Crowdfunding has become increasingly popular as a means for “ordinary people” to access services which might have been previously unavailable. Whether investing in companies, backing a project, or something else, one of the more exciting possibilities about crowdfunding is breaking down barriers to participation. Real estate remains one area with significant barriers to less-wealthy individuals. London-based Property Partner is aiming to lower these obstacles to those who may be interested in this type of investing.
Daniel Gandesha, who previously headed the office for investing in startups at telco BSKyB and who founded the startup, says that he decided to create the business out of his own negative experience. You can invest in property if you have the money or connections, but potential investors frequently must contribute significant funds up-front and they do not necessarily maintain control over their properties when they commit to an investment fund.
Once you sign up for the service, users can select investments and then monitor them as they change in value. Each month, users will receive rental income and can then sell their holdings whenever they decide to exit. The company says that everyone, down to the smallest investor, will have the option of exiting the investment at market value after 5 years.
There are several competitors out there, including Fundrise, Realty Mogul, CrowdStreet, and RealtyShares in this market, but they are based in the United States and appear to focus on the American market. Fundrise does not require a minimum fee, but the others stipulate that potential investors put in at least $5K and $10K if you go with Crowd Street. As opposed to the other services, Property Partner lets users invest for a minimum of £50.
When Property Partners launches (in the coming weeks, they say), they are planning to go with a commission-based model for raising revenue. The company says that they will take 2% from each initial transaction and then a 12.5% (+VAT) for advertising, letting, and managing the property.
Property Partners has not yet launched, but they already claim solid financial backing. Just last week, the startup announced that they had picked up £1.25 million from Octopus Investments, Seedcamp, and private investors. This latest round follows an unannounced £150K that the startup raised back in February 2014.