Buy-to-let investors have traditionally taken decades to build their property empires. Even if using an aggressive BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method it can take a number of years to build up sufficient equity in one property before being able to refinance and use that capital as a deposit for another.
On Housemartin, you can build up a portfolio of properties in minutes by investing a small sum across a variety of properties spread up and down the country. There are currently more around 70 properties listed on the exchange, so an investor with £1,000, could easily invest £50 in 20 different properties, making it easier than ever to build up a diverse property portfolio.
No deposit required
One of the most difficult tasks to get started in property investment has been finding the capital for a deposit. Buy-to-let mortgages generally require around a 25% deposit, which means that a buy-to-let investor purchasing an average UK property valued at £268,200 would need to find £67,050 for the deposit. This is on top of the various legal and conveyancing fees involved in property purchases and the costs of any refurbishments that would be required before being able to rent out the property to tenants.
In contrast to the buy-to-let model, Housemartin offers investors the opportunity to invest in a “slice” of supported living properties from as little as £1. Housemartin sources and renovates the properties and finds the tenants, so investors are spared those stressful expenses. Housemartin tenants are also generally housing associations and charities that want long and stable inflation linked leases, so there have been fewer tenancy issues compared to an equivalent portfolio of properties tenanted with AST contracts.
No complex buy-to-let mortgage
Most investors have traditionally acquired their first property by taking out a buy-to-let mortgage. From this starting point, their plan was for the rent money they received to cover the cost of the mortgage payments, maintenance expenses of the property, and provide a monthly profit. They would also expect to benefit from any house price growth, which grew nearly fourfold between 1990 and 2020.
This buy-to-let model worked well for investors for many years. However, with the government changing the tax regime and imposing new regulations on landlords and high interest rates making mortgages less affordable, it has now become much more difficult to generate a profit and investors are abandoning the BTL sector en masse.
On the Housemartin exchange, each property is divided into small slices which you can invest in from £1 – no need for an expensive or complex mortgage. By investing in a slice of a property, Housemartin investors gain exposure to potential capital gains on the property, but will also receive the same proportional slice of each rental payment (less any costs) by the tenant. You receive rental income without needing to use that money to pay off the mortgage on the property.
What happens if house prices fall?
The value of properties can go down as well as up. On a buy-to-let property, if house prices fall dramatically then an investor could be left with negative equity on the mortgage and rent payments may not cover the debt if mortgage rates go up.
On Housemartin, if property prices fall then the capital value of your investment would fall in proportion. However, as there is no mortgage to pay on the property, you would still keep all the rental income proportional with your investment. Moreover, with most leases on the Housemartin exchange inflation-linked, your income will not be eroded by inflation.
What happens if house prices rise?
Demand for property in the UK continues to outstrip supply, which can be a useful predictor for house price growth. According to the latest House Price Index report from Nationwide, the annual rate of house price growth increased marginally in May to 3.5%, compared to 3.4% in April. You may also benefit from capital appreciation if the price of your property rises on the Housemartin Exchange.