Property Moose Review
** Property Moose review updated September, 28th 2018 **
Property Moose is currently in the midst of changing its business model. The previous model whereby investors purchased shares in each property and paid monthly dividends is being discontinued. All properties are being revalued at a four-week sale price to create a final share price to be held within a new PLC which will hold all of the properties. All investors who opt to stay invested will receive allocations of shares within the new fund. The share price will be valued against the valuations, costs, and revenues generated by the portfolio of properties. I expect the fund to operate more like a REIT rather than a peer to peer model where investors will receive distributions in the first quarter of 2019.
Once all properties have been transferred to the new company, Property Moose will attempt to acquire mortgages on the portfolio with a maximum loan to value of 50%. These funds will be used to pay out investors who wish to exit their investments and also to acquire new properties for the portfolio.
My personal thoughts are that the situation isn’t ideal. But after sitting down with Andrew Gardiner, CEO of Property Moose, it appeared the original business model wasn’t working and Andrew and his team figured out the best possible long-term solution of moving all properties into a single PLC portfolio. This solution was voted on by investors and received a 99.48% majority.
For those looking to exit early, you will likely be disappointed as the values of the new shares may lead to a capital loss.
I’m not a fan of REIT style funds but I have faith in Andrew that he is acting in the best interests of his investors which is why I’m considering remaining in the new PLC.
You can read my original Property Review below. This Property Moose review will be updated once the new fund is finalised.
Property Moose was founded by James Cadbury, the great, great grandson of George Cadbury, the co-founder of Cadbury Chocolate. Property Moose was founded as a way for investors to own pieces or shares of property without the hassles of individual ownership or landlord headaches. Property Moose has recently changed its strategy and now offers loan notes.
My December 2018 Allocation: Unchanged
My current annual rate of return: 2.21% (Net return before taxes)
|Est. Annual Yield:||2% - 5.8%
|My Risk Rating *:|
|Loan Security:||No loans. Investors own property shares|
|Provision Fund:||Landlord insurance, 1% of purchase price for future expenses|
|Investor Fees:||5% acquisition, 15% profit share, £30 accounting & governance|
|Time to Become Invested:||Slow|
|Time Needed Managing:||Low|
|Lending Agreements With:||No loans. Investors own property shares|
|Sign Up:||Sign up for an account|
* This opinion risk rating factors in types of loans offered, interest rates, platform history, default numbers and my own investing experience. My risk rating explained.
Property Moose – The Important Info:
- You own shares in property via an SPV company
- Most properties owned outright; no mortgages
- Diverse property locations
- Easy to use website
- Instant debit card deposits
- Good staff communication
- Dividend yields can vary widely by property
- Some properties have performed poorly because of tenant issues and vacancies
- Some note loans are second charges
- No secondary market for buying and selling
- End of term values are speculative
Property Moose is an equity site rather than a traditional peer to peer lending site. Investors own shares in properties that are held for a period of two to three years. Investors receive a share in any monthly rents which are paid as dividends and also receive a share of any net profits if the property is sold. Property Moose is now offering loan notes rather than property shares.
I’ve felt some of the RCIS valuations on previous property offerings property valuations were overly optimistic, so due diligence was key. The secondary market for buying and selling property shares was removed on February 28th, 2018. Property Moose is a long-term investment and even though you’re investing in property and loans, and there are risks involved.
Read more below in my exclusive Property Moose review.
Property Moose Review: My experiences so far….
I have been investing in Property Moose since June 2015 and so far my experiences have been mixed. My biggest issue is some of the investments have underperformed yield wise due to low tenant occupancy rates. I had no success selling unwanted shares on the defunct secondary market and if I could turn back time, I would have avoided the poorly performing multi-occupant HMO properties. If only I’d finished that crystal ball I’d been building! Some of my older investments are in the process of being evaluated and placed for sale so time will show if they were wise investments or not.
Now the company only appears to be offering secured second charge loan notes which I wouldn’t invest in.
What Is A Property Moose?
Property Moose used to locate investment properties, negotiate a purchase price and offer investors shares in the property. Each share cost
£500 £10 (since Jan 2016).
As a bonus, money pledged to fund a property received 3% annual interest. This “dead money time” interest was nice because Property Moose houses can take time to fully fund.
After a property was acquired, Property Moose arranged management and collected rental payments for a fixed term (usually two to three years). After the term is over, Property Moose manages the sale of the property and distributes any proceeds / profits among investors after expenses are paid.
I doubt Property Moose will continue to offer buy-to-let properties because of the headaches that have accompanied the lower income tenants. The Moose will offer lenders development loan notes similar to companies like Lendy and Funding Secure.
When Did Property Moose Launch?
How Do I Sign Up?
Click here to open an account. (This is a referral link which costs you nothing but pays me a small referral fee. By signing up for accounts via my website, you enable me to continue bringing you new company reviews.)
Who Can Sign Up?
UK residents or non-residents who have a UK bank account.
What’s The Signup Process Like?
Plain and simple. They run the usual i.d. check, no additional identification needed. They follow up with a friendly welcome phone call which is the perfect time to ask any questions you may have.
What’s The Minimum Deposit / Investment?
Debit Card Deposit: No Minimum
Loan Notes: £100 minimum
Are They Regulated?
Yes, by the UK Government’s Financial Conduct Authority #574048. FCA regulation is nothing like the FSCS (Financial Services Compensation Scheme) which covers consumers when they deposit money in banks. The FCA does have the ability to pursue criminal action against companies it finds are in violation of its standards, but it’s not a government entity and its funded by the very companies it regulates.
How Much Interest Does Property Moose Pay Lenders?
Loan notes pay lenders 8%+ annual interest. On share owned, Property Moose pays monthly dividends on collected net rent. Dividend yields vary depending on the property. Some are as low as 1% while others are as high as 8%. This yield is affected by rental occupancy, delinquent rent payments and incurred property repair expenses and taxes. Investors who pledge money towards funding a property that has yet to complete, receive a 3% annual return.
Here is an example of how Property Moose used to estimate a properties returns and costs:
What Are the Fees?
In March 2018, Property Moose sent out an email stating the company was now “fee free”. I’m still unsure what fees have been removed but when I learn more, I will update this page.
On the older property offerings, these were the fees:
5% Acquisition fee is calculated on the purchase price. According to Property Moose’s website:
The earlier you invest, the lower the fees are!
Our investors receive a daily cash bonus on your investment from the day you invest until the day we purchase the property. This is calculated at 3% per annum and is paid to you with your first rental payment paid as reduction of our 5% fee. This is to encourage our members to get behind our properties early to benefit from the bonus and to fund properties quickly. Our costs are reduced if a property funds quickly (less marketing!), so we pass the benefits directly onto our investors.
Any fee reduction is helpful since fees destroy returns.
15% Profit Share fee is calculated on the net price. This fee is now included on the Data & Calculations page.
10% + VAT Property Management fee. This isn’t really a Property Moose fee but something you should be aware of. This is a standard property management fee.
£18 accounting and £12 corporate governance fees. These newly added fees will be included on SPV’s 59 and newer and are total amounts levied on each property split between lenders based on their owned shared amounts. For example, if a property is £100,000 and you own £1,000 in shares (1% of the property), your fee share would be 30p or 1% if each of the accounting and governance fees.
How Long Is The Investment Term?
Property shares were for two or three years, at which point investors vote on the exit strategy. In most cases, investors are voting to sell the properties. Loan note terms are 12 months and longer.
What Security Does Property Moose Lend Against?
Property shares are secured by the properties themselves while loan notes security varies but tend to be second charges placed on the property. I personally won’t invest in second charge loans as default recovery is improbable.
What Are The Main Risks?
Company Failure: If Property Moose fails, there are many unknowns as to how lenders would really fare. Since investors own property directly within individual limited companies, in theory, a company failure wouldn’t be catastrophic since the investors would still own the properties. But it would create a headache in the administration department as to how the properties would be managed and sold at the end of the fixed term. Let’s hope Property Moose doesn’t fail.
Tenant Defaults: If tenants don’t pay rent, then investor returns would decline. You rely on Property Moose ‘s ability to implement quality management and attract quality tenants. In October 2015, Property Moose claims 60% of purchased properties have retained existing tenants. It’s too early to tell the success rate of longer term rentals.
Laon Defaults: If borrowers don’t pay, default recovery can be lengthy and expensive. Some loans are second charges which can be are extremely difficult to recover.
Calculation Errors and the unforeseeable events: There are so many unknowns that go along with landlording. If the valuation is wrong or Property Moose miscalculates the expenses, investors may lose money on the resale. If a tenant destroys a property and hits the road for greener rental pastures, investors returns would shrink. Leaky toilets, holes in walls and bad plumbing are commonplace in the rental world.
Property Market Downturn: If the market turns south, property values could decrease and be worthless upon resale.
Too Sector Specific: Being 100% in the real estate sector is risky should a downturn occur.
Long Term: There’s no guarantee you will be able to exit your investments.
Is There A Provision Fund On Properties?
Yes. Remember provision fund expenses are paid by the investor so they do decrease your returns. Recently Property Moose has added the following provision fund expenses as part of its calculations:
- £450 for landlord insurance to cover boiler, gas, electric, plumbing and drainage
- 1% of property purchase price to cover unknown future costs and expenses
If the 1% costs and expenses fee isn’t needed, these funds would be added to the total revenue at the end of the term.
Am I Lending To Property Moose The Company?
No. You own shares and are investing directly in the properties which are held within SPV’s and registered at Companies House. Think of this as crowdfunding rather than traditional peer to peer lending.
With loan notes??????????????????????????
What Happens If Property Moose Goes Bust?
Investors shares in property are ring-fenced and registered at Companies House. Any funds being held are in a segregated Barclays account which is protected. In the event of platform failure, 3rd party liquidators would sell the properties. Property Moose’s website doesn’t really go into detail about this process (read here) so lots of unknowns here. As always, don’t invest more than you can afford to lose.
THUMBS UP FOR PROPERTY MOOSE:
You’re Investing In Property
Nothing beats the security of property. As long as Property Moose remains transparent, honest and keeps locating quality properties, I believe this is a pretty secure investment. Unlike other platforms that offer unsecured loans, Property Moose’s business model allows the properties to be sold in order to recoup funds.
No loans here so the properties are the security. Nothing better than owning brick and mortar. All properties are owned by within an SPV which can be viewed on Companies House.
Deposits, Payments & Withdrawals
Property Moose allows debit card payments for instant no fee deposits. Rental payments are deposited into your holding account (aka e-wallet). Withdrawals are done at a clack of a mouse button.
It’s very easy to use, looks great and is being constantly improved. Here is a look at the Portfolio dashboard:
Property Moose usually has one or two investments available at a time. These include houses, HMO’s (Houses of Multiple Occupation) and mixed-use commercial with flats above.
Property Moose’s staff and owners care about their lenders. Each question or concern has been addressed promptly and I have several conversations with the CEO and I’m f the opinion that Property Moose is well run by competent people with strong financial business backgrounds.
I also like the fact that the Moose team aren’t afraid to admit to the growing and learning pains of a new industry and learn from those mistakes to improve their product offerings. The HMO properties are a good example of this. When businesses take personal responsibility in this manner, it instils me with confidence.
If you change your mind on an investment that is still funding, you can cancel your bid. You can even cancel up to 14 days after the property has been fully funded.
THUMBS DOWN FOR PROPERTY MOOSE:
Some HMO Occupancy Rates And Property Yield Returns Have Been Low
When I first started investing through Property Moose, I made the mistake of chasing high projected yields offered through HMO or “houses in multiple occupation”. These properties have performed poorly due to low tenant occupation rates. Here are my actual yields on both the HMO properties:
If I could start over, I would have steered clear of the HMO’s. A few other properties have also delivered disappointing returns however this is the risk part of equity property investing.
Unknown Outcomes = Higher Risk
While property could be considered lower risk, future values are purely speculation. Only time will tell whether the investments will pay off.
Only One Property Has Come To Term
We are now entering the timeframe where the very first investments are ending. Only one property has been sold while lenders have voted to keep two others for a further three years. Here are the financial results on the first sale:
The rent yields and property growth amounts were disappointing if compared to the estimates listed when the property was first offered. Here are the estimated returns versus the actual returns:
I list these results as a negative because this is the only property sold and the numbers don’t lie. As I said when I first reviewed Property Moose man moons ago, there are many unknowns that accompany crowdfunded property investing. It’s very similar to investing in stocks. You never quite know which ones to pick so most people pick different ones hoping to average a decent return. Some properties do well while others will fall far short of estimates.
I know the Property Moose team has learned a lot since they first started offering property crowdfunding and I think poor past results won’t be indicative of future results.
No More Secondary Market
From February 28th, 2018, investors will no longer be able to buy and sell shares in properties. This is due to cost and regulation issues. I have a feeling that the FCA was bearing down on Property Moose regarding their secondary market and the Moose decided to pull the plug to save costs. I never had any luck selling shares on the secondary market anyways but despite this, I’m still concerned about the removal of this very important feature.
Lower Yields Than Estimated
Most of my investments are yielding less than Property Moose estimates:
I’m still comfortable investing as I think Property Moose is a good company but I still understand the nature and risk of crowdfunding property investing. Having said that I’m disappointed in some of the low dividends returns on certain properties.
I’ve always had my hand in real estate investing so Property Moose was intriguing. It’s very much a “jump and hope you land somewhere soft” scenario. The good thing is investors collectively own the homes. I try to diversify while steering clear of certain deals such as HMO’s (where multiple tenants rent by the room) and properties in certain cities such as Hartlepool. HMO’s offer better-estimated dividends but my lowest performing properties are HMO’s as retaining full occupancy remains an issue.
The Property Moose Review Conclusion
Property Moose is a way for investors to own pieces or shares of property without having the hassles of individual ownership or being a landlord. It’s a unique way to get onto the property ladder and diversifying your crowdfunding portfolio. You receive rental income each month although you have to invest a sizable amount to make this income payment noticeable. The minimum investment has been increased from £10 to £100 so this might put some investors off. My overall dividend yield has been on the low side due to low occupancy rates and delinquent rents. Property Moose no longer has a secondary market to trade shares so once you’re in, you’re in until the end. Property Moose is a long-term investment and there are risks involved so do your due diligence.
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** This Property Moose review is for information purposes only and should not be regarded as investment advice. Opinions expressed within this Property Moose review are only opinions based on my own personal experiences. As with any financial investment, peer to peer lending involves risks, so never invest more than you can afford to lose. Thank you for reading my Property Moose review. **