For the first time, three properties have been purchased through crowdfunding and mortgaged at 50% before being offered to investors.
Investors Can Buy Shares in Three Mortgaged Properties Purchased Through Crowdfunding
The scheme was launched by Property Partner, which was established this year.
The flats in West Drayton, near Heathrow Airport, are owned by a company, and therefore, investors will be buying shares in the firm rather than in the properties.
As a company owns the properties, investors will not be affected by the buy-to-let tax changes announced in the summer Budget. Instead, they will be able to deduct the full costs of the mortgage from their profits.
Until this latest scheme, all of Property Partner’s properties were bought outright with cash.
Shares in the company that owns the West Drayton flats can be purchased from £50.
Altogether, the flats were bought off-plan for £885,000. The first was purchased in April and the other two were acquired from investors that needed to sell on their contracts.
Consequently, Property Partner bought the three flats at a discount and the current valuation is £960,000 – the buy has already made a paper profit.
Property Partner launched in January and has so far brought in almost 4,000 investors, who have crowdfunded over £8.5m in purchasing properties.
Individual investments range from £50 to more than £100,000 and shares can be traded on the scheme’s secondary exchange.
The property owners pay 10.5% + VAT of rental income for management services.
The latest addition to the sector is a firm called Propology. It plans to source properties through developers and estate agents.
Investors must provide at least £500. They then receive 100% of the net rental income plus quarterly dividends.