The Investor Assessment – Everything you need to know
This blog post contains all the information we recommend you read and understand prior to taking the investor assessment.
The investor assessment consists of just 10 questions which seek to ensure you understand the risks associated with the investments and that they are right for your personal circumstances.
This blog post will take about 5 minutes to read.
Investing with CapitalRise
CapitalRise provides Self-Certified Sophisticated, High Net Worth and Corporate Investors access to investments funding loans to prime property developers in prime locations across London and the South East of England.
We provide a self-selection investment service, meaning that CapitalRise members are invited to review each of our projects and undertake their own due diligence. We do not automatically diversify your investments across projects.
Investors should be prepared to hold any CapitalRise investment for the full term of the underlying loan they are investing in. The average CapitalRise project is typically between 1 to 2 years in length. CapitalRise does operate a Bulletin Board, which allows investors to post their investments for sale. However, this does not guarantee a buyer.
What am I investing in?
When investing with CapitalRise, investors are issued bonds by subsidiary property companies, which in turn have provided the loan to the borrower. CapitalRise creates a new subsidiary property company for each loan we provide. We will sometimes refer to the company as ‘the bond issuer’.
The reason why we create a new dedicated subsidiary property company for each project is so that investments in one project cannot be impacted by the performance of any other project we have funded.
Do I only deal with CapitalRise?
Yes. CapitalRise will manage the relationship with borrowers and you will not interact directly with the dedicated subsidiary property companies.
How is my investment protected?
We are proud of our track record of no losses or defaults and we believe this showcases the quality of both the borrowers we engage with and the projects they are undertaking. That said, past performance is not a guarantee of future performance so it’s important to understand the measures we put in place for every loan, as a contingency should the borrower be unable to repay.
First and Second Legal Charges
For every loan we provide, we ensure that CapitalRise holds either a first or second legal charge over the property asset, on behalf of CapitalRise investors. Taking a legal charge over the property means that the borrower cannot sell the asset without first repaying the loan or allocating proceeds from the sale to repay it.
A first legal charge gives CapitalRise investors priority when it comes to repayment, meaning they will be repaid in advance of anyone else when the loan redeems.
A second charge means that another lender (e.g. a bank) will be repaid first and CapitalRise investors will be repaid second.
CapitalRise will act on behalf of investors to enforce the rights of a legal charge if deemed necessary.
A first or second legal charge does not guarantee the repayment of your investment.
CapitalRise does not currently offer a provision fund to cover any losses incurred on investments.
Provision funds are typically offered by platforms where you are investing in unsecured loans. Our loans benefit from the security of the property.
Financial Services Compensation Scheme (FSCS)
Investments with CapitalRise are not covered by the Financial Services Compensation Scheme (FSCS). This means that if an investment is unsuccessful and does not pay the advertised rate of potential return, or you lose your invested capital and CapitalRise are unable to recover it, you will not be eligible to make a claim under the FSCS.
Funds invested using our Innovative Finance ISA (IFISA)
Investing through our Innovative Finance ISA (IFISA) allows eligible members to earn tax-free returns on investments. Investing through our IFISA carries the same risk as a standard investment and does not guarantee that your invested capital or any accrued return will be repaid to you.
The value of properties during development projects
Some of the projects on the CapitalRise platform provide borrowers finance during the construction of a property. On these loans the borrower will typically receive a portion of the loan at the beginning and then more is provided throughout the term.
Each month, an Independent Project Monitor appointed by CapitalRise visits the development site. The project monitor verifies and reports exactly what work has been completed and the associated costs.
Only once this report has been received can the borrower request a construction finance drawdown to cover the costs incurred during that period.
It’s important to remember that during construction, the value of a development site fluctuates. For example, if a dwelling is being completely rebuilt, at the point the original dwelling is taken down, the value of the outstanding loan could be greater than the value of the site.
In order to calculate the loan to value (LTV) at entry and exit for a development project, we use two values – the value of the original asset and the anticipated value of the asset at completion of the project.
What happens if CapitalRise goes out of business?
As CapitalRise creates dedicated subsidiary property companies for each new loan and subsequent investment opportunity, all investments are ringfenced. This means that should CapitalRise become insolvent, the administrators would not be able to use investor funds to repay creditors.
Instead, CapitalRise generates its revenue from the borrower, upon repayment of each loan. It is therefore in the interests of the administrators to work to seek loan repayments.
Is this investment right for me?
Investing with CapitalRise is not right for everyone. You must be able to demonstrate experience with similar investment products or have assets sufficient to categorise yourself as a High Net Worth investor.
You should only invest money with CapitalRise that you do not need in the near future (12-36 months for example). Further to this, the amount of money you invest should not be an amount that would impact your lifestyle should you lose it.
If you have any questions about the investment opportunities we offer, please contact our investor relations team via our website Live Chat or on 020 3869 2620.