Invest & Fund Review
Here's the Invest & Fund review, written by one of our specialists. You can find more reviews in our comparison tables.
Invest & Fund is the only P2P lending company that has a combination of five things, leading to excellent risk-reward balance…
Invest & Fund Review: their best-rated product
This account has been paying 6.67% after fees and bad debts in the regular P2P lending account and 6.17% in the IFISA due to slightly higher fees.
What is Invest & Fund?
Invest & Fund does residential bridging and development loans usually between £500,000 and £5 million, with a planned term of up to 18 months.
When did Invest & Fund start?
Invest & Fund started doing P2P property loans in 2015. Total lending is now £120 million.
What interesting or unique points does Invest & Fund have?
Invest & Fund is the only P2P lending company that has this combo of five things: 1) the top 4thWay PLUS Rating, showing an exceptional risk-reward balance, 2) a good 4thWay Risk Score, showing few losses before interest in a severe recession and property crash, 3) over five years of history, 4) low bad debts with proven, swift debt-recovery practices leading to 100% recovery, and 5) enforced lender discipline through a cap of 10% of lender money in any one loan.
How good are its loans?
Invest & Fund focuses entirely on residential properties, which makes it easier to assess loans and build on the experience of Invest & Fund's people further. It also lowers the risks when compared the commercial property (shops and such), which is intrinsically riskier.
The highest ever loan size compared to the property value on Invest & Fund's bridging loans reached 78.6%, but, with around 9/10 of its historical loans successfully repaid in full, the highest outstanding loan size is 65.0%. The remaining 1/10 loans are all in good standing. That is remarkably low and will easily enable Invest & Fund to continue to contain the risks. Invest & Fund is relatively cautious on bridging loans, rarely approving one that hasn’t recently reached practical development completion. This is a distinguishing feature that puts Invest & Fund's bridging loans at the safer end.
The highest ever approved development loan size compared to the expected sale price of the completed development is 68.8% and the highest outstanding now is 66.3%. This is a very sensible upper limit that compares very favourably to other P2P development lending.
One in ten Invest & Fund's loans have been junior loans paying 15%-24%, which come with substantially higher risks of large losses in the event of the loans turning bad, but these loans are only to existing borrowers and under limited circumstances. All but one of its junior loans has already repaid in full with the last loan still live and in good standing, with six months to go.
Invest & Fund used to approve loans from £100,000 to £2.5 million, so around half or less the current size. This is unlikely to impact the quality of the loans, although 4thWay will monitor as usual.
Invest & Fund during COVID-19
Invest & Fund paused new lending for about five months near the start of the pandemic, but restarted again. As a result of the pandemic, quite a lot of loans briefly fell behind on repaying, but there are now no loans that are late, and the loan book looks very strong.
Invest & Fund kept its loan resale market fully open and functioning normally throughout all COVID-19 lockdowns. All loan parts up for resale were quickly purchased. As of January 2021 there are no loan parts available, due to strong demand from lenders. This is a double-edged sword: it means you might at times find it harder to lend your money through Invest & Fund, but it does demonstrate that long-term lenders remain faithful due to excellent results.
During the pandemic, Homes England, a non-departmental public body that funds new affordable housing in England, agreed to start lending through Invest & Fund for seven years.
How much experience do Invest & Fund's key people have?
My colleagues and I at 4thWay have conducted extensive research and interviews of the Invest & Fund team. I'm satisfied it has the breadth of experience in property lending and risk analysis that we want to see, with many decades of relevant experience between them, including at a senior level at major banks.
Invest & Fund review: lending processes
Invest & Fund has high-quality processes for checking these kinds of loans, looking into the borrowers themselves, financial accounts, the development sales plan, any important contractors and proof that previous developments were completed as expected. The property is always physically inspected, which is not the case at all P2P lending companies. It ensures better and more consistent standards, lowering the risk of suffering a loss and it reduces the number of loans that are approved that ought not to have been.
Invest & Fund generally avoids areas where the property market is widely considered to be over-heated, such as central London.
Invest & Fund's borrower- and development-monitoring practices are equally top-notch and comprehensive.
A development is not fully funded by Invest & Fund lenders in advance, and then drawn down by the borrower. As and when each tranche of the development loan is required, Invest & Fund asks individual lenders to fund it. This is not ideal, as it means that potentially a development might go wrong if lenders suddenly withdraw from lending. However, Invest & Fund's strong record even during the pandemic and also its other sources of cash, such as from institutions, gives reassurance.
We would ideally like to see Invest & Fund more routinely request that a borrower prepares a plan B in case its initial plan to repay the loan falls through. However, with its excellent record of full repayments, it's potentially overkill in this case. Also, Invest & Fund's key rainmaker clearly has a lot of experience in helping borrowers to come up with improved plans if trouble hits, and so they will be able to help with alternative plans as and when it becomes necessary.
Very critical for these kinds of loans, Invest & Fund has demonstrated that it takes action quickly if a loan is turning bad. It has suitable processes in place to deal with the recovery of bad debt.
How good are Invest & Fund's interest rates, bad debts and margin of safety?
Invest & Fund interest rates have clearly been sufficient and appear to be attractive for the risks involved, with just a few minor bad debts, all swiftly recovered. Rates have come down over the past few years to better align with lower risks, but still remain highly satisfactory.
Invest & Fund has achieved our top 4thWay PLUS Rating of 3/3, “Exceptional”. It has done this despite some heavy penalties in our calculations, due to its history being just slightly smaller than our highest hurdle mark. Nevertheless, its history is substantial enough for a calculated rating. The 4thWay PLUS Rating shows that lenders spreading their money across many loans across lending accounts of this calibre can strongly expect to make money even through a very severe recession and property crash.
I believe lenders have an excellent margin of safety.
Has Invest & Fund provided enough information to assess the risks?
Invest & Fund has been badgered by 4thWay even more than average, and over a longer period, and yet has very patiently provided detailed data, answers to our questions and access for interviews. Invest & Fund is amongst the most transparent P2P lending companies, making it easy to do a detailed assessment of its people, processes and performance.
Invest & Fund should however provide more of the information and statistics that 4thWay gets directly to prospective lenders on its website.
Is Invest & Fund profitable?
As of Invest & Fund's most recently filed and audited accounts, it is still loss making, although this is to be expected at this stage in its growth.
What can you tell me about Invest & Fund's cybersecurity?
Invest & Fund doesn't automatically redirect you to the secure version of its website if you go to the insecure one. It's difficult to end up at the insecure version, however, since you would likely have to deliberately type in “http” into your browser. This is therefore a very small risk.
Invest & Fund's website technology is up-to-date, doesn't appear to have malware and is showing as clean by Google Sage Browsing, McAfee and Yandex. The website is secure and carries a valid security certificate, helping to protect you when you supply your personal data. It is unclear whether Invest & Fund is automatically monitoring for hacking and malware activity, although Invest & Fund informs us it has a firewall in place to prevent hacks.
This assessment is not based on a full attempt to hack into the website, but rather on broader scans from our security provider Sucuri, which can lead to errors.
Is Invest & Fund a good investment?
Invest & Fund is a good investment that would fit well in almost any portfolio of P2P lending accounts.
What is Invest & Fund's minimum lending amount and how many loans can I lend in?
The minimum you can put into Invest & Fund is £2,500, although no more than 10% of the money you put into Invest & Fund can ever be put into a single loan, even if there are not currently enough loans available. While this could mean some money remains unlent a little longer, this is very responsible from Invest & Fund, considering at many platforms you could theoretically pile all your money into one loan.
The minimum that you can lend in a single loan is £250.
Most lenders usually have their money lent and diversified automatically. You can select loans for yourself if you are a self-certified sophisticated lender, high-net worth investor, elective professional lender or per se professional lender.
Does Invest & Fund have an IFISA?
Invest & Fund's account is available as an IFISA. It's exactly the same, except that, unusually, it has slightly higher fees that effectively reduce your lending rate by half a percentage point.
Can I sell Invest & Fund loans to exit early?
Yes, you can sell your loans to other lenders for a fee of 0.25%.
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Invest & Fund review: key details of its lending account
4thWay PLUS Rating
Interest rate after bad debt
Here we show the P2P lending site's own estimate
4thWay Risk Score
Lower Risk Scores are better. How is this different to the 4thWay PLUS Rating?
Invest & Fund Quick Expert Review: the only P2P lending company that has a combination of five things, leading to excellent risk-reward balance…
Invest & Fund does residential bridging and development loans usually between £500,000 and £5 million, with a planned…Read the full review here
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The 4thWay® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. The ratings assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or IFISAs, and measure your overall performance across all of them, not against individual performances.
The 4thWay PLUS Ratings are calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay® PLUS Ratings.
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