Property Partner Review & How My Monthly Income Rose By Over 12,000% In A Year!

A review of Property Partner is long overdue for this blog. It’s finally here and the whole world is overjoyed, I’m sure.

Property Partner is a UK-based property crowdfunding platform which specialises in residential property. Backing the business is Index Ventures, Seedcamp & Octopus Investments

The idea is to allow investors to gain from the buy-to-let market with less hassle and less risk than buying directly.

The minimum investment is outrageously lower than buying a property outright using a mortgage, yet investors still benefit from the effects of leverage as most of the properties are geared.

The platform has recently branched into PBSA (purpose-built student accommodation) & commercial property for further diversification.

How does Property Partner work?

Listings are divided into shares and the monthly rental payments are actually dividends. This is because each listing is set up as an SPV (Special Purpose Vehicle); a standalone limited company which owns the property.

Subsequently, They describe their platform as “the world’s first stock exchange for residential property”. This hints heavily to the resale market where investors can buy and sell their shares, but more on that later.

There is a 2% fee for any purchase but no fees to sell. Rental income is paid monthly and accrues from the time that you make the purchase.

New listings appear on most Wednesdays & you can buy property at any time on the resale market.

New listings are the main attraction of the website. An example is below

property partner

Since summer 2017, any listing that yields less than 5%, automatically gets a top-up bonus to the 5% mark for the first 2 years. After the 2 years, the rental income reverts to the original calculation of gross rent minus costs & service fee (2.51% per year in this case).

In the past, there have been other promotions such as double dividends for the first year which help to boost income.

In the resale market, you buy directly from other investors at a market price. Also, instead of buying immediately, you can place a bid at your own price and wait for a willing seller to be matched with you.

In terms of exit strategy, It’s strange how Property Partner works.

Resale market aside, investors also have an option to sell at market value after 5 years. For those that want to sell, Property Partner will make a new listing on the website selling the unwanted shares as a single block. If this is unsuccessful then they will sell the entire property externally.

It’s a shame that selling is considered after just 5 years in my opinion as I see property as a longer-term asset. Especially considering the cash flow it creates. Why anyone would want to sell after 5 years is beyond me. Aren’t properties meant to double in value every 10 years?

My experience so far

I entered the Property Partner ride back in February of 2016 with a £200 investment. My confidence in the platform was low but my desire to create a passive income stream was high.

Month by month I added to my portfolio of properties and watched the rental income grow. See for yourself:

Year

Month

Income

2016

Apr

£0.03

May

£0.12

Jun

£2.09

Jul

£1.73

Aug

£1.84

Sep

£1.87

Oct

£1.87

Nov

£1.87

Dec

£1.87

2016 Total

£13.29

2017

Jan

£2.25

Feb

£3.03

Mar

£3.57

Apr

£3.76

May

£3.59

Jun

£3.70

Jul

£8.84

Aug

£5.27

Sep

£5.59

Oct

£6.02

Nov

£6.78

Dec

£6.90

2017 Total

£59.30

2018

Jan

£7.13

2018 Total

£7.13

Grand Total

£79.72


By just contributing what I could afford, my monthly income rose by 12,433% in a year. It was 
3p in April 2016 and £3.76 in April 2017. Isn’t the income growth beautiful? Every month I benefit from compounding returns, unlike stock market dividend where the payout is every quarter, at most.

The rising income is impressive but it is important to put it into context. So far, I’ve spent £2403.44 on the platform. April 2017 to January 2018 is 21 months. That’s an average spend of £114.45 a month! easily manageable.

These days, I take advantage of the Auto-invest feature since the minimum deposit went from £50 to £250. Without warning might I add! Auto-invest allows me to continue to invest from £50 a month & allocates the funds against all new listings on the platform.

Auto-invest has 2 additional benefits. Firstly, far less chance of getting scaled back for an oversubscribed listing. Secondly, there is 5% interest on funds waiting to be used in the Auto-invest account!

My goal for 2018 is to reach the £10 a month mark which will be a great symbolic landmark. Of course, all of this will be reinvested into more purchases on the platform.

Performance

Let’s look at overall performance, keeping in mind a contribution of £2403.44

Property Partner

To begin with, the £161.38 only considers dividends, valuation gains and auto-invest interest. Interestingly, the combined value of promotions and discount on purchases in the resale market outweigh the 2% transaction cost for all purchases.

When I first joined the platform, expected returns were advertised at 13% pa. Since then, I’ve watched it dwindle to 7.2%! at least they’re honest.

I’m sure the returns would be higher if it was not for the Brexit referendum result. Soon after the referendum, the valuation slumped but has been on a slow, upward trend ever since.

The resale market has a lot to offer. Remember, market means market. There are some extremely juicy bargains waiting to be scooped up. Take a peak

property partner

As you can see, there are some properties trading at a massive 20% discount! Valuations take place every quarter by a RICS qualified Chartered Surveyor. I know of no other way to buy UK property at such large discounts – do you?

Why Property Partner is a winner

  • Effective way to gain exposure to geared UK property
  • Easy to diversify into multiple properties across the country
  • Resale market offers liquidity and opportunity to buy at a discount
  • Reasonable fee and no annual charge
  • Monthly income stream
  • Newer listings have strong yields
  • Auto-invest option offers 5% interest and low monthly commitment

What I dislike about Property Partner

  • Gearing enhances loses if house prices go down
  • Uncertainty over exit after 5% years
  • Property market has high tax burden
  • Relatively low yields from older listings
  • No shield from macroeconomic risk
  • Minimum spend (when not using auto-invest) increased from £50 to £250

So there’s my take on the Property Partner platform. Overall I think it is a great way to invest in property and I will continue to grow my position this year. However, like with any other investment, there is considerable risk to consider.

For more information, visit the FAQ section on the Property Partner website. This post has purposefully avoided tax issues as everyone has a different tax situation. Please check site disclaimer information.

 

2 Replies to “Property Partner Review & How My Monthly Income Rose By Over 12,000% In A Year!”

  1. Interesting investment platform. I will probably stick with REITs for now and our single family home for real estate exposure. With the new US tax package on top of a growing global economy, I think we will see inflation in coming years and I think real estate will be a good hedge. Tom

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