Article 34 in a series of 40 articles on P2P, property and CrowdProperty
Previously, we took a look at what others say about CrowdProperty. This article looks at what that (positive) market perspective means for you, and next we’ll be explaining the importance of small developers for the UK housing market.
Many investors have been attracted by the opportunities in alternative finance and peer-to-peer lending. There is, after all, a lot going for it: there’s often a wealth of choice, the individual has a lot of control over the process, and, not least, rates in general are better than cash (where you’re losing money against inflation) or many comparable asset classes.
While that’s true of many platforms, we believe CrowdProperty has an edge. Indeed, we reckon we’ve got more edges than the Grand Canyon.
Expertise
First, CrowdProperty is run by property experts, with a depth of understanding of the asset class and the pains that property professionals face when organising finance for their projects. We know because we’ve been there: that’s why the three co-founders, with 75 years' collective hands-on property investment and development experience, set the business up. The critical thing in lending is asset class expertise, then sourcing the capital. Too many overlook this fundamental aspect, with inexperienced, tech-led teams or experience from other sectors, and therefore don’t understand the pains, problems and risks sufficiently.
We are, and always have been, solely focused on what we do and our business model, asset class, instrument and security, continuously building stronger and deeper expertise. We don’t have a foot in other asset classes, where there may be money to be made, but we believe we wouldn’t have the expertise to serve our lenders and borrowers in the best possible way. After all, you don’t see Tiger Woods playing tennis. Instead, we both stick to what we’re good at - with a relentless focus on getting better and better every day to be world class.
Reinforcing this, we have a clear ‘lender of first resort’ positioning – disrupting traditional bank and non-bank sources of capital for the SME property professional market. We offer thoroughly market-benchmarked ‘total cost’ pricing to attract direct applications and then win that business with speed, service and expertise. This allows us to attract the best quality projects by offering competitive rates, backed by a swift and excellent service.
Efficiency
Our efficient operation model allows us to give the best rates to lenders and borrowers alike. This is because we’ve cut out the fat. CrowdProperty disintermediates the broker channel for both significant economic and underwriting benefit. The economic benefit comes from both our platform and the borrower themselves not paying fees to brokers (which also mitigates threats from competitive lenders who may decide to buy market share by paying higher fees to brokers to hit time-period targets).
The underwriting benefit comes from our direct relationship with the borrower. There is no sales person in the middle who is only incentivised on successfully closing deals. Instead, our team works directly with the lender throughout the process. This builds a strong relationship, which opens better communication channels throughout the project as our team will value-add in challenges faced along the way.
This richness in both underwriting and loan monitoring is unprecedented and is no doubt a contributor to our 100% capital and interest payback track record over nearly six years. This track record and high quality of active loan book is validated by securing major institutional backing after extensive due diligence into our best practices, processes, systems and expertise.
Importantly, we do not suffer an excessive London fixed-cost base – we’re based in Birmingham, enabling us to invest in deeper expertise and more resources.
Transparency
This enables our utmost transparency on our track record and projects listed through information on our website and through project webinars. This has led us to be the only property development/bridging platform member of the Peer-to-Peer Finance Association (P2PFA), the ‘top table’ of UK peer-to-peer lending, and the first property development platform to be Brismo verified. This means that we have independent verification of the performance of every loan that we originate.
CrowdProperty was the first property project P2P lender to disclose lending performance using Brismo’s independent methodology. This is absolute transparency – opening up every loan cashflow to an independent assessor who then publishes that data in a format that is directly comparable to others in the sector. The chart on our statistics page shows that assessment and significant outperformance vs Brismo’s UK Peer-to-Peer Lending Returns Index.
Last but not least on this issue: we have undergone extensive institutional due diligence and have commitments from two institutions who have spent months understanding the business to ensure the very best operating and due diligence practices are undertaken, complementing retail lender capital.
Risk
Rigorous risk management is one of the pillars of our business. We always take first charge security and only lend on projects with planning permission already in place. Projects are assessed with deep and rigorous specialist property experience. This selectivity means we have funded just 3% of all projects that we’ve seen. We only ever consider projects independently proposed to our platform, ensuring independent and impartial due diligence. This also goes for the management of the loan through the project – our close and trusted relationship with borrowers means that we see and can help tackle challenges that arise, backed by our decades of expertise.
All this, taken together, explains why we are the number one direct originator of SME property project funding applications in the UK, with a £1.7bn annual application run-rate, from which we carefully select top quality projects to support and place on our platform. Our focus and relentless pursuit of betterment makes us world class, a bit like Mr Woods’ golf swing.
View detailed performance information on our statistics page: www.crowdproperty.com/statistics
See our funded, live and upcoming projects: www.crowdproperty.com/projects
Read more about how investing works and investment options at www.crowdproperty.com/lenders
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