Shojin Property Partners secured funding targets of a combined £1.63M for two of its latest crowdfunded projects in Southend-On-Sea and Hampshire, reportedly attracted 38 investors. Southend-On-Sea was an equity raise (variable profit share) while Hampshire was a debt raise with a fixed return.
“Many investors are disillusioned with traditional buy-to-let investment, thanks to the government’s crackdown,” opined Shojin Property Partners CEO Jatin Ondhia. “Recent figures from UK Finance show that the number of accidental and first-time landlords buying new properties continues to drop, with 9.8% fewer buy-to-let mortgages completed in May 2018, compared with the same time a year ago.”
Planning permission has been granted, subjected to signing the Section 106 to demolish a derelict pub and neighboring fish and chip shop in Southend-On-Sea to build a five-storey, contemporary landmark building, comprising of 49 residential flats, two ground floor restaurants and basement parking. Shojin Property Partners noted that the Southend-On-Sea site occupies a prime location on the seafront with fantastic views over the estuary, close to the iconic 1.34-mile Southend pier where the Jamie and Jimmy Friday Night Feast is filmed and near where Jamie Oliver’s family restaurant, Oliver’s on the Beach, is located.
Shojin Property Partners has partnered with Beyond the Box Developments Limited, who purchased the main site in August 2017, to develop the site. Targeted to be finished in 33 months, with an expected Gross Development Value of around £22M and a targeted annualized return for investors is 26%, Shojin Property Partners has co-invested a percentage of its own funds to show its commitment to the project.
The crowdfunding for a bridge loan secured against a detached, residential property in Hampshire reportedly took just five days to reach the funding target of £189,000, with 50% of the money raised from cash ISAs, which were transferred in using an IFISA. Over 80% of the investors in the project were UK-based, 20% being were international investors.
“We have seen a sharp increase in investors diversifying into property crowdfunding, having previously invested in buy-to-lets, together with cash ISAs,” observed Ondhia. “The returns for both are currently poor, with average buy-to-let yields in London for example, being between just 2-3% and cash ISAs offering no more than 1%-2% per annum.”
The property is currently vacant and in poor condition with the borrower obtaining the bridge loan in order to apply for planning permission for an enhanced residential development.
“Increasingly landlords are looking for alternatives that offer them hands-off and hassle-free investments with good returns. Many want to be free of the legal responsibilities and increased tax burdens associated with traditional buy-to-let,” said Ondhia. “Landlords are facing increased legislation and eroded profits, so it’s no surprise they are exiting the market.”
Shojin Property Partners investors benefit from a 1st charge secured against the property which has an existing use valuation of £400,000 (LTV 64%) plus a second charge secured against another property owned by the borrower, indicated the platform; investors can expect to receive a fixed return of 8% annualized with a loan term of 12 months.
“Since the launch of our crowdfunding platform, we have seen investors from different walks of life and across a broad age range, investing in our projects, from as little as £5,000. We now offer investors the opportunity to invest across the entire property spectrum,” added Ondhia. “Our success is down to the broad range of investment opportunities we offer, including hands-off buy to let, bridging loans, mezzanine loans and property development.”
Have a crowdfunding offering you'd like to share? Submit an offering for consideration using our Submit a Tip form and we may share it on our site!