A question from an intrigued potential investor was sent into Bob Quinn from The Money Advisors which was published in last week’s Sunday Independent. See the question and response below as well as our comments.
QUESTION: I recently came across a company called Property Bridges which sells itself as a peer-to-peer investing platform. Like many, I’m attracted to the idea of investments linked to property but what’s the catch?
PROPERTY BRIDGES: Thanks for your interest Amelia. We are delighted that you are attracted to our investment opportunities and we can tell you, there is no catch.
BOB QUINN: The Irish love affair with investing in Property needs to stop. I’ll sum up the problem in one sentence: there are too many fingers in the pie.
PROPERTY BRIDGES: It can be a love affair Bob, but what other options do we have? Stocks are at all-time highs and we are getting nil on our savings. We like physical assets such as bricks and mortar as an investment, we know property and are comfortable with it as an asset class.
BOB QUINN: Let’s list them: the estate agent, the solicitor, the seller, the buyer, the lender, the ECB, the insurance company, the letting agent, the tenant, the accountant, Government, Revenue, tradesmen and the Residential tenancies board. If there is a breakdown with just one of these, your investment becomes too much like hard work.
PROPERTY BRIDGES: Investing in property can be hard work. But with Property Bridges, our team does all the hard work, so you don’t have to. Just invest with the click of a button.
BOB QUINN: By investing in Property Bridges, you do not have to deal directly with most of these parties but as still joining the ranks of the property speculators.
PROPERTY BRIDGES: Not technically correct Bob. We lend funds to developers who pay a fixed return. Our funds are secured by first charge over the property or site and we only lend up to 70% loan to value. Most of the upside or downside in the price movement is shouldered by the developer as they are taking the biggest risk. We accept if the sales value decreases by 30%+ investors are likely to lose some of their money. Given the supply/demand imbalance, the lack of funding for development, the stringent mortgage rules and the general market fundamentals, we rate the chances of a big price shock to the downside as extremely slim.
BOB QUINN: The difference is you have no control over what type of property your money is invested in or where.
PROPERTY BRIDGES: Actually Bob, our investors have full discretion over what type of property they invest in and what location to invest in.
BOB QUINN: Property Bridges has two full pages of risks.
PROPERTY BRIDGES: Very true Bob. We believe it is very important for investors to be fully informed of the potential risks before they invest. Our team works extremely hard to mitigate the risks associated with property finance but it’s impossible to eliminate all risks. We believe our returns of 8% per year are very attractive and compensate the investor fully for the risks involved.
BOB QUINN: To be fair to the people behind the company, they give an honest account of the risks associated with the type of investment.
PROPERTY BRIDGES: Thanks Bob. Investors can read our full risk warning here.