Interview with Filip Karadaghi, Managing Director of LandlordInvest

What is LandlordInvest about?

LandlordInvest is a UK-based peer-to-peer lending platform for residential and commercial mortgages. We launched in December last year after becoming fully FCA authorised. In January this year, we made bit of P2P history as we launched the first residential mortgage backed Innovative Finance ISA, ahead of major players such as LendInvest and Funding Circle.

What are the three main advantages for investors?

1. Security – we believe that loans should be asset-backed as it creates a form of security for investors if a borrower defaults. I personally would not invest in unsecured loans given the risks and the potentially very lengthy enforcement process to reclaim part of the capital, if any at all.
2. Returns – We offer returns of up to 12%, although we recently funded a loan with a rate of 19% to investors. The loan was arranged with a trusted bridging lending partner and is secured over a flat in Chelsea, one of London’s most prestigious areas.
3. Diversification – We offer investors the possibility to invest in both relatively low-risk buy-to-let mortgages and more risky bridging loans. Investors can build their portfolio according to their risk appetite and other considerations.

What are the three main advantages for borrowers?

1. Manual underwriting – we are more pragmatic in our underwriting than most high-street lenders and assess each loan on its merits. For us, the most important part of our assessment is that the borrower has a verifiable track-record and that the security is enforceable in the event of the default.
2. Speed – we recently assessed a loan, had it fully funded and completed in two days. It was for a borrower that was let down by his exiting lender for an obscure reason at the last minute and approached us.
3. Online application with a simple online control panel – A borrower may apply for a loan through a simple online form and keep track of the status of their application, loan schedule, loan payments in a easy to use control panel.

What ROI can investors expect?

We aim to offer returns between 5-12% per annum, depending on the product.

You recently launched an IFISA product. How has the investor uptake been so far and was it a big advantage to be in the forefront of approved providers?

The demand for our IFISA has been good. IFISA account holders, although only around 20% of the total registered investors, account for 50% of all funds on the platform. As such, IFISA account holders usually deposit more than non-IFISA account holders and also invest more.

I believe that the main advantage of being one of the first platforms able to offer the IFISA is that we have managed to establish a presence in the industry. If it was not for the IFISA, we would probably be less known than we currently are, given our relatively recent launch.

It remains to be seen what happens when the major players are able to offer the IFISA, but I believe it will be a benefit for us as it will make the IFISA a more mainstream product, benefiting everyone in the P2P industry.

Is the technical platform self-developed?

A prototype of the platform was developed overseas, but the final platform in use today was developed in-house by our tech team, led by our co-founder and CTO Joe Vallender. We continue to make all further developments in house, and are releasing new features regularly.

What was the biggest challenge in launching LandlordInvest and what have been challenges since?

The biggest challenge has been operating under a “real” P2P model, i.e. no pre-funding of loans. As we were one of the first platforms operating under this model, some investors did not fully understand how it works, as many were used to the pre-funding model operated by many players within our niche. One of the drawbacks with a “real” P2P model is that a loan does not start to accrue interest until a loan is complete. This means that there is a certain cash drag. However, one of the benefits with a “real” P2P model is that lenders lend directly to the borrower(s) and the servicing fee charged by us is usually lower than what platforms that operate a pre-funding model charge. This means that we pass on more interest to the lenders.

How is the company financed? What background does your team have?

LandlordInvest was initially entirely financed by the founding team and have recently raised financing from business angels. We’re currently in discussion with several private and intuitional investors to raise another round, which will help us to further ramp up our capacity.

Which marketing channels do you use to attract investors and borrowers?

We use a multichannel approach including, establishing good relations with the press, having an interactive presence on various forums and blogs, affiliate marketing programs and social media presence.

We still believe that the best marketing is doing what we set out to do as the best marketing channel is always word-of-mouth. If we are able to satisfy the platform investors, then there is a high chance that they might recommend us to someone else.

Is LandlordInvest open to international investors?

LandlordInvest does accept overseas residents, subject to KYC and AML checks.

However, it is a requirement that investors must have a UK bank or building society account to be able to invest on our platform.

I hear you are planning a secondary market? Will that work with premium and discounts or at par? What other features do you plan to roll out this year?

We are indeed developing a secondary market and expect to launch it in the beginning of May this year. Investors will only be able to sell loan or loan parts at par. Investors will also be able to sell parts of loans.

We are always developing the platform as we want to deliver the best experience investors can have when investing our platform.

We welcome feedback from investors and have implemented a number of features following direct conversations with investors, and will continue to do so.

Where do you see LandlordInvest in 3 years?

We have established ourselves as one of the leading platforms within our niche and delivering good risk adjusted returns to the platform investors. This has also been our aim since we founded the company and we will do our utmost to reach that aim.

P2P-Banking.com thanks Filip Karadaghi for the interview.