Liquidity
The shares are unquoted, and there is trading platform or quotation for them. You could sell shares, should you find a willing buyer, but such shares may constitute a minority holding in an unquoted company and as such may hold little value until a Property is sold.
Financial Services Compensation Scheme
There is may be an ability to make a claim under the Financial Services Compensation Scheme established by the Financial Services Authority in the event that any investee company fails. Please contact the Financial Obudsman Service for details.
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The House Crowd Limited (FRN 711355) is an appointed representative Prosper Capital LLP (FRN 453007) (“Prosper”). Prosper is authorised and regulated by the Financial Conduct Authority. Neither the House Crowd, Prosper nor any of their affiliates or group companies provides any advice or recommendations in relation to any investments in this document. If you have any doubt about the suitability of any investment, or you require financial advice, you should seek a personal recommendation from an appropriately qualified financial advisor that does give advice.
This information pack dealt with equity investments. Our peer to peer loan investments have fixed returns. If you would like to find out about them you can download our peer to peer guide here.
Crowdfunding... the smarter way to invest in property
By phone: 0161 667 4264
By email: [email protected]
By post: The House Crowd, 91-95 Hale Road, Hale, Cheshire WA15 9HW
