|
Post by investorl on Jun 11, 2016 9:05:46 GMT
I'm looking for new p2p sites and PM looks great. But after about hour of searching here on forum and on the PM site I didn't find an answer to my question how exactly are interests paid.
Can someone please fill/correct following statement?
- I will receive 3% until money for property is collected (pre-funding period) - after that there is a period with 0% interests until property is purchased - when property is purchased, is interest still 0% until the property has any tenants?
- when property is rented, there is "year term" information, for example 3 years. What is "projected rent"? Is it an interest for each year when property is rented?
- and after this period, the property is sold or the rent can be extended?
- and if property is sold, is there another interest from this sale or only principal is returned from this amount?
- and "Projected return" value is calculated from what? Originally I thought that this is accumulated "projected rent" for 3 years but it seems that it's not true.
Thanks
|
|
ben
Posts: 2,020
Likes: 589
|
Post by ben on Jun 11, 2016 9:45:54 GMT
PM is pretty simple to use and I am currently avering about 5.5% of all money invested, this includes a few that are not fully tenanted, 2 waiting to be tenanted ie recently acquired. In answer to your questions
- I will receive 3% until money for property is collected (pre-funding period) - If you invest in the one needing funding now you recieve 3% until it fully funded which comes out of PMs fees.
- after that there is a period with 0% interests until property is purchased - This does not usually take that long once fully funded.
- when property is purchased, is interest still 0% until the property has any tenants? - correct
- when property is rented, there is "year term" information, for example 3 years. What is "projected rent"? Is it an interest for each year when property is rented? - this is what the expected rental yield would be if it was tenanted after fees
- and after this period, the property is sold or the rent can be extended? - After the 2/3 years the website states there will be a vote to decide if the property is kept or sold.
- and if property is sold, is there another interest from this sale or only principal is returned from this amount? - You get back a percentage of the sale after fees, depending on percentage you put in, so if the property sells for less then the orginal value you may lose capital.
- and "Projected return" value is calculated from what? Originally I thought that this is accumulated "projected rent" for 3 years but it seems that it's not true - Combination of any potential profits and rental yield over the time i.e if the property does what it expects.
Personally I am using sites like PM instead of having a rental BTL. I expected it get slightly lower returns then if I got a BTL personally but a lot easier, at the moment my rental yield is better then I got with my previous BTL property.
At the moment I am quite happy with PM and are happy to increase my investment.
|
|
pom
Member of DD Central
Posts: 1,922
Likes: 1,244
|
Post by pom on Jun 11, 2016 11:21:28 GMT
I think you need to stop thinking about it as interest - because it isn't. PM is crowdfunding not p2p, and these are shares not loans. Interest implies a steady rate of return which you are very unlikely to get, returnd are projected and will vary with the performance based on occupancy and costs incurred. The 3% is actually cashback, the share of the rent is paid as dividends and the return of capital will be a capital gain/loss depending on how well they do at the end (first ones will reach end of the term in the autumn). Which can all potentially make a big difference to your tax exposure so you should probably be sure you understand the differences before you invest. Apart from that Ben's already answered your questions so I don't need to
|
|
|
Post by investorl on Jun 11, 2016 12:01:36 GMT
ben Thank you for all answers. It's much more clear now. pom You're right. Currently I tried a lot of P2P investments and because of that I treat PM also as investments. But because of diversification I'm going to try something else too. It's interesting point of view to consider PM as classic BTL rental. I didn't see that before but you're right. Thanks to both of you for your answers!
|
|
adrianc
Member of DD Central
Posts: 8,877
Likes: 4,754
|
Post by adrianc on Jun 11, 2016 16:07:06 GMT
It's interesting point of view to consider PM as classic BTL rental. I didn't see that before but you're right. Indeed. That's exactly what it is. You're buying shares in a company which owns a BtL property. The rent that's paid by the tenant has expenses subtracted, and is then distributed to shareholders. When all the shareholders agree, the property's sold, and the sale price distributed. Look also at THC - the big boys, they pay annually, rather than monthly - and PP - about whom I know next to nothing. There may be others.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Sept 24, 2016 10:36:06 GMT
So that I'm clear (I seem to be asking newbie questions today...) I should consider an SPV here just like a listed company*... any increase in value when the house is sold is passed along via the capital repayments but then subject to CGT, any 'income' in the mean time (i.e. rent) is via dividends and therefore subject to the same allowances / taxs as any other share?
(* I get that there is no simple way to 'sell' shares before maturity currently)
Thanks
|
|
littonowl
Member of DD Central
Posts: 398
Likes: 355
|
Post by littonowl on Sept 24, 2016 10:47:38 GMT
So that I'm clear (I seem to be asking newbie questions today...) I should consider an SPV here just like a listed company*... any increase in value when the house is sold is passed along via the capital repayments but then subject to CGT, any 'income' in the mean time (i.e. rent) is via dividends and therefore subject to the same allowances / taxs as any other share? (* I get that there is no simple way to 'sell' shares before maturity currently) Thanks I'm told from communications with PM this week that the Secondary Market is imminent, so there soon will be a way to sell shares whenever you like.
|
|
ben
Posts: 2,020
Likes: 589
|
Post by ben on Sept 24, 2016 11:01:36 GMT
The secondary market is coming soon although with how quick properties have been released lately I am not sure how many people will be buying on the secondary unless they can get a decent discount. I doubt there will be too many buyers looking to buy at the current valuation.
|
|
littonowl
Member of DD Central
Posts: 398
Likes: 355
|
Post by littonowl on Sept 24, 2016 11:08:40 GMT
Depends, Ben. Being new to PM, I'm keen for the SM to open up, so that I can diversify. Saying that, I'm also a tight Yorkshireman, so won't pay over the odds! I guess/hope supply and demand will help keep prices realistic, and allow the SM to flourish - no reason I can really see why it shouldn't.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Sept 24, 2016 11:31:51 GMT
The secondary market is coming soon although with how quick properties have been released lately I am not sure how many people will be buying on the secondary unless they can get a decent discount. I doubt there will be too many buyers looking to buy at the current valuation. Due to property prices rising or other?
|
|
pom
Member of DD Central
Posts: 1,922
Likes: 1,244
|
Post by pom on Sept 24, 2016 11:33:12 GMT
So that I'm clear (I seem to be asking newbie questions today...) I should consider an SPV here just like a listed company*... any increase in value when the house is sold is passed along via the capital repayments but then subject to CGT, any 'income' in the mean time (i.e. rent) is via dividends and therefore subject to the same allowances / taxs as any other share? (* I get that there is no simple way to 'sell' shares before maturity currently) Thanks Yep Except for the PMF deals which are loans (seeing as your original qn got rather skipped over in SM discussion!)
|
|
pom
Member of DD Central
Posts: 1,922
Likes: 1,244
|
Post by pom on Sept 24, 2016 11:38:11 GMT
The secondary market is coming soon although with how quick properties have been released lately I am not sure how many people will be buying on the secondary unless they can get a decent discount. I doubt there will be too many buyers looking to buy at the current valuation. Due to property prices rising or other? The properties have all been bought at a discount compared to the valuations. - so that plus any other rises will make things interesting. What we don't yet know is whether PM will use the purchase price or the current value as the "par" value before allowing discounts/premiums. If they start with original cost then rather than looking for a discount it may be more a case of looking for a not too extreme premium. If the starting point is current value then they'll pretty much have to be discounted to not hammer future yields too much.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Sept 24, 2016 11:42:49 GMT
Thank you pom for spotting the question. Whilst am I on a roll (bread or otherwise...) I can see that PM first 'sale' is coming up soon. Am I correct in the view that aside from dividends, this will be the first return of cash to people since the site went live? I've seen the PM seems to be more yield and less CG focussed, which sounds good to me (got to use up that divi tax allowance some how Is it consistent in the length of time of it's properties planned periods? Has there been any material impact from Brexit on the market here? I would assume being mainly non London it would be minimal but thought I should ask.
|
|
pom
Member of DD Central
Posts: 1,922
Likes: 1,244
|
Post by pom on Sept 24, 2016 12:28:21 GMT
Thank you pom for spotting the question. Whilst am I on a roll (bread or otherwise...) I can see that PM first 'sale' is coming up soon. Am I correct in the view that aside from dividends, this will be the first return of cash to people since the site went live? I've seen the PM seems to be more yield and less CG focussed, which sounds good to me (got to use up that divi tax allowance some how Is it consistent in the length of time of it's properties planned periods? Has there been any material impact from Brexit on the market here? I would assume being mainly non London it would be minimal but thought I should ask. Yep everything so far has been just dividends... Not sure what your 2nd question was meant to be? Who knows?! Nothing I've noticed anyway.
|
|
adrianc
Member of DD Central
Posts: 8,877
Likes: 4,754
|
Post by adrianc on Sept 24, 2016 14:53:05 GMT
So that I'm clear (I seem to be asking newbie questions today...) I should consider an SPV here just like a listed company*... As a private limited company, not a publicly listed one. Because that's exactly what it is. A limited company, in which you own shares...
|
|