Introducing CrowdLords for LandLords. Crowdfunding for the Buy-to-let market - directly connecting LandLords and Investors

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1 Introducing CrowdLords for LandLords Crowdfunding for the Buy-to-let market - directly connecting LandLords and Investors

2 What is Crowdfunding? Crowdfunding is the concept of using a combination of several people, the crowd, to fund a business venture, social cause or property. This usually takes place on an online platform. A target amount of money required is outlined on the platform for individual Investors to contribute towards until the full amount is reached when the fundraising will end for that property. There are several types of crowdfunding including donation crowdfunding, debt crowdfunding and equity crowdfunding. CrowdLords uses equity crowdfunding where the investor receives shares in a specified property in return for money. 2 CrowdLords LandLords Guide

3 About CrowdLords Directly connecting LandLords and Investors so that more people can benefit from Buy-to-let CrowdLords utilises the power of crowdfunding to enable more people to invest in and make a return from the UK Buy-to-let market. CrowdLords is an equity based crowdfunding platform that directly connects LandLords requiring finance, with Investors looking to invest in residential property. As a LandLord you invest a minimum of 5,000 into a property of your choice that you wish to manage. We then list the property on the CrowdLords platform. Investors access a range of properties. They invest at least 1,000 at a time in any property they choose, in exchange for an equity stake in that property. 3 CrowdLords LandLords Guide

4 Why become a CrowdLords LandLord? A new way for you to fund your Buy-to-let property portfolio. No need for the banks. Being a LandLord is an attractive proposition, but at the moment the barriers to entry are too high - and getting higher. You need to find the 30% deposit and getting a mortgage can be challenging You need to have enough working capital for refurbishments You need to be able to pay the mortgage whilst refurbishing and during voids CrowdLords LandLords avoid these barriers of entry: No need for a mortgage Finance is raised directly from private Investors, who share the risk and rewards. You can invest from as much as you wish in the property, as long as it is more than 5,000. Income and capital growth You still benefit from regular rental income as well as capital growth if the property increases in value. Choice and control You decide the terms of the investment so that they fit your financial priorities whilst still being attractive to our Investors. Advice and support We help you with the property listing, legal and financial compliance and advice on how to be an effective LandLord. 4 CrowdLords LandLords Guide

5 How it works... Find a property you wish to buy and manage then raise the finance you need from our crowd of Investors. Find a property Tell us about it. Decide how much money you want to invest. Discuss the financial details with us e.g. the purchase price of the property, projected rental income, the costs of refurbishment etc. Create your property listing This details the investment term, the percentage of income and capital growth on offer to investors, the property detail and information about your target market. We work closely with you to build this. Publish your pitch Investors can see your property on the CrowdLords platform and the projected returns they can expect to receive. Reach your target and complete the deal Once your target has been reached, fundraising will stop. All money invested is pooled together and put into a Special Purpose Vehicle (SPV) which purchases the property; you are now a CrowdLords LandLord! 5 CrowdLords LandLords Guide

6 The Process Whether you are looking to kick start your property portfolio and become a LandLord or expand your portfolio, CrowdLords provide the support and financial backing you need without reliance on the banks. Our approved legal structure and framework provides clarity on responsibilities, risks and rewards. The below diagram is designed to illustrate the process. Third Party Director Appointed by CrowdLords Oversees SPV LandLord Acting Company Director of SPV One off investment Oversees and Reviews Quarterly dividend & capital growth at end of term SPV Special Purpose Vehicle A separate company to CrowdLords Quarterly dividend & capital growth at end of term One off investment Investors The CrowdFunders Rent paid by tenants into SPV Purchases Manages, maintains and lets the property 6 CrowdLords LandLords Guide

7 Key questions Who owns the property? The property is owned by an SPV (Special Purpose Vehicle), with one SPV holding one property. The Investors and LandLord have different classes of shares in the SPV. What is a Special Purpose Vehicle? A Special Purpose Vehicle is a separate limited company which operates under its own legal status, with its own asset and liability structure. Who sets up the Special Purpose Vehicle? CrowdLords will set up the Special Purpose Vehicle. Who is responsible for the tenancy agreement? CrowdLords provides all the legal documentation including the tenancy agreement. It is the LandLord s responsibility to get it signed on behalf of the SPV. Who sources the tenants? This is the LandLord s responsibility. What happens to the tenants rent? Tenants pay rent directly into the SPV. Provided the SPV generates income the Investors and LandLord receive a quarterly dividend according to their share as calculated by the Nominated Accountants. As the LandLord, you also receive any surplus income remaining from the payments after costs as you are responsible for managing the property. Can I get a letting agent to market or manage the property? Yes, however, any costs incurred come out of your share of the income. You increase your own income by effectively managing costs like these. How long is the finance there for? You, the LandLord, decide the term of the investment. It forms part of the financial proposal published on our platform so that Investors know how long their money is tied up for. What interest does the LandLord have to pay on the loan? This is not a loan! This means that LandLords do not pay interest. The Investors get their return from a share of the income, paid quarterly, and a share of the capital growth at the end of the term. (which LandLords decide from the outset and outline on the listing when seeking finance from Investors). Who covers the additional maintenance costs? Maintenance is the LandLord s responsibility, as is furniture and everyday running costs. These costs are paid for by you, the LandLord, which is why you decide the investment terms - how much income and capital growth you offer to Investors. You receive any surplus remaining after costs as you are the one responsible for managing the property. You are entitled to a proportionately larger share of income and capital growth. The more efficiently that you manage the property, the more profit you make. Who pays for the insurance? Insurance costs along with other operating costs are paid for by the SPV as it s in everyone s interest that the assets are protected. Who pays for any refurbishment to make the property rentable? Refurbishment costs are included in the total funds raised and are paid for by the SPV. What happens if the property is empty? As the LandLord, it is your responsibility to find tenants for the property; the projections allow for a couple of weeks per year for the property to be untenanted; but every week that the property is void results in a loss of income for everyone. What happens if I fall seriously ill? Should you fall seriously ill whilst acting as Landlord, we will appoint someone else to manage the property until the end of the term. What happens at the end of the term? At the end of the term you have the choice of either continuing as LandLord and relisting the property on CrowdLords or selling it on the open market. If it is not a favourable time for the property to be sold there is the option for all shareholders of the SPV to vote to extend the term. 7 CrowdLords LandLords Guide

8 We d love to talk to you, whether you are looking to become a LandLord, or extend your existing portfiolio by becoming a CrowdLords LandLord. Alternatively, you may be a Developer looking for LandLords or perhaps you d like to start by being an Investor? Here s how to get in touch: +44 (0) support@crowdlords.com Investment in property comes with risks as well as the possibility of rewards. These investments should be considered to be long term investments as it may not be possible for you to get your capital back before the term expires. The value of the property can go down as well as up and such fluctuations will affect the amount of capital you receive back at the end of the term of the investment. Any regular payments offered may also be affected by factors such as the market rental value, periods of non-occupancy and unforeseen refurbishments. Any references to past or forecasted performance should not be relied upon as a guarantee of future results. If you are in any doubt, you should seek advice from an FCA regulated adviser. CrowdLords cannot advise you on whether the merits or risks of an investment are right for your circumstances. CrowdLords encourages investors to read the full risk disclosure notice at 8 CrowdLords LandLords Guide