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CrowdProperty Opens Up On Its Performance
We have some rare information about CrowdProperty‘s performance and it looks like it is finally opening up, allowing a wee bit of analysis of some the risks.
This is great for me, because I've suspected that this is one of the rare P2P lending sites that is both secretive and yet – probably – very good at what it does. A rare combination, since we have already seen that secrecy is usually a bad sign for lenders.
How secure are CrowdProperty's loans for lenders?
CrowdProperty, which specialises entirely in property development loans, now reveals three ratios that are useful for lenders in assessing the basic security of their loans, i.e. how likely are they to recover their money (plus interest)?
Firstly, CrowdPropertyhas states that lenders have lent over £23 million and that the expected sale value of all the developments will be £63 million, based on RICS valuations – which is an important standard.
As usual for this kind of lending, loans are granted to the developers in tranches, with each tranche of the loan paid out to the developers after they successfully complete each stage of the development. The average initial loan has been just 64% of the initial property value.
When you add on interest costs, which roll up throughout the development, the total that the borrower needs to repay at the end is typically under 60% of the expected sale price.
All these ratios, I can tell you, are very good and far from standard in P2P property development lending.
Bad-debt history
CrowdProperty's figures on bad debts are a little ambiguous, and I suspect it is garbling standard terminology. However, there have been no loans that have lost money and none are currently expected to.
Just three loans out of 51 have fallen several months late so far. This is reassuring; I would probably have expected more, although without more detailed information it is uncertain.
Interest and loans paid
It's good to see that £800,000 has already been paid in interest to lenders, who earn 8%, along with over £8 million of loans. Without more details, it's difficult to say much more about that figure.
CrowdProperty is not listed in our comparison tables, because it has not provided the detailed information and interview sessions that we require from all P2P lending sites in return for a listing.
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