LANDLORDINVEST is launching a secondary market this week, giving investors the chance to sell off their property loan parts.
The peer-to-peer property lending platform will charge a 0.5 per cent administration fee to investors, who will be restricted to selling their loans at par value.
Investors will be allowed to sell multiple parts from the same investment separately to increase the chance of finding a buyer sooner, the firm said.
Loan parts for sale will be shown on screens along with the interest owed to the investment over the remaining term of the loan. The sale price will be adjusted daily to account for the interest accrued to the seller on that particular date, as the loans available on the platform typically pay interest once per month.
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“The process will be fully manual so it will allow investors to buy and sell the loans or loan parts they prefer, and will only include performing loans, leaving out arrears and defaults,” the firm’s co-founder and chief executive Filip Karadaghi told Peer2Peer Finance News.
The move is set to outbalance the downsides of not allowing pre-funding on the platform, he said, by reducing the cash drag effect investors experience when their funds are not participating in any investment and are thus not yielding returns.
Karadaghi expects this will in turn bring new investors to the firm, as it will give them the chance to earn money from day one and buy into more liquid assets.
“Based on enquiries we have recently received, we would assume the secondary market option will certainly bring in new investors,” Karadaghi said.
“The ability to earn interest straight away and the guarantee of better liquidity represent the biggest factor for a number of investors.”