The main reason I had never invested in property before was simply the cost of investing was too high. I guess this is the same for many people; well that and the hassle that would come with being a landlord. Now I have found a way which means anyone can invest with relatively little money and hassle – Crowdfunding! This seems to have been gathering ground over the past year or so and it is now possible to buy shares in buy-to-lets from just £50. All you do is sign up to the crowdfunding website, deposit some money and choose a house to invest in. Someone else lets it and deals with all the hassle for you.
The two companies which I prefer so far are Property Partner and The House Crowd. Property Partner has properties in and around London and you can invest from £50. They pay a dividend each month and you can also sell your shares in the houses through their exchange to cash in capital gains. The House Crowd seems to focus on higher yield properties up north but requires minimum investments of £1000. Both seem like a great entry into rental property as you don’t have to be hands on and the investments are much cheaper than going it alone.
So is crowdfunding the best way to invest in property. Well if you can afford to buy lots of properties then you would probably get better returns going it alone. As you wont be getting a mortgage for your shares you wont be making use of the most powerful part of property investing and that is leveraging your money. Basically leveraging lets you make a better return on investment. This leveraging principle is explained very well in Simon Zutshi’s Book Property Magic where he also describes how mortgages make for more tax efficient investments.
If you have ever wanted to get into property then the crowdfunding route seems like a great starting point. You can invest less, have less hassle and diversify much more than if you were to go for the conventional route.