When investing your capital is at risk.
There are 345,000 new homes needed annually, but only 170,000 of those homes are ever built.
It can be difficult for SME housebuilders to access traditional finance to build the homes that are needed by the UK economy every year. That’s where FutureBricks steps in. Not only are they financing crucial infrastructure projects, they’re democratising real estate investing by making property-backed investments accessible to all. Retail lenders can get onboard with as little as £500 and earn up to 10% gross interest per annum.
We sat down with Founder and Managing Director, Arya Taware to find out what’s next for the FutureBricks platform.
What was the first moment you decided you needed to start your own business in this space?
I spotted a gap in the market while working at an SME housebuilder firm. We had a property development site and had few projects, but there was no financing to allow us to get to deliver the final product.
While the SME property development market is worth about £50 billion, only about 10% of SME housebuilders can access financing.
On the other side, there is £270 billion sitting in cash ISAs, earning on average 0.24% per annum. At that point, it really hit me that as a financial services consumer, I had my own funds in a savings account. While I was torn in investing in the more volatile stock market, I knew there was something I could do. I wanted my funds to be secured against an asset, but I didn’t want to lose them to inflation either. Ultimately, I wanted real estate investing to be hassle-free, without owning a physical property.
That’s when I recognised that I was tackling two industries – real estate and investment – both with high barriers to entry, but with one crucial step forward, I could realise potential by building my own business in this space.
How does your experience complement that of your team to bring this mission to life?
Having grown up in the real estate industry watching my father run a growing business, and later completing my degree at The Bartlett at UCL in Urban Planning, Design Management, Real Estate, my background gave me a wealth of knowledge and insight.
With an eye for detail and a thirst for data, I built a team that binds expertise and specialised experience in underwriting in real estate with a solid understanding of the realities of SME housebuilders and the market.
Every department is deeply anchored in their experience field: with Michael Williamson and his industry experience in finance with leadership positions in FTSE 100 companies and blue chip companies like Oaktree Capital and GSK, Richard Clare who brings onboard his expertise in underwriting for bridging and development, and Zahira who is in the niche business development field for property development.
The same goes for our investment retail team, led by Sahiba Patni, who has graduated with a Masters in Investment & Finance and is completing a PhD in International Finance. We speak every language of the two fields.
Our team’s motto is to push our limits and to speak the language of tomorrow – one that is of innovation and deep thinking.
What does the competitive landscape look like and how does FutureBricks maintain a competitive edge?
The competitive landscape is racing to meet the rising demands for homes. We have yet to meet the demand (345,000 homes) year after year. This is a mission FutureBricks has set out to accomplish and to lead.
The UK peer-to-peer property lending market is worth in excess of £1.3 billion with growth rates of 30.7%. Our focus is on speedy delivery of funds to SME housebuilders once we have completed our rigorous vetting process, offering in return to lenders, double digit returns per annum with an intuitive mobile application that allows them to track their investments. This in turn allows us to offer a healthy blend of low risk (bridging) and high risk (development) products.
We don’t want to be alone in this race; on the contrary, we believe this is a message that should be spread. What we do want is for our model in rigorous vetting, transparency in investment management, and thirst for data and innovation to set an exemplary bar, leading forth the property development world in the peer to peer lending industry.
We want to grow our loan book to over £100 million in the next 3 years, and that is only the beginning. Through innovation, a data analytics mindset in both lending and borrowing, a strong ethic model and a belief in our values, we want to be the leading P2P lending platform offering property-backed investments.
What were some of the biggest growth highlights this year?
FutureBricks has launched itself into 2020 with a growing momentum: with £2.2 in loans for this year so far, Covid did not slow us down.
FutureBricks maintained a 100% track record with all payments to lenders made on time and a 0% default rate to date (13/11/2020).The last 3 projects we launched were funded in 7 minutes on average and our growth is strong with a healthy demand coming from our lenders community.
To date, we have a 91% satisfaction rate of 5* or “Excellent” on TrustPilot as we continuously optimise our account management and client experience delivery.
What changes in the market have you observed with the onset of the Covid crisis and how has the business tackled them?
Constructions have been given the green light based on the latest update from the government; this was the case for the first lockdown, and it is the case for the second. This is good news for our SME housebuilders who carry on their work.
We have been updating our community with any situation updates, whether it is in regards to Covid or not, by keeping transparency as a driving force. All our projects are still on track with monthly interest payments made on time. If there are any changes, our procedures ensure our lenders’ base would be kept in the loop. FutureBricks’ growth momentum carried through to this new year, and Covid is a variable that we manage with our insight and close monitoring.
What’s been the most exciting highlight so far and how did you celebrate?
The most exciting highlight for FutureBricks is to now see its departements growing. We have reached a great balance of brains and hands, and can’t wait to roll out our next plans.
In early November, we celebrated the onboarding of a few corporate lenders and funded a property development project, for around half a million pounds, by way of first charge as is the norm for all our projects funded.
Insofar, our retail client growth has been organic; that is, through words of mouth. We pride ourselves in having such a loyal customer base, and for the first time, we are celebrating our launch into marketing activities by officially establishing a marketing department. FutureBricks is growing, and we want more people to join us in the values and mission we stand for.
What do you anticipate to be the biggest challenge moving forward?
Our biggest challenge in moving forward is finding a balance between large scale property development projects and smaller SME housebuilder projects to cater to the diverse appetite of our lenders community.
What’s next in the pipeline for the business in the way of product, partnerships and more?
FutureBricks is looking to launch for the coming year its IFISA accounts, allowing our retail lenders community to expand their range of account types with us and still being able to obtain up to 10% interest per annum in asset-backed investing within the IFISA allowance of £20,000 for the 2020/2021 tax year.
What will be the most exciting part about this crowdfund?
We want to share our message in revolutionising the real estate investment world by making accessible to all instead of the stereotypical image of large institutions or only deep-pocketed investors. This is a chance to invest in the FutureBricks firm while also being able to learn about the company, sign up as a lender to learn more about our property development projects and become part of the lenders community.
What’s the best investment tip you can give to new investors?
Understanding the importance of risk management and diversification is the best tool you have in your arsenal to manage risk. To quote Warren Buffet “Don’t put all your eggs in one basket”. Always make sure you understand what you are investing in. Do your research, that is, due diligence, and work with trusted and regulated platforms to invest wisely.
What should an investor look for in a property investment opportunity?
There are a few important criteria that an investor should look out for:
- The most secure investments will be classed as first charge, giving you the first legal charge over the site in case of default.
- Loan to value (LTV) is an indicator of how much money is being borrowed in proportion to the final value of the development; lower the LTV lower the risk and more money put in by the borrower.
- Demand for the type of development in the local area. This is dependent on prosperity and general trends within the locality.
- The developer’s track record of having completed similar projects within suitable timescales.
- If available the valuation report has key information regarding the general market in that area and qualitative aspects of the development. The 90 day value in this report should also be given importance as this is the expected amount that the site will be sold in case of a distress sale.
What’s one piece of advice you’d give to entrepreneurs just starting out?
Persistence is key. I started this business from scratch, a business which is heavily regulated and in the property development industry! So believe in what you do and keep marching forward and be agile!
To find out more about FutureBricks, check out the pitch now.