Post by j on Jul 18, 2014 17:50:42 GMT
Interesting email from THC this afternoon. What are everyone's thoughts?
Newsletter July 2014 - Important changes to The House Crowd
Hello **********
Ch ch ch ch changes...
Important news - please read this email carefully if you wish to invest or continue investing with us.
Contents of this email:
Changes in the law and property market
More choices for you
Changes to our investment policy - better returns for you
New exit policy
New website launch
Changes in the law and property market
As most of our members know we were the very first property crowd funding company in the world. Being pioneers means we didn’t have a proven business model to follow so we had create it as we went along to some degree. Some things have worked well (our buy to let model) and some things haven’t worked so well – our initial attempts at develop and sell at the low end of the market (though they were still profitable just not as good as we had anticipated).
However, two years later and things have moved quickly on from where we started.
Most significantly, there have been changes in the law that mean we need to alter the legal structure and the way we can raise money. We have been granted permission to operate as a crowd funding platform until March 2016 and are in the process of obtaining full authorisation to take us beyond that time.
We will now operate purely as a fundraising platform and all investments will be offered either by our sister company House Crowd Property Management Limited (and related SPVs) or pre-vetted 3rd parties who have undergone our due diligence process.
And as far as the market is concerned, prices have increased in greater proportion to rents so we need to adapt and also find ways to improve the returns and service we offer you.
We have been researching and developing different options, as well as asking our investors what they would be interested in.
More choice
This is a brief summary of how we have decided to change how the platform operates. The changes stem partly from changing market conditions and partly due to the feedback we have received from our investors.
Greater geographical spread - in addition to our core property offering in Manchester we will also offer property throughout Great Britain (and possibly, down the line, overseas)
More variety - in addition to our standard high yield buy to let purchases we will now offer:
short term development deals
higher value properties with lower yields but greater potential for capital growth
Student accommodation
HMOs (multi let properties)
Select 3rd party hotel room/care home projects
New investment options
- Please note: this is in relation to future projects and does not affect existing ones.
Two of the most important aspects for investors are returns and exit. We have improved both of these for you.
We will from now on be offering 2 basic investment models to choose from.
Profit share model
We will continue our joint venture model with all profits shared. However in order to provide you with attractive returns we will reduce our shareholding where appropriate.
Financial forecasts, issued with each investment, will detail estimated returns.
Due to rising property prices and the confusion it has caused with some investors, we will no longer be offering the fixed 6% a year dividend during the period of property ownership on new projects. Instead the net yield received should be as good or higher but will be variable depending on voids/ maintenance costs.
It is suitable for people who want a mixture of income and capital growth and are prepared to share in available profits without the certainty of a fixed return.
Income only (Loan Note) model
This has been designed for people who are interested in achieving as high a fixed return as possible. We will offer an income only model on certain properties.
This will pay a fixed annual return but investors will have no share in equity.
The rate will vary from project to project but will always be fixed and will always be clearly stated. Interest will be paid out quarterly or bi-annually depending on the deal.
Exit strategy
We are giving you, the shareholders, more control. We will state a Minimum Term for each new investment.
After the expiry of that Minimum Term, we will provide an annual valuation. You as a shareholder will be able to vote once a year as to whether you would like to sell at that price or not. If there is a 51% vote in favour, the property will be put on the market for 4 months to see if it can achieve that price (if not it will be removed until the next year).
We will also be creating an online forum (within the next 6 months) where you may sell your shares to other investors before the property is sold.
We hope this will deal effectively with the concerns some investors have about liquidity.
New website
Alongside the changes is the introduction of our new website.
It has so far taken 2 months longer than was promised but is now almost ready - we think/hope/pray.
We hope to get it on-line in the next few days. It looks fab and we have been over it more times than I care to think about but it will inevitably still have some typos, errors and teething problems so please bear with us.
If you spot anything you think needs correcting, please email Clarissa to let her know… And we would like to get your feedback anyway, so let us know what you think.
Enjoy the sunshine whilst it lasts!
Frazer Fearnhead
Managing Director
Newsletter July 2014 - Important changes to The House Crowd
Hello **********
Ch ch ch ch changes...
Important news - please read this email carefully if you wish to invest or continue investing with us.
Contents of this email:
Changes in the law and property market
More choices for you
Changes to our investment policy - better returns for you
New exit policy
New website launch
Changes in the law and property market
As most of our members know we were the very first property crowd funding company in the world. Being pioneers means we didn’t have a proven business model to follow so we had create it as we went along to some degree. Some things have worked well (our buy to let model) and some things haven’t worked so well – our initial attempts at develop and sell at the low end of the market (though they were still profitable just not as good as we had anticipated).
However, two years later and things have moved quickly on from where we started.
Most significantly, there have been changes in the law that mean we need to alter the legal structure and the way we can raise money. We have been granted permission to operate as a crowd funding platform until March 2016 and are in the process of obtaining full authorisation to take us beyond that time.
We will now operate purely as a fundraising platform and all investments will be offered either by our sister company House Crowd Property Management Limited (and related SPVs) or pre-vetted 3rd parties who have undergone our due diligence process.
And as far as the market is concerned, prices have increased in greater proportion to rents so we need to adapt and also find ways to improve the returns and service we offer you.
We have been researching and developing different options, as well as asking our investors what they would be interested in.
More choice
This is a brief summary of how we have decided to change how the platform operates. The changes stem partly from changing market conditions and partly due to the feedback we have received from our investors.
Greater geographical spread - in addition to our core property offering in Manchester we will also offer property throughout Great Britain (and possibly, down the line, overseas)
More variety - in addition to our standard high yield buy to let purchases we will now offer:
short term development deals
higher value properties with lower yields but greater potential for capital growth
Student accommodation
HMOs (multi let properties)
Select 3rd party hotel room/care home projects
New investment options
- Please note: this is in relation to future projects and does not affect existing ones.
Two of the most important aspects for investors are returns and exit. We have improved both of these for you.
We will from now on be offering 2 basic investment models to choose from.
Profit share model
We will continue our joint venture model with all profits shared. However in order to provide you with attractive returns we will reduce our shareholding where appropriate.
Financial forecasts, issued with each investment, will detail estimated returns.
Due to rising property prices and the confusion it has caused with some investors, we will no longer be offering the fixed 6% a year dividend during the period of property ownership on new projects. Instead the net yield received should be as good or higher but will be variable depending on voids/ maintenance costs.
It is suitable for people who want a mixture of income and capital growth and are prepared to share in available profits without the certainty of a fixed return.
Income only (Loan Note) model
This has been designed for people who are interested in achieving as high a fixed return as possible. We will offer an income only model on certain properties.
This will pay a fixed annual return but investors will have no share in equity.
The rate will vary from project to project but will always be fixed and will always be clearly stated. Interest will be paid out quarterly or bi-annually depending on the deal.
Exit strategy
We are giving you, the shareholders, more control. We will state a Minimum Term for each new investment.
After the expiry of that Minimum Term, we will provide an annual valuation. You as a shareholder will be able to vote once a year as to whether you would like to sell at that price or not. If there is a 51% vote in favour, the property will be put on the market for 4 months to see if it can achieve that price (if not it will be removed until the next year).
We will also be creating an online forum (within the next 6 months) where you may sell your shares to other investors before the property is sold.
We hope this will deal effectively with the concerns some investors have about liquidity.
New website
Alongside the changes is the introduction of our new website.
It has so far taken 2 months longer than was promised but is now almost ready - we think/hope/pray.
We hope to get it on-line in the next few days. It looks fab and we have been over it more times than I care to think about but it will inevitably still have some typos, errors and teething problems so please bear with us.
If you spot anything you think needs correcting, please email Clarissa to let her know… And we would like to get your feedback anyway, so let us know what you think.
Enjoy the sunshine whilst it lasts!
Frazer Fearnhead
Managing Director