Pros & Cons Landlordinvest
- Strong interest rate
- All loans are backed by collateral (property)
- Great track record (10.74 percent average)
- Secondary market for early exit
- Direct investment structure only
- All alternative investments with high return potential come with high risk
- No automatic investment
Characteristics of Loans
Loans on Landlordinvest
Landlordinvest has a clear but detailed summary of all the different real estate loans on the website. At the top of the page, you will find the most basic information, such as interest rate, months left of the loan, sum available for investment, Loan-to-Value (LTV) and risk rating. Below, you can find more information about the specifics of the loan and the possibility to access the valuation report. In addition, you will be able to find information on specific collateral, property details, security disclosure information, such as size, location, and building materials, which is also included in the valuation report.
A great thing to note about Landlordinvest, with the exception of the detailed information available to lenders, is the consideration shown for the risk of investing in this type of alternative finance. Most platforms neglect or try to hide the risks involved in investing, but this platform is very straightforward in what investors should be aware of. This knowledge of the risks involved is also reflected in the specifics of the loan where, in addition to the public valuation report, any borrower used as protection is reviewed by a third party credit agency such as Experian. This score is made available to the public and can be used to decide whether to invest in a specific project.
The platform divides the main risks of P2P mortgage lending into six categories:
- Borrower default: The possibility that the borrower will not repay the loan. According to Landlordinvest, this is the biggest risk.
- Mortgage fraud: The possibility of someone getting a mortgage under fraudulent circumstances.
- Insolvency of platform: Risk of default in a company that operates a lending company.
- Property market danger: The risk that the ability of lenders to pay will be impaired by a decline in the UK property market.
- Interest rate risk: The risk of a general market increase in interest rates above your earnings.
- Illiquid instrument: The risk of not being able to sell your investment before the end of the loan period.
Landlordinvest Buyback Guarantee
As with most other peer-to-peer lending platforms, there is no buyback guarantee in the event of project failure. This type of insurance project is mostly used by credit originator platforms because transparency is very poor and investors need some kind of protection (even if it is weak) to be interested in this type of a company.
At Landlordinvest, loans are given a credit rating based on collateral and the downside to not getting a buyback guarantee is that investors need to exercise due diligence and look at particular ventures as well as take diversification seriously. It is suggested to have over 100 loans to ensure good diversification.
Direct Investment Structure
There are two different types of investment structures in P2P investments:
- Direct structure means that you are purchasing a claim directly against the borrower.
- Indirect structure means that you gain exposure to a loan by investing in it if it is issued by a platform company to the originator of the loan.
Landlordinvest is a conventional crowdfunding lending platform, and each loan is organized as a direct investment structure. It tends to make it easier to properly assess the risks involved, because you know that you are lending directly to the company/owner of the property and not lending to the real estate company through a loan origination middleman.
Attributes of the Platform
Manual investment in Landlordinvest is simple and straightforward. Loans are usually above £100,000 and up to £400,000, which is at a high level relative to most sites, putting the minimum investment amount at a low of £100. There is a sufficient number of new loans being regularly published for a direct investment structured system, but a higher number of loans published in the future will definitely help to increase the potential for diversification. If you invest manually, you will see the real estate projects available as shown below, while also being able to tap into projects put up for sale on the secondary market.
This platform does not yet provide automatic investment, and you need to pick every single project you invest in. However, this is often to be expected as due diligence on projects is required in order to obtain the best available interest rates compared to the risk associated with obtaining the cost. Landlordinvest focuses on quality rather than quantity, and the number of loans available makes it reasonable to invest manually in the primary and/or secondary markets. This also leaves more time for due diligence on the real estate loan.
Landlordinvest operates a competitive secondary market, allowing borrowers the ability to exit the loan before the end of the term. This increases the value of the investment and is a huge plus in terms of being able to allocate capital as the investor wishes. Although the secondary market is very effective if you want to sell part of the loan, it's less efficient if you're looking to buy part of the loan. There are for now no known parts of loans available on the secondary market, even though more than 2 million pounds worth of loans have changed hands outside the primary market. So if you're looking to buy loans on the secondary market to diversify quickly when you start investing on the site, you seem to have to act quickly – and keep this particular secondary market page tight!
Process of Registration
Registration at Landlordinvest is easy. Whether you are an individual investor or investing as a corporation, creating an account needs just an email and a password. The platform is available to anyone with a European bank account. Upon creating an account, the platform sends an e-mail with registration instructions. The company complies with KYC (Know Your Customer) and you therefore need to provide an identity card and additional information in order to be able to withdraw money from the site. You can therefore create an account and invest, but you will have to complete the KYC before you activate your withdrawal.
Deposit and Withdrawal Process
Depositing funds to the investor's account is done in three steps:
- Transfer money from your conventional bank transfer or TransferWise to your Landlordinvest account.
- Your funds will be available for investment on the day of reported delivery (usually 1-3 banking days).
- Upon receiving the funds and applying them to the account, you will receive an e-mail confirmation.
Withdrawing funds is very easy if you are already approved by KYC. Only press the "delete funds" button, enter the amount you want, and wait for 1 to 3 business days before the amount you requested lands in your account. There are no minimum withdrawal limits and no extra fees or commissions for withdrawing funds from the network – except, maybe, from your own bank. Note, depending on their fee structure, your own bank can charge transaction handling or currency exchange fees.
Type of Funding
Landlordinvest has a simple portfolio analysis of your investment in real estate on the website. Your report section is divided into three areas:
- Account Overview: Your balance, available funds, committed assets, remaining principal and total value of your account.
- Earnings: Total interest earned and potential interest due.
- My Investments: a comprehensive list of all the assets you have or have had on the website, pending, operating, sold and fully repaid. This section is a standalone one and further divided into Simple View and Advanced View.
The money you receive is gross of tax. You're responsible for your own tax affairs. HMRC has released a guide that you can download.
LandlordInvest has a chat function on the bottom right corner of the website that provides direct access to customer service. They usually respond very quickly during business hours (Mon-Friday, 9.00-18.00 UK time) and generally have good contact with the clients. We have yet to receive a response within the same day/few weekdays. They are qualified to answer every question we have, and they do not seem to avoid any kind of query. We have the feeling that the company is looking after its investors.
Who can invest in it?
You've got to be over the age of 18 to become a lender.
You need to sign a loan account in order to be able to lend. They're also going to need to confirm your identity. Typically they can do this automatically, but sometimes they're going to have to check details directly with you.
LandlordInvest - Is it regulated?
LandlordInvest Limited is governed by the Financial Conduct Authority and is permitted to carry out its activities as a financial company under financial registration number 660926. The program does not come under the Financial Services Compensation Scheme (FSCS).
|Total investments:||£9.6 million|
|Total capital repaid:||£6.8 million|
|Total investor earnings:||£800 thousand|
|Secondary market sales:||£2.8 million|
|Number of loans:||50|
LandlordInvest main features and highlights
- P2P lending Platform