Property developer Iwan has been building houses for more than 20 years but his first development with Invest & Fund was also the first time he’d used alternative finance. With the successful completion of that project, we caught up with Iwan to get his candid view on alternative finance and working with Invest & Fund:
I&F: Can you tell us a little about your project?
Iwan:It’s a residential site made up of one and two-bed apartments split across two buildings in Cardiff, near the city centre and university. I started looking for finance in late 2015, agreed terms with Invest & Fund in April 2016 and completed the project on schedule in August 2017.
I&F: Why did you choose an alternative lender after so long with traditional lenders?
Iwan: I’ll admit, I took a calculated risk in choosing Invest & Fund. Peer to peer lending, while prevalent elsewhere, is a relatively new form of property development financing in the UK. The rates and terms Invest & Fund offered were attractive compared to established lenders, so that was an immediate appeal. The absence of an exit fee was also a huge plus, and refreshing compared to other lenders.
I&F: And what was the experience like?
Iwan: Overall, really simple. I was delighted that we received every single one of the 13 drawdowns on time, and largely without retention and it felt like there was a lot of genuine interest and determination from everyone to help me get the job done. Some of the more traditional lenders have a reputation for withdrawing funding during tougher economic times, whereas I thought the Invest & Fund team had a genuine interest in helping me complete the development. A building programme has plenty of its own stress points, but thankfully the financial side wasn’t one of them.
I&F: How did the rates and terms compare?
Iwan: I could have sourced a lower headline rate from banks, particularly as I have a solid buy-to-let property portfolio, but overall, Invest & Fund’s model worked more in my favour. I was offered a Loan to Cost (LTC) limit of 75%, no exit fee and all interest rolled up for payment at the end of the project. That meant I could put in less of my own money up front and didn’t have to worry about monthly interest payments throughout the development, or big exit fees at the end.
I&F: Anything you’d change or we can improve on?
Iwan:The level of due diligence was more thorough than I expected, particularly in comparison to other lenders I’ve worked with. The amount of time taken between the valuation and formal offer did delay my start date, but not enough to be a significant problem.
I&F: Would you use I&F again and what’s next?
Iwan:Definitely..! I’m about to start work on a 24-bed property offering student accommodation and a six-apartment project in pre-approval stage. Hopefully we’ll work together again soon.
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