I have already written some stuff on Brickowner in the past. Brickowner got my attention on Seedrs, where they were raising funds. Meanwhile they successfully had two funding rounds in which I invested as well. So I am a (minor, 0.0001%) shareholder oft he marketplace. I tell you this for transparancy reasons. I will express my own opinion impartial.
What did Brickowner achieve so far?
Besides the two mentioned funding rounds there are already 4 projects financed, two are still funding at the moment, although one (Nash) will close imminently I guess. Yet 44 to 59 investors have participated in the projects and the investment sums were between GBP 35k and GBP 101k, relatively small. I already invested in some of those projects.
What’s the current project about?
The current project, Regent House, blasts the prior projects in terms of volume (1.7 Mio GBP) and expected yield (32.66%). The prior projects only filled very slowly, so how on earth shall such a big project be funded? I remind you that Brickowner does not originate the project itself, but works together with asset managers which want to open their projects to retail investors. This case is special as Brickowner provides its platform to a real estate developer and does the administrative task for him by handling the investments and client onboarding. This can increase growth drastically for Brickowner, if more such projects can be launched.
The project itself is a commercial property which will be converted into an apartment building (one to two bedrooms) with a retail space on the floor ground. The rebuild should take about 12 months. A part (1.7 Mio of 5.8 Mio GBP) is being financed through Brickowner.
What are the risks?
It should be clear that you don’t get 30% yield without risk in only 12 months (btw 3% comissions is deducted up front from your investment). Investors participate as equity investors through a SPV. So if there are problems, this will reduce the expected yield and it might turn in to a loss. There might be delays which means that your capital is bound for more than 12 months. A lot can go wrong (but it does not have to of course): Anticipated sales prices are too high, generally cool off of the property market etc.
As I see it, the rest of the needed capital is being raised with a senior bond which has a superior claim on the assets before the SPV investors are in the queue.
I have already invested in this project, knowing that I could lose money if all goes wrong. This has to be clear to everybody who considers to invest (and is applicable to investments in general). I don’t want to be a naysayer, but I find it crucial that the risks are understood (especially in this case). I believe in this project; this is why I put my money in there.
For new investors there is a cashback available. If you register through this link and invest at least GBP 1’000.- (does not matter if in one project or 10 different over time) you will get GBP 50 as a reward (I get a commission myself). If existing Brickowner investors ask themselves why they did not get a notice about this project from the platform. Easy answer: First the Brickowner people and involved parties will invest. Then it will be publicly announced. I like this mechanism as it builds trust (to me at least) if the people in charge are in the same boat with me (risking their own money).
Some months ago I introduced Brickowner to you through an interview with CEO Fred Bristol. At that point in time Brickowner was raising money on seedrs with an equity sale. Now the platform made some progress but needs another cash injection to develop further (I am myself a tiny minority shareholder), which presents an opportunity to get on board as shareholder as well. At the moment the funding is about 80 percent complete. If you decide to invest in some equity you need to keep in mind that this is a longterm investment with the possibility of a total loss. There is a lot of risk associated with start-up investment.
Ok, what does Brickowner actually do?
Different to other platforms investors get the chance to invest alongside large and institutional investors with a minimal investment of GBP 100. Normally such projects are reserved for the big hitters and the entry investment is mostly 25k at least. This is a whole new opportunity. Brickowner charges 3 percent up front plus an annual fee of 0.75 percent. This sounds like a lot, but given the several year term of these projects the initial fee can be split and assigned yearly which means that with a 4 year term the actual yearly management fee is about 1.5 percent. It is normal that such projects have some entry fees.
So far 4 projects have been funded and a fifth is coming soon
Not that much, huh? I agree, but Fred released a statement on that point on seedrs which I find very interesting and encouraging. He stated that they only want projects which match their criteria (quality etc) and that not every asset manager is compatible with their set of rules. They are setting up processes to scale the business in the future which should be very cost effective for investors. He reiterated that he and his team will favor fewer but great projects then a lot of them meeting not their standards. Interesting times lay ahead of us. The coming project is a bit different then the previous projects.
With this project you lend funds to a loan portfolio which helps real estate developers to finance their projects. The projects are secured with mostly first and second mortgages with maximum ltv’s of 67.5 percent. There will be an annual distribution of interest which amounts to 7.5 percent per annum (two year term, so 2 x 7.5 = 15% total yield expected). This project is therefor more like a bond, as we do not profit from an increase in price of the real estate. The projects are supervised by an experienced developer who will at least invest 10 percent alongside Brickowner investors in every project. There is a sign up bonus for new investors: You get GBP 50 if you sign up through this link and invest at least GBP 1k (I get a small provision on that, but it is of course free to you). Given the longer funding period, Brickowner is offering 3% cashback (p.a) on invested funds until the project is fully funded.
For me Brickowner is operating in a niche and seems to be a good alternative for retail investors to get a foot into institutional projects. What is important to me is that you make your own picture before you invest. In this special case this is more important to me then ever as I am involved with the platform (although only as a tiny shareholder).
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Again, currencyfair increases its welcome bonus to 45 Euro! If you transfer at least 1’000 Euro (or equivalent in any other currency) you will be credited 45 Euros on your account and your next transfer will be free of charge. Really nice in my opinion. How currencyfair works can be read here. To get the bonus, you need to register with this link https://www.currencyfair.com/?channel=R8YXD1. Now would be a very good time to try a new platform either in Europe or UK. You can see an overview of availabe cashback and bonuses here. A trick for UK Investors: You can pay in GBP, convert it to Euro or any other currency and then convert it back and withdraw it in GBP (used to work like that, but I can’t be sure 100% now). Same should work for EUR deposits.
An example for maximising your cashback
Mintos for example offers (only if you sign up through a referall link on this blog, see cashback offers) 1 percent cashback on your average investment amount for the first 3 months. If you transfer 1’000 Euro using currencyfair and invest the money on mintos, you will receive 55 Euro in total (45 plus 10). Really great opportunity.
Just be sure that you are exposed to exchange rate changes when you are leaving your local currency.
“Disclaimer: I have participated in the Brickowner seeding round on seedrs and therefor holding some equity (0.025%) of Brickowner. I guarantee to report objectively about Brickowner, but for transparency I decided to share this information with you. “
1) Could you tell me a little bit about the story behind Brickowner? When and by whom was the idea born to create a p2p platform?
Brickowner was founded in 2015 by myself, Fred Bristol, and Toby Stone. Since university I have invested and managed property, both in the UK and abroad. In early 2015 whilst I was researching and investing in property I saw opportunities for others to invest alongside me. Simultaneously Toby (co-founder) was looking for ways to save for a home purchase, with the return on cash from banks so low, his savings were depreciating relative to property. These two problems led to the idea for Brickowner.
After a bit of discussion and research, we found that such difficulties were a recurring problem experienced amongst our friends. Toby’s experience and work with start ups led to a discussion around the potential of crowdfunding and after being introduced to a number of these platforms, I realised that a similiar platform could help others save for property and invest alongside professionals. Obviously the property crowdfunding market has matured a lot since then.
2) The p2p/crowdlendling&funding market has gained traction during the last couple of years, do you think this will persist?
I think the growth of the sector is an indication that every day investors are looking for new ways to invest their money, after years of receiving savings returns that don’t beat inflation. Changes in technology mean that such investments are easier than they have been before and provide people with a level of control they haven’t ever been offered. If I logged into Brickowner now, I could tell where my money was invested, the fees charged and my projected return over the investment period, such transparency isn’t provided by banks and most large fund managers, due to the older technologies used and the disparity between the return they receive vs. the interest they offer.
Given the above, it is easy to see why the crowd-lending/funding market will continue to increase, if we compare the EU market to the US we still have a long way to go before our crowdfunding markets experience the same maturity. By 2025 crowdfunding is expected to increase by 300% globally, the EU will experience a greater proportion of that growth if we account for it’s size now when compared to the US and Asia. My view personally is that people will use a number of preferred and trusted platforms to invest in the future, moving away from a single savings account, with p2p/crowdlending/funding platforms meeting that need. Brickowner aims to become the trusted property investment platform in this regard.
3) You are raising some capital on seedrs. Will this be the last round, or can interested investors expect more rounds in the future?
The decision to raise money on the Seedrs platform was made because it allowed anyone access to an invest in our business, this is a principle we’ve applied to property investment and wanted to use in order to grow ourselves. We found quite often people who invested were passionate about our performance and really bought into our platform and vision.
If there is a need to raise further capital for Brickowner, we will likely continue to use Seedrs as a platform for this. There is likely to be another round after this present round. This will give people further opportunities to invest and support the business.
4) There are already other p2p platforms in your segment, such as property moose, property partner etc. Why is Brickowner better or how is it different?
I feel that Brickowner differentiates itself in a number of key ways:
– We have built our platform from scratch working with users to ensure that our platform is as easy to use as possible, we truly believe everyone should be able to invest in property and technology should support rather than hinder this.
– Unlike the other platforms you mention we are working with experienced property asset managers to source and manage the opportunities, thereby giving people access to property investment opportunities they wouldn’t otherwise be able to access.
– we are providing our users with a broad range of opportunities within different property sub sectors, not just residential
5) Congratulations to you for having funded your first project by investors some weeks ago. A second one is now in the funding phase. What can we expect in the next weeks?
Thank you! We are currently looking to work with our investors to ensure we are providing property opportunities that they want to support. This means that over the near term we will ensure that properties are sufficiently diverse to allow investors to spread their money between different investments and also find out what types of property interest them. Given the feedback so far it is likely that we will potentially look at professional HMOs (houses in multiple occupations), where a single home is rented to multiple professional tenants in the coming weeks. In the medium term we are planning to offer a number of commercial property developments as well as further residential opportunities.
As we work with some of the leading property managers in the UK, we are able to offer a wide variety of property investments with strong capital growth and income potential. The diversity of property offered is one of the key differences between our platform and others.
6) Are you happy with the speed the projects are filling? Are there any institutional lenders interested to invest via Brickowner?
Our projects are filling steadily now, and I am happy with the speed in which people are investing. We have been keen to ensure that new users have had a good investment experience. At present we are not speaking to institutions in terms of them using our platform. We are focussing on providing the best possible service to individuals. Other time we may also look at ways we could also incorporate institutional users for our platform.
7) When do you expect break even?
On current projections we are expecting to break even at the beginning of year 3, this obviously depends on a number of factors, including whether we feel it is in the best interest of our shareholders to delay break even in order to grow bigger quicker in a shorter timeframe.
8) Is there anything else you would like to let know my readers?
We are currently offering new investors £50 for their first £1000 (click link) invested, given that we have funded our first property, we will shortly close our second we wanted to show new users how easy our platform is to use! If your readers have any questions please contact email@example.com or visit the site www.brickowner.com