Basset & Gold vs Other Alternative Property Investments
Property backed investments are fast becoming a strong alternative to savings accounts. Rather than the standard 0.5% or 1.0% offered by your local bank branch, savvy investors are looking at alternative opportunities that yield around 5% to 15% return per annum, even if it means taking on slightly more risk.
The role of investing in property or ‘security backed assets’ is very popular because properties tend to maintain their value or appreciate over time. In the event that a potential loan deal turns into a default, the lender is usually able to recover costs by repossessing the asset and selling it on the open market. Subsequently, an investment in property through a bond, peer to peer platform or crowdfunding scheme tends to come with very low risks and a healthy return on investment.
In this article, we aim to discuss how income bonds work, referring specifically to Basset & Gold and their innovative products and how this compares to other popular mainstream property peer-to-peer platforms like Landbay and Lendvest.
Basset & Gold Income Bonds
Basset & Gold offer a popular product which gives you a monthly income once you have invested between £1,000 to £500,000 and committed to a 3-year or 5-year fixed bond. This is known as an ‘income bond.’
The rate remains fixed and will not change during the duration of the bond and should provide you with a return of 6% to 7% per annum. Typically the longer you keep your money locked away, the higher your return should be. However, they have a strong record of providing customers with 100% of their agreed return.
There are no upfront fees, set up fees, exit fees or administration fees, the Basset & Gold team generate their revenue based on the margins from the investments that you are involved in – so they have an extra incentive to deliver the right financials.
To ensure that the investments are strong and low-risk for the client, Basset & Gold’s investment team will review opportunities based on:
- Initial opportunity filtering
- Historical loan book performance
- Current loan book
- Evaluating underwriting procedures
- Corporate due diligence including accounting and legal sign off
Other products include a cash bond which pays out every six months and allows you to remove your cash within 30 days. This product offers rates of around 3.14% and is ideal for those that do not want to commit to a long-term investment.
See also compound bonds below whereby you get your interest reinvested every month and then at the end of the term you get your entire capital plus the interest on all the interest.
This is a financial promotion. Capital at risk.
Landbay is a peer to peer platform for property investments, matching investors looking for a return and individuals looking for mortgages. With no investment or set up fees, they also take a commission in between. As an investor, you can put in as little as £100 up to an amount that runs in the hundreds of thousands and possibly millions.
It starts with someone looking for a buy to let mortgage which is likely to be a property investor or property company. Once they have passed the credit and affordability checks, their loan is opened up to potential Landbay investors who can choose to invest in the loan. Once agreed, the borrower makes monthly interest repayments and the investor receives a percentage of that interest and they can choose to withdraw their earnings or continue to reinvest.
So far, Landbay has invested in 312 mortgages, each with a loan term of 10 years and in total, this has led to over £59 million in lending.
The rates offered to investors are around 3%, with a fixed rate of 3.54% which can remain the same for up to 5 years. Or there is the tracker rate with an expected return of 3.07% – your simple rate of interest is 2.70% pa above LIBOR (London Interbank Offered Rate). When LIBOR changes, your Tracker Rate changes too.
Landbay is authorised and regulated by the Financial Conduct Authority meaning that they have to adhere to treating customers fairly, presenting risk and maintaining transparency. Their investment products are not backed by the Financial Services Compensation Scheme, so in the unlikely event that you lose your investment, you cannot use the scheme to recover any costs.
In addition to offering bridging finance, Lendinvest also offer a savings product.
LendInvest was pretty much the first bridging lender to allow individuals and companies to invest on completed property loans. LendInvest present investors with loans that they have already backed and funded.
To become an investor, individuals have to put in a minimum of £1,000 but thereafter they can make a minimum investment of £100 per project and from there, they are encouraged to diversify into other loan projects. The income generates from investing in their projects is calculated daily and paid into your online account on the first of every month. When you make your investment, you cannot exit or ‘cash out’ until the loan has been fully repaid – so you are tied up for the loan duration.
LendInvest is also not covered by the Financial Services Compensation Scheme so you are always at risk of losing your investment – but they are experienced in analysing each case so that your risk is reduced. The LendInvest website does not specify just how much of a return you can make, but according to The Guardian, this ranges from 6% to 12% and is on average around 10.4%.