High potential returns from a British real estate lending platform
LandlordInvest has been around since 2014 and, although it hasn’t reached high volumes and remained somewhat in the shade, it has a very good track record and offers exceptionally high interest rates. Is it the right choice for you?
|Total Investment Volume||£11m+ (€13m+)|
|Average annual interest||10.93%|
|Minimum Investment||£1,000 since 1 July 2021|
|Who’s eligible to invest||All adults|
|Investment Type||Real Estate Lending|
|Auto Invest Function||No|
PROS & CONS
- LandlordInvest’s average annual ROI stands at almost 11%, and in 2020, the average return was over 12%. Compared to the main British competitors such as CrowdProperty (about 8%) or Kuflink (roughly 7%), LandlordInvest really stands out and can even compete with popular high-interest European sites such as EstateGuru.
- Although the number of projects isn’t impressive, and they’re all UK-based, they offer very varied levels of return (and risk, obviously). Interest rates range from as low as 5% to as high as 19%, which allows building a balanced portfolio.
- Transparency is important, and LandlordInvest seems to know this. They are very clear about the risks involved in asset-backed peer-to-peer lending, provide comprehensive information to lenders on each project, including a risk score, and try to mitigate those risk actively, e.g., undertaking credit checks of the borrowers using Experian and/or CallCredit, the UK’s leading credit reference agencies. The statistics page is modest but informative and includes links to yearly outcomes statements where you can check out how the loans have performed. Financial reports are also available, although they could be more visible on the platform.
- Going for high interest rates always means you have to accept higher risk. In the case of LandlordInvest, the biggest setbacks are the common use of second-rank mortgages as collateral and relatively high LTV (loan-to-value) ratios of, on average, 63%.
- LandlordInvest will increase its minimum investment into each loan from £100 to £1,000 as of 1 July 2021. LandlordInvest’s CEO explained that it’s “a part of a strategic move to target high-net-worth and sophisticated investors”, and it’s better suited to “the manual lending we offer which requires investors being involved with their due diligence”.
- This brings us to another con – the lack of auto-invest. LandlordInvest indeed focuses on quality instead of quantity, and the number of loans available makes it comprehensible to manually invest in both the primary and secondary market. However, the requirement to conduct own due diligence on each project combined with the new high minimum investment threshold can deter many lower-volume and hands-off investors.
Who is behind Landlordinvest?
The three founders, or the “core team”, exhibit a good blend of experience in finance, real estate and tech. The about us page also lists three “advisors” who are involved primarily with other, mostly their own, ventures. It’s a bit unclear whether more people are involved in the company and what the role of the advisors exactly is.
LandlordInvest also seems to be actively seeking partnerships. In 2020, they co-financed a £1.5 million property deal with the United Trust Bank. LandlordInvest’s part of the loan, worth just over £400,000, was fully funded by 52 investors in just six minutes.
In 2021, they announced they sought to collaborate more with banks and another peer-to-peer property lending platform. We don’t know yet which platform and in what capacity exactly, but this would be a somewhat new turn in P2P finance – there hasn’t been much collaboration between platforms so far.
What does LandlordInvest offer?
On LandlordInvest, you can invest in two main kinds of residential or commercial property-backed loans:
- Buy-to-let loans, typically offered for £100,000-£300,000 and lasting between 1 and 5 years. Buy-to-let means purchasing a property to rent it out.
- Bridging loans, which tend to have higher volumes (£150,000-£750,000) and shorter durations (up to 12 months). Bridging loans are used until a borrower secures permanent financing or removes an existing obligation. They are considered to be riskier and therefore have higher interest rates to compensate for the risk.
How much can you earn?
The average ROI is 10.93% and has varied over the years from 9.57% in 2019 to 12.68% in 2018. Of course, the expected return will largely depend on the deals you choose to invest in – LandlordInvest advertises returns between 5 and 12%, but you can probably make even more if you stick to the higher-interest projects (and assuming they will not default).
For British tax residents, profits, or their share at least, can be tax-free as they qualify for the Innovative Finance ISA.
Who is LandlordInvest best for?
LandlordInvest is very clear who their target is – sophisticated and more experienced investors who prefer a very hands-on approach and are willing to put considerable amounts into each deal. If you’re not interested in spending too much time on due diligence and value automated investments, you’ll probably be better off choosing a different platform.
How to invest on LandlordInvest
Signing up is quick and easy. You will need to confirm your identity and pass an Appropriateness Test which is required by the Financial Conduct Authority (FCA) and designed to demonstrate your knowledge and experience of investing in peer-to-peer lending.
LandlordInvest is a solid platform with a good track record, high transparency and a clear idea about their positioning in the P2P lending universe. It’s not for everyone – manual investing only and a high minimum investment threshold can deter many more hands-off and low-volume investors – but that’s exactly what the platform seems to be aiming for. Their further collaborations with banks and possibly other platforms will be an exciting development to track too, especially given the success of their first partnership deal.
P2P Market Data are dedicated to providing unbiased reviews of P2P Lending platforms and other alternative investment platforms. We are on a monthly basis collecting funding amounts from over 90 different platforms for The Monthly Funding Report.
When reviewing an alternative investment platform, we consider a variety of factors such as:
- Number of investors
- Minimum investment requirement
- Historical annual returns
- Diversification opportunities
- Reinvestment opportunities
- Educational and informational offerings
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- Total capital invested
- Features (such as secondary market and automatic investing)
- General transparency (the difficulty of finding who the owners are, how they make money on the platform(fees), terms & conditions and more)
- Management team
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