P2P investors: 'Some invest very personally and emotionally'

Last week, the peer-to-peer (P2P) community gathered at the LendIt Europe 2015 conference at the Hilton London Metropole where the discussion quickly turned to why people invest in property lending.

The property panel discussion featured: Christian Faes of LendInvest, John Goodall of Landbay, Luke Jooste of Funding Circle and Brian Bartaby of Proplend.

They were asked questions on a variety of different topics including, what happens when defaults occur, how many investors does it take to fund a loan and the emergence of P2P property lending markets – but the focus always returned to why people choose to invest in certain property loans.

Luke Jooste of Funding Circle stated:  “Some invest very personally and emotionally into buildings, so they can see exactly what has been funded and where their money is going.”

Christian Faes of LendInvest said investing in the property market was interesting because there was a tangible relationship for the investor.

“If you are investing in a secure consumer platform, you perhaps don’t incur the same relationship with a borrower as you can’t really see or necessarily understand the circumstances,” said Christian.

Brian Bartaby of Proplend, said the first loan his company had issued was for a very small property in London which the two investors lived close to and drove past daily on their way to work.

“They felt very comfortable with the property because they felt as though they could see their money every day,” said Brian.

“It can be quite an emotional attachment and a very localised thing, and you might not be able to sell that loan to someone living in Birmingham, for example.

“However, if we have a commercial property with a brand name in it, you can sell that more.”

Christian, however, believed that he was beginning to detect an interesting trend with investors living in London wanting to invest outside the capital.

“They might know where the property is in that area and might feel comfortable with that project,” said Christian.

“It may be [so] for their own diversification by selecting geographical regions.”

John Goodall of Landbay echoed that sentiment saying he had found that potential investors had very mixed feelings about putting their money into London.

“They ask how much is a property in London, and some say, ‘Oh, I don’t want to lend in London’, [while others] say ‘It’s the safest market in the world’,” said John.

“There does seem to be a real split in terms of those opinions.”

Luke, however, concluded that many investors want to be able to trust in a project before offering to invest any of their money.

“Borrowers are now coming to us for repeat business and have grown their brand through our investors,” said Luke.

“If investors have good experiences in terms of deals and as the brand grows, the money funds itself.”