I haven’t written anything about my real estate crowdfunding portfolio since July. Enough changes happened in between, so I’m ready to provide new updates.
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Yielders is a real estate crowdfunding platform from the UK that focuses on buy-to-let properties from London and South East England. Since its launch in 2016, it managed to fund properties worth more than 2.5 million GBP, with an average net yield of 6%.
Yielders finds properties available on the market, evaluates, buys them and then secures a rental agreement for a minimum of 2 years. The acquired properties are managed by separate SPVs (special purpose vehicle), limited companies separated from Yielders that will manage the property. After this, it publishes the properties on the website and investors can buy shares in them. The minimum investment is 100 GBP.
Since the properties are already bought, the investors will receive rental payment the next month after they invested. All rental payments are paid on the 1st of every month.
The typical investment horizon is 3-5 years. At the end of the investment term, Yielders looks for a buyer, sells the property and then distributes the capital gains to its investors.
Yielders makes money by charging different fees along the process. When you buy shares in a property, a 2.5% SPV administration fee is charged out of your investment. Additionally, a 10% fee is charged every month from the gross rental yield of the property. When the property is sold, Yielders also takes a 15% cut of the capital gains from the property.
With all the high fees, the average rental yield of the properties is 6%, so it’s still a good deal. It also helps that Yielders buys properties debt-free, so they don’t need to use part of the rental income to pay for loan interest payments.
This is the part I don’t like about Yielders. They do have a secondary market where you can sell your shares to other investors if you want to exit earlier from your investment. However, they charge a 50 GBP fee for listing your shares on the market. A 50 GBP fee is not a friendly fee for small-time investors.
There are currently more than 2500 investors on the platform. While it’s focusing more on UK investors, they accept investors from all over the world (except US residents).
The registration process is relatively simple: provide an email address, passport copy and proof of address, bank statement and you’re done.
You can invest either as an individual or as a private company in their properties.
The website looks really nice, although it’s a bit slow. The front page shows you the available properties, with net rental yields displayed and full rental return until the end of the investment term.
I like that each property has enough details to help you make an informed decision.
If you want to invest in a property, you’ll first have to at least download the available documentation before the invest button is activated.
As a nice perk, they also show you on the property page a nice investment calculator, showing expected rental return.
I can see the list of my investments and I can also publish them on the secondary market if I want to sell them. However, the 50 GBP fee on each rental property prevents me from doing that.
I’ve started to invest in July, and so far, I’ve invested around 400 GBP into 4 different properties. As of October, I’ve received around 2.95 GBP in rental payments. This amounts to an annual yield of 5.27%.
I believe Yielders is a good option for people wanting to invest small amounts in the UK real estate market.