Crowdfunding startup focused on breaking ‘oligopolistic’ position of UK house builders

Renthusiast_inside_articleReal Funds is a UK-based fintech startup focused on breaking the oligopolistic position of a few house builders controlling the land supply and who are not focused in building human-size projects.

Founded by Arya Taware, a former UCL young entrepreneur, Real Funds’ vision is to provide small and medium-sized (SME) developers access to alternative capital through a crowdfunding platform (peer-to-peer lending) to build housing development projects of small and medium scale. Below Arya answers some questions on how Real Funds intends to operate:

Q: How does Real Funds differ from other crowd-funding platforms related to property? 

Real Funds’ direct competitors are not solely specialised in property developments, they have buy to let, renewable or other business loans as well. Real Funds’ main expertise is in the development of small to medium scale housing loans . Moreover, Real Funds will monitor the development project for its successful delivery.  Every individual who invests in any project via Real Funds will have a first charge, making it an asset backed investment.

Q: What is the inspiration behind the idea? 

I previously worked for a small sized property developer who would struggle to find funding to develop housing projects and realized it was an issue faced by many SME house builders. The real estate market is currently trusted by 5 to 6 major property developers controlling the land supply. SME property developers lack access to development finance, especially after the 2008 banking crisis. I saw an opportunity as alternative finance was gaining momentum and decided to use the lethal combination of technology and crowdfinancing to solve the gap in the property development market. 

Q: What types of projects will Real Funds be looking to finance and will you be focused on any specific geographical area?  

Real Funds’ platform will have small-to-medium sized housing projects within the United Kingdom starting with Greater London. Due to our strategic property partners having vast experience in London-based development finance, we will first build our foundation here and then expand.

Q: What are the criteria for a SME builder to participate in Real Funds? 

The criterion involves a number of factors such as the track record of a property developer, their team and the project itself. Our property team will go through the project proposal and undertake a thorough vetting process. We also work closely with independent quantity surveyors and architects for the due diligence process. 

Q: What is your investment synopsis or why should people invest with Real Funds?

All our projects would be by small-to-medium sized house builders who are building houses or flats for domestic consumption.

Moreover, all our projects will have first charge on the property making it asset- backed investments unlike any other industry. Thus, people not only get access to invest in local development projects and beyond with as little as £100 but also help solve the housing crisis at the same time and earn returns up to 10% per annum.

We truly aim to ‘democratize’ investing in property development projects, making it accessible to all, which will be the beginning of a new phase of this traditionally closed exclusive industry. 

Q: How long would a typical Real Funds investment last? And in terms of ownership how will the investment be structured?

As Real Funds is focusing on property development projects the typical life of the project is 12- 24 months. In terms of ownership and security for investors, we will have first charge over the properties for all of our projects, as well as , floating charge and personal guarantee. 

Q: What has the reaction been so far from property professionals for your business?

The reaction from property professionals has been overwhelming especially after being shortlisted as a top 10 semi-finalist for Richard Branson’s Pitch to Rich 2015 competition. Many people are enthusiastic, as they love the concept of being able to invest directly in SME housing developments and enjoy monetary returns and at the same time help to solve the housing crisis. The property professionals love the fact that Real Funds’ will be monitoring the successful delivery of the project and keep the investor up to date throughout the project. 

Moreover property professionals are thrilled to have the additional option of diversification and secondary market features on the platform. 

Q: How is the general public able to participate in Real Funds?

Anyone can simply go on the platform, browse through the range of projects in detail and have the choice to invest as little as £10o in their local development projects or beyond for returns of up to 10% per annum, while at the same time helping to solve the housing crisis.

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