The House Crowd Returns and Review – My Experience

The House Crowd Returns and Review – My Experience

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As any wise investor should, I like to spread my money widely across different asset classes. Among other platforms, I use The House Crowd (THC) to invest in property. Below, I review the company and discuss the returns that I have made using them.

Short answer: I recommend using them but remain cognoscente of the risks of investing! Explanation below.

More p2p investing food for thought: RateSetter Review: How to Make 15% in 12 Months with Peer-to-Peer Lending

Who and what are The House Crowd

The House Crowd founder, Frazer Fearnhead, was a contestant on the BBC’s Dragon’s Den a few years ago. He has gone on to create a multi-million-pound property crowdfunding platform offering a range of products to investors and borrowers offering interest rates up to 12%.

It evolved around the concept of enabling anyone to be a landlord of sorts. A number of people would crowdfund the purchase of a property. The House Crowd managed everything physically, paying the investors in both rental income and capital appreciation.

While this helps smaller investors get their teeth into the asset class from £1000. Returns were in the region of 3% from rental income + any capital appreciation (which varies of course).

This could be considered a good investment.

However, my preferred option is to purchase a property myself instead, leverage a 75% LTV mortgage and supercharge the returns.

For this reason, I didn’t use The House Crowd in their infancy.

However, this changed when they introduced Peer to Peer lending.

Products The House Crowd Offer

THC have five main products to invest in at the time of writing. They are equity or debt-based investments with a minimum investment of £1000. Investor’s money is pooled together, and the returns split with THC taking their cut of course. Products available:

  • Peer to Peer lending
  • Property development investment
  • Innovative finance ISA
  • Auto-invest
  • Property equity crowdfunding

For reference, there is a decent summary of each product on their website here.

Alternatives to The House Crowd

There are credible (I’m told) alternatives to The House Crowd in the UK for property crowdfunding however, I don’t have personal experience with them. If you would like to do some digging, check these out:

FundingSecure offer returns of up to 16% per annum on more complex projects – if anyone has experience with them, I would love to hear your thoughts either in the comments or ping me an email.

My investment

As I’ve alluded to, I’m a fan of Peer to Peer investing. The returns are high and the risk is manageable (in my opinion).

So the nitty gritty:

I took on a 6-month loan secured with a 1st charge against 2 tenanted commercial units. The loan amount totalled around £1.5 million from all investors and offered 11% return per annum.

The supporting documentation all looked good and valuation reports reasonable.

I invested £12,000 to test the waters and waited (don’t invest what you can’t afford to lose etc).

Then what happened?

My returns

Without beating around the bush, the loan defaulted.

To be honest, I wasn’t expecting this to happen as all the documentation looked well researched. However, it did happen and it will most likely not be the last time it happens – this is investing not a savings bank account.

I followed the updates that The House Crowd posted on the website. These were pretty good considering the little information they can pass on for legal reasons with a loan in the recovery process.

Consequently, the commercial units had to be sold to repay the investors. A few months later I received around 60% of my capital back. Another few months later I received all of my capital back.

Additionally, I’m now awaiting the payment of my interest. The amount received will depend on the final sale price of the units. I’m expecting at least some interest, which is better than none considering the unlucky circumstances here.

The verdict

My loan defaulted, there’s no way to dress that up. To be honest though, I’m not annoyed because this is part of the risk any investor takes when they decide to invest.

I could take to the internet and write a terrible review about the platform because I didn’t receive what I might have been expecting.

But I’m actually impressed that considering the circumstances, I got all my capital back and likely some interest. I’ve been happy with The House Crowd’s communication and processes given this ‘worst case scenario’.

There has been nothing wrong with the company, just an unlucky investment which is part of the parcel when chasing higher returns.

As I like the website interface and way I was handled, I will be investing again with THC in the Peer to Peer realm and with their Auto-Invest product. If I find the time, I’ll be sure to let you know how I fair in round two!

Parting thoughts

I got unlucky in this instance, but I was pleasantly impressed with The House Crowd as a company. Some points to consider:

  • THC allows even the smallest of investors to own a share of a physical property via crowdfunding. However, you may find better returns owning a property yourself and leveraging a mortgage. Problems such as bad tenants will affect returns with either strategy.
  • Investing doesn’t always go to plan, no matter what platform or strategy you use.
  • Consider investing smaller amounts to test the waters and never with money you can’t afford to lose, or have tied up for longer than anticipated.

I hope this review helps you decide if The House Crowd’s platform is suitable for you. If you do decide to give them a go, I’d be most grateful if you might consider using my referral link here which will get you £100 free cashback.

Related: If you need to send money or pay overseas, you should be using Transferwise – I discuss my experience here.

Take care,

Dom Sign off

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