The Wealth List chats to Jatin Ondhia of Shojin Property Partners about how investing in property in the UK has changed.
- Tell me a little bit about you and your business partners
My own background is in investment banking while my business partner is from the construction world. Several years ago we looked around and noticed that lots of people we knew were sitting with cash in the bank earning a pittance. We saw a great opportunity to put that money to work in the property space, an area where Sandy and I have much knowledge and a lot of passion for.
- Investing in property in the UK – How has the market changed?
In the old days it was simple – if you had lots of money you invested in property development, while the rest of us invested in buy-to-let. While BTL has had a great ride, the government is now firmly trying to remove the individual players from this space and they want to institutionalise it. At the same time, there have been huge developments in the use of technology for Crowdfunding which has opened up the opportunity for regular investors to invest in bridge, mezzanine and equity for development projects. In the old days, it would have been very hard for a developer to get funding from multiple people, the administration of the loans would have killed them. Now with the use of technology we can have hundreds or even thousands of investors together on one project. So, in short, investors now have lots more options for investing across the property development spectrum.
- If Buy to Let is dead… what is next?
Buy to let, as we know it, is dead. There are still opportunities in the rental space, but you have to work a bit harder for your returns. For example HMOs and serviced apartments are great way of boosting yield, but they are more hassle than traditional buy-to-lets. If someone really wants to do buy-to-let then we suggest doing it through a Crowdfunding platform so that you can invest alongside others and someone else does all the work! However if you really want to put your money to work then look at all the other opportunities including bridge lending, mezzanine lending and equity for property development. At long last everyone is able to invest across the property spectrum thanks to Crowdfunding.
- What should you look at before investing into property?
Always stick to what you know and love, and leave the rest to someone else. If you have a real passion for property then you can spend the time and effort finding the unique opportunities in that space. For most people however, who have regular jobs and plenty of other things to deal with in life, it’s best to invest through a medium which enables you to get the benefits of property without doing the work. In the old days this would have been investing with a fund manager, but that fund manager would have taken all their fees even when they don’t make you any money. Now, with Crowdfunding, there are more options for you to invest via platforms that do all the due diligence, co-invest alongside you and only get paid when you make a profit. That is proper alignment.
- What is property Crowdfunding and how does it work?
Crowdfunding comes in many shapes and sizes and it’s important to do your own due diligence before investing. You must check whether the Crowdfunding platform carries out thorough due diligence on the investment. Do they invest alongside you? Do they take hefty fees upfront or do they share the profits at the end? Do they oversee the investment on your behalf? What is their expertise?
- How is Crowdfunding Property Investment disrupting the property market?
Crowdfunding is democratising the entire property market. Even in areas that were once reserved only for the very rich now regular investors can get involved too.
- Who is Shojin and how did they get into crowdfunding?
Ultimately it’s simply an expansion of what we have always done. We always focussed our attention on very high net worth investors to fund development projects, however we recognised that there’s a whole market of regular high net worth investors who would love to invest but just didn’t know how. We could provide the opportunity and enable lots of smaller investors to club together.
- What makes Shojin different and an expert in the crowdfunding property sector?
By providing a partnership approach, rather than a broker approach, investors can trust us to look out for their interests. We have an in-house team of experienced professionals that carry out extensive due diligence on every project, and only if it meets our criteria do we invite investors on board. We always co-invest our own funds, oversee the projects and then share the profits at the end. This is the way investments should be done.
- What are the benefits for investors and how does it differ to more traditional investments?
Just like investing through a normal fund management platform the process is totally hands-off for the investors. However, unlike traditional platforms we don’t get paid unless the investment performs. Traditional fund managers get paid regardless of performance and that just does not seem right. In this age when we have the internet, investors are now able to pick their own investments and keep the lion’s share of the profits.
- How long have Shojin been operating and what is Shojin’s track record?
We have been going for about 9 years now and have many projects under our belts. We have never made a loss and our worst project was one where the units took longer to sell because the market softens just as we were selling the units. Even then however we delivered the expected return, but just over a longer timeframe to end up at a 14% annualised return over 2 years. More importantly however is that we have a team of 15 people who all have expertise in various aspects of property and investments and they all work to ensure each project we back is viable and is fully expected to meet the profit target.
If you would like to find out more about Jatin Ondhia or Shojin Property Partners visit www.shojin.co.uk