The House Crowd Investor Interview

This is part of my The House Crowd Series, where I explore the crowd-funded property investment business.

Previous posts in the series:

Crowdfunding in Property through The House Crowd – Part 1

Crowdfunding in Property through The House Crowd – Part 2

Part 3 – Choose the Investments With The House Crowd

Where’s there’s muck there’s brass – Investing in Property Development with the House Crowd

This time I’ve interviewed a friend of mine, David, who has been investing with The House Crowd for a few years, even before I had heard of it. If you have any questions about The House Crowd, leave a question below or email me at adam AT MagicalPenny.com and I’ll get them answer.

Here’s David’s answers:

What attracted you to The House Crowd?

I was in my first year of university, looking for a way to save excess student loan.

I was interested in investments generally, but didn’t really know where to start.

Hours of trawling through Google results led me to a few crowdfunding sites, and The House Crowd stood out as the underlying asset for two main reasons.

Property – seemed less risky than some of the other crowdfunding offerings (personal loans, start-up companies…)
Dividend yield – seemed rather good to me at 6%. *Can be even higher dependent on project

What do you look for when choosing the projects?

When I first started investing, there was only one type of project – the equity share in an underlying property, with rental payments as dividends and potential capital growth once the property is sold.

Now there are The House Crowd projects linked to developments and development bridging loans, and these tend to have a shorter and more definite term (typically 9-12 months).

Because they’re deemed higher risk, the interest is quite high too (9%+). The House Crowd performs all necessary due diligence, and I trust that they have made sensible judgements.

There is a lot of literature you can trawl through for each deal for extra peace of mind.

I suppose I ask myself

If the developer defaults, could the underlying property be sold quickly enough to return investors’ capital?

And the answer is usually ‘yes’!

Have you cashed out or do you reinvest?

Although it’s tempting simply to spend your dividend and interest payments, I try to retain the cash to invest in new projects.

This sort of compound return is the only way to accumulate in any meaningful way over the long term.

I imagine people with vastly greater sums with The House Crowd than me are able to draw a pretty serious income from their investments.

The government has brought in the ‘Innovative Finance ISA’, so once The House Crowd gains regulatory approval, we should all be able to access these returns completely free of tax. I think that will be enormously attractive to long term savers and investors.

Any surprises with investing with The House Crowd?

Not really – and certainly nothing negative.

I suppose the greatest surprise has been how well The House Crowd has grown and developed its offering over the five years that I’ve been involved. The company itself has had a few share issuances, and I have such faith in the idea that I’ve invested in that too. I think this type of investment will gain enormous interest, once the concept has reached this country’s mass of savers.

Banks’ deposit accounts generally pay very little interest, and investment managers are often expensive and subject to high minimum investment criteria.

Property is popular and this is an accessible way to gain exposure.

The greatest surprise – I hope – is how disruptive this becomes in the investment and savings market.

Thanks David for sharing his thoughts on The House Crowd.