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Reinventing property investment

By Mark Wilson

Mark Wilson argues that a more intelligent use of Internet web sites that incorporate social networks - can transform the UK property market for tenants, buyers and property investors

It was one of those nights at an investment forum where all I heard was the same economic uncertainty talk prevalent in recent years. We all know that the banks are not lending and that property yields are at rock bottom – though this does not alter the fact that we still need something to invest in!

So what should the industry do with the present situation? And how will the industry find new and better ways of creating investment opportunities? How can we implement the required change? And what is that change? Can financial models be improved?

There is no doubt that the traditional models of property investment are struggling to create opportunities that were once the norm. Equity funds are thin on the ground and bank credit seems to be non-existent. So how do we create opportunities? To explore new methods, we have to look at some other industries and start to re-think how we create opportunities.

Perhaps one of the most interesting developments in the world of innovation and Internet is how some niche products have accessed resources. These resources are finance, information and customer data. Combined, they allow a redesign of the operating base for property investors – something that can improve the situation of both customers in the form of buyers and tenants and the investors themselves.

Crowd-sourcing and how this became a tool for the development and delivery of new services - that have until recently have never been possible - is an important area to consider. It is beyond doubt that crowd-sourcing has created real opportunities.

At it’s core is the ability of crowd-sourcing to join up new supply chains - which underpin how industries operate and how they evolve - in light of the new changeable market conditions.

Of course, both the old and the new models are required. This means we have to find new ways of looking at what we do - and do it cheaper, quicker, and more effectively than ever before. So where can we find some inspiration for property developers and investors? And how can these ideas be tested amongst the current planning, legal, social and economic frameworks?

Crowd-funding – The money is no longer just in the banks and the investment houses

For property investors, the most important question in the property market is: How do we get funding for projects? The answer lies in how investment trends are changing…Perhaps one of the most interesting changes is in funding. Even most banks will admit that traditional business banking has changed considerably.

Even before the onset of credit-crunch, banking was going through some fundamental changes. These changes have created new methods of lending, which allow smaller investors to pool their resources and create direct approach to any number of investment markets - as well as allow any number of markets to present their projects to them.

This has bought not only new types of financial instruments…But flexible ways of deploying finances - that in some cases could have moral, social, terms and conditions – that influence the investment itself.

Some examples of this are web sites that have sprung up in recent years like Funding Circle, Ratesetter and Zopa. Among these three, a good example is Ratesetter. Established in October 2010 it has over 120,000 members and has an average rate of return of 5.95% and an average default rate of 0.24%. The site offers one, three and five-year bonds to investors. Like on most of these sites, the interest rate is higher for longer bonds or those deemed more risky.

These three sites are the largest of the current peer-to-peer lending (also known as social lending) sites in the UK and have lent over £250m to borrowers thus far. In May 2012, the UK government announced it was planning to put some £100m into alternative lending to help stimulate the economy.

Hence, lending is moving out of the bank manager’s office and bringing opposite ends of the usual spectrum together, completely bypassing the usual middle-men. Investing is now in a place where traditional lenders would never go. Like a landscape transformed. Basic bartering and trading is merging, for the things that used to require finance to purchase and sell.

Another example launched in April 2011, is the UK-based Streetbank. This is a site that helps users share and borrow things from neighbours with a focus on lending locally. To join, users must list at least one item they are willing to lend. The website’s aim is to foster greater community spirit and increase personal connections between neighbours. Streetbank is a social enterprise and charges no fees, nor profits from advertising revenue.

Lending then, provides locally-based empowerment, based on ideas that are rooted as much in the social, as the environmental. In April 2010, a not-for-profit micro-lending website Energy in Common was launched. The website allows users to lend money to eco-friendly energy projects around the world. Users can lend as much or as little as they want.

Once the venture is fully funded, the loan is dispatched to the entrepreneur. When the loans are repaid, it puts the funds back into the users’ account for relending to other entrepreneurs. The website will also calculate the emission reductions resulting from the project and also allows users to buy the carbon offset they have helped create. Sample projects include a solar panel system in Ghana and fuel-efficient stove technology in Tanzania. There are lessons here for the property market in the UK and elsewhere. Whether you are a residential investor, a commercial investor, a developer, a builder, a surveyor, a management agent or a tenant - we all need the same good covenants and to build on good relationships. But the relationship between with these parties still relies on the traditional structure - where everyone is compartmentalized. But how many of us understand that community is playing a bigger and bigger part than we can already imagine? We should…As it is changing the traditional roles of the stakeholders within the industry.

What’s good and bad in any supply chain is always a consideration. Sometimes by mixing these aspects it can improve things. We all want to create virtuous cycles of quality and service…We all want to have well maintained properties, happy tenants and customers, some reasonable rate of return on investments, trustworthy tradesmen and landlords, etc, etc. But these philosophies have a cost, and the cost has an effect upon how we are able to invest in the processes that promote systems that improve the services we want to deliver.

There is no doubt that automation can play a part in reducing this cost, but automation requires regular checks and balances, to ensure that these systems provide the best value and the appropriate balance. But the core of what we are looking for is perhaps a 360 degree view on the environment in which we working, living and operating in. Thus, empowering people to report the things that they ‘like’ and ‘dislike’, in addition to giving owners better information about new tenants and vice-versa.

The answer to resolving all these issues is simple: Social Networks. Specialist property-related social network sites make perfect sense for all the players in the business and most importantly, buyers and tenants.

Of course, the traditional models will still be available…But syncing the profile of an investor, that of a tradesman or professional alongside buyers and renters would help all sides of the industry and provide benefits for all.

One of the big problems a buy-to-let investor has, for instance, is choosing a tenant. Mostly this is based on credit scoring, which is something of a blunt instrument in figuring out whether a tenant is good for a property they desire to live in. The information now required by lettings agencies often turns customers away. It is not possible with many to actually rent a property unless their credit record is perfect and they have been on the electoral role for a few years. These measures are of course intended to protect the property owner from unscrupulous and sometimes criminal tenants who may disappear with fittings or leave the property in a state of advanced disrepair.

The snag with this system is that it often penalizes perfectly respectable tenants who are unfortunate enough to lack all the correct parameters to satisfy the letting agency or landlord. An example of this is someone who may have been an expatriate for professional reasons – and therefore absent from the electoral role for several years. This often leads to demands for guarantees of rent which are beyond the means of most people, driving them into direct contracts with private landlords and the upshot is millions in lost business. This is one example of where a property-related social network can build truthful reputations of both tenants and landlords. No site like this can be mandatory, but it would be in the tenant’s interest to sign up and build a profile. Next time they move, the info on such a site would be more detailed and more reliable than a traditional credit score report - which in this age of economic instability is to some extent, meaningless.

The same is true for the reputations of architects, builders, plumbers and even landlords. Social networks can also provide crowd-funding and foster community relations in relation to property - which are otherwise impossible. Investors for example, can group together to make large investments, landlords can prove they are trustworthy and buyers can have more confidence in the quality of renovation or maintenance. Micro-investment could also flourish and get important projects built.

These are just some of the many ways in which social networks can transform the property industry and we need to build them with as much urgency as we build other important infrastructure. The benefits of building this online infrastructure are simply too extensive and costly to ignore.

About the author Mark Wilson is the CEO of BigOnIt.com and has a portfolio of property investments

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Renewable Sector

BIG.on.IT Blog - BIG.on.IT - Project News

Renewable sector

Here at Big.on.it we have worked in the creation of ideas with the renewable energy sector providing strategic support based of research and facilitation services. We have worked with engineers, designers, architects and surveyors providing strategic business modelling for renewable energy projects.

Our services :-

• Business modelling: • Facilitation and research: Provided research base on the renewable technology market with a specific focus of Feed in Tariffs for the Solar energy and the creation of solar energy PowerStations

• Supply chain technology life cycle audit - To determine the various scenarios that may arise as result of new technologies

• Strategies to develop software for management Information Systems for the control of renewable energy systems

• Understanding the Political energy environment

• Deploying technology for lead generation, and customer management

• Assisting in the sales and marketing pipelines

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Working with the 3rd sector

BIG.on.IT Blog - BIG.on.IT - Project News

Working with the 3rd sector

BIG ON IT spent a productive morning with the Anna Zvarikova and the team from the meadproject.org.uk Working with 3rd sector as part of a proof of concept services BIGONIT created and demonstrated how to assist in the rapid development of ideas and business creation concept for charities, and the third sector, Creating income streams and development processes that can be used in the field of social enterprise, and entrepreneurship.

Here at BIGONIT we are always identifying and demonstrating the art of the possible, through research, - rapid development, by creating and assisting in the development of proof-of-concept solutions.

BIGONIT are a 'multi- industry' experienced team whose primary aim is to aid companies individuals charities and the 3rd sector create strategic business models using scalable technology.

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Management Team

BIG.on.IT Blog - BIG.on.IT - Project News

Management Team

Mark Wilson MBA - Founder

Mark Wilson - Founder

With a Masters in Business Administration (MBA) from Strathclyde University, Glasgow, Mark is a professionally qualified and highly experienced individual with considerable exposure of devising and implementing innovative development initiatives and programmes across various industry sectors and personnel.

He is a Coutts accredited management consultant in addition to which he attended training course such as Oracle in New Zealand and Microsoft in Australia.

Mark has excellent all round knowledge and experience of technology, finance, operations and marketing. In developing CRM systems he has an in-depth understanding of the worldwide implications of such systems.

His key skills and attributes, including people management, strategy development, change management, problem solving, marketing, commercial and financial awareness, customer focused, effective negotiator are all a result of working in differing environments and sectors such as recruitment, property, social housing, Health care , property development and technology over many years and being a serial entrepreneur he is self-motivated

He has travelled extensively both for pleasure and academic pursuits, achieving success at the University of Western Australia in e-commerce, operational management, marketing, Asian Economics and organisational behaviour. He continues his love of travel increasing and improving his knowledge, personal and business, by attending conferences worldwide and in the development of his business.

Mark is always willing to share his knowledge and experience with others and spent a number of years doing so with young people as a mentor for Prince’s Scottish Youth Business Trust (PSYBT).

Mark has diverse outdoor pursuits both on dry land and the sea. He cycled the Ocean Road in Australia, the route from Prague to Vienna and walked the Scottish Highlands on a winter navigation course. His ocean pursuits include gaining a ‘Crew Competency Certificate’ through the Royal Yachting Association (RYA) and being an accomplished advanced diver. He continues his love of the outdoors with climbing and cycling in Scotland and further afield.

Jose Perales - Development Manager ( BAck office operations)

Jose Perales is a former Naval Officer and Mechanical Systems Engineer currently working towards an MBA in Business Administration. He has worked across many sectors including providing mechanical, technical and systems engineering to the Armed Forces along with working in supervisory roles within the Automotive Industry before entering the IT and Cloud Computing Industry. Jose’s experience of supervising technical and business projects is vast and he has a wealth of experience in the fields of programming, server administration, cloud computing, IT Security, Data Processing and managing Financial and Commerce based IT systems.

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