P2P Property Lending

  • Crowdsourcing system for property investing
  • Property is used as collateral against the loan
  • Loan is locked up for the term

I have heard of Property Bridges before but never really looked into it until last weekend. I started reading through their website and I asked the meetup group members if any of them had any experience with this company, there were no replies unfortunately. I’ve always been interested in purchasing property for either buy-to-let or flipping it (fixing it up and selling it). I think this may be a good alternative to the risk involved in buying property outright.

Property Bridges is a crowdsourcing site that brings together property developers and lenders. They currently focus on residential properties in Ireland. It was founded during the recession when developers were unable to get loans from the banks so they had to turn to other avenues in order to keep projects moving.

When a developer submits a loan request to the property bridges company, the loan is scrutinised and other due diligence is performed on the developers. If they feel the loan is worth backing then they will add it to their website in order to get people like you and I to loan money.

Individual loans can be as low as €500 or up to €100,000. What I like about this Property Bridges is that the property is used as collateral against the loan, so if the developer does default on the loan, the property is seized and sold. Of course, this is still not a risk-free investment, if property prices drop then the property may not be able to be sold for the amount of the loan. The maximum loan to value ratio they allow is 70%, meaning that the developer must put in at least 30% just to get started. This would give the property 30% equity immediately. Should the project run over-budget, it is up to the developer to fund the extra budget.

The disadvantages is that your money is locked up for the term of the loan. Unlike the other Peer-to-Peer (P2P) lending platforms that return the loan on a monthly basis, this platform will return your money plus interest at the end of the loan term.

I am going to give this a try to see if I can get the returns that they boast; 8%+. I believe this would be taxed as income which would mean getting hit with a 40% bill, + PRSI + USC charges 🙁 It really should be capital gains tax but P2P lending does not fit into that category. As you can probably tell from my tone, I really don’t like this because we take all the risk of investing but only pay tax on profits, we cannot write off loses.

Needless to say, do your own due diligence on this, get financial advice before investing in anything. I am not a financial adviser nor do I give advice in any fashion.

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  1. According to alternative finance research company AltFi, the largest P2P lenders still dominate the market. Zopa still has just under a 50 per cent market share in consumer lending, followed by RateSetter, with about one-third of the market. Funding Circle dominates in business lending, with a market share of around 71 per cent, while Lendinvest has a two-thirds share of the property lending market.

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