Exclusive interview with CrowdLords CEO, Richard Bush
Over the last decade, assisted by the financial crash in 2008, Property Crowdfunding has rapidly become a more attractive form of investment for many people here in the UK, as well as abroad.
As someone fairly new to the details of Property Crowdfunding, but wanting to know more, I caught up over a coffee for a chat with the founder and CEO of Property Crowdfunding platform CrowdLords, Richard Bush.
How did you get the concept for the business?
I used to run a branding and marketing agency, specifically Business to Business consulting which involved a lot of travelling. Once, during a trip, I was talking to a colleague about what is the best form of investment. I suggested crowdfunding and she, as a landlady, suggested property investment. We looked at each other and asked:
"Well, why aren't the two combined?"
Twelve months later CrowdLords was formed!
What was your goal at the outset?
At the beginning, it was about making Buy-to-let more accessible to more people. For example, in the South East of England, you need so much initial capital just to buy your first property even if you have the time and the knowledge. Then on the other hand, you have people with the money but who lack time and knowledge. We specifically wanted to connect those two groups of people so that everyone could benefit from property investment.
How do you define business success?
Success to me means happy clients. All our focus is on helping investors make the right choices to meet their financial objectives. This requires us to source the right opportunities, do thorough Due Diligence, package them in a way that suits both parties and then to publish it in a way that makes it easy to make the right decisions. For us company growth isn't the driver, but it will come if we focus on our investors. For example, what's great is how many people reinvest the returns they've made, and this shows us that they're happy. The proof is right there as they're willing to do it again.
Do you feel that property crowdfunding helps the communities in which it operates?
Yes, undoubtedly. We're currently right in the middle of a national housing crisis and the small to medium sized property developers who used to provide a significant proportion of the housing stock now find it difficult to raise the funds they need from the banks. Property Crowdfunding helps to fill that gap. What's more, if we prioritise high quality properties appropriate for the local communities, that offer good value for money, then we're doing our bit to help.
As the founder and CEO of CrowdLords, and having built a competent team, what would you say that your biggest skill is, as of now?
I am a firm believer that skills development and learning is a lifelong pursuit. As I say to my team and my family, never stop learning!
Many of my core skills are the same as they've always been. I am lucky enough to have the ability to identify and structure opportunities that fulfill market need, twenty years' branding and marketing expertise and a solid understanding of the Crowdfunding sector, gained by being a hands-on investor myself.
How do you maintain your energy and enthusiasm to progress?
I'm hugely motivated by my contact with clients and hearing them tell me that we've helped them realise great returns. I see their excitement and satisfaction and it's genuine. It's specific to each individual and it's real. My enthusiasm to keep progressing is based on my belief in the huge potential of this industry and what it might be in the future. I'm genuinely excited by that.
How did you build the CrowdLords team, and what do you look for in your employees?
I look for people who have skill, drive, expertise in certain areas, and overall, energy. I'm a firm believer in adjusting the job to fit the person, and not adjusting the person to fit the job. Essentially, I want to work with people that I get on well with, so I amend roles to suit them. We're all square pegs, let's change the shape of the job to fit us!
What is the biggest potential demographic of investor and how do you plan to become accessible to them?
Experience tells us that Entrepreneurs are the biggest demographic of investor for us. They have the right appetite for the risks associated with investing. In addition, if they are successful, they have money to invest as well as the drive to make more money.
The second biggest demographic is most likely to be expatriates. One day, these people will want to return to the UK and buy their dream house, and they need a way of keeping the value of their tax-free savings in line with the prices in the market to avoid their money deflating in real terms.
How do you view the younger 18-30 demographic, and is Property Crowdfunding the best way for them to get on the property ladder?
I feel sorry for them! With house prices as they are, it's so difficult to be able to buy your first property. At the moment, it's possible that CrowdLords isn't quite right for that demographic as the risk of investing is just too high. We do see the potential of this group though and we will be launching more lower risk / lower return investments over the coming months.
Is it difficult to evolve the business whilst maintaining your core demographics of investors?
Not really. We need to evolve in order to become more attractive to our core demographic. We have to really focus on Entrepreneurs to get more of them investing and reinvesting. The great thing about property crowdfunding is that the more investors there are, the better it is for everyone involved.
Do you plan to expand the business internationally?
There's great scope for expanding abroad, and not necessarily just foreign investors investing in UK property. I'd like to imagine us branching out to different countries like Australia and the Far East, or South America, to build people's confidence in property crowdfunding there too.
How do you best advertise and market your business?
I'd like to have more presence to attract the people not specifically looking for what we offer. Presence builds familiarity and through familiarity comes inherent trust in our brand and that would be a great way of addressing the concerns that initially hinder people from getting involved.
Investing has changed radically over the last 20 years. Where do you see crowdfunding in 2040? Could it render traditional lending obsolete?
I like to think that we're doing what Uber has done to getting a ride somewhere, or what AirBnB has done to finding accommodation. I think the term is disintermediation. By removing the middlemen (i.e the banks) then everyone benefits. We need to start making our money work for us all the time, instead of just sitting in a bank on low interest. I can imagine a future where all the money in our accounts that we're not immediately using will be taken and applied to commercial enterprises facilitated by sophisticated platforms that don't yet exist. That said, unlike bank accounts, it is important for investors to understand that investing in property crowdfunding does carry distinct risks and investments are not protected in the way that bank deposits are.
So banks will evolve to become more attractive to lenders too?
They'll have to. There are already some banks that have platforms for raising money from investors for sustainable projects. British banks will have to follow suit.
In retrospect, what would you have changed if you were laying out a business model for CrowdLords again?
When we were initially founded, we were only the third property crowdfunding platform in the UK. If I were to lay out a business model again, I would start a platform aimed at home ownership instead of property investing. We mentioned the housing crisis earlier; I think I would have liked to help people to get on the property ladder initially. They're the ones that need most help.
On what grounds do you turn down or refuse properties in which you could potentially invest?
We work with roughly one in every forty developers that approach us and that's all down to trust. For me, trust is the key in every single link in the chain. If a developer doesn't mention a specific issue, however small, and then that issue gets discovered later in the Due Diligence, then my alarm bells start to ring. I'm a firm believer in integrity and transparency, so if there's not total trust between everyone involved, the project just won't work, and we walk away.
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