CapitalStackers still gives you the benefits of being part of a group of investors but it puts you more in control.
Simply put, CapitalStackers “stacks” private funding on top of bank lending in order to reach the level required to finance a property scheme.
A borrower looking to finance a property deal will first secure a level of bank finance (usually 50-65%) and then put his scheme up for auction on the site for a group of people to come together and invest in it. Each investor can choose the level of risk they come in at, so it’s a very attractive alternative to managed fund investments, which are subject to fluctuations in capital value and tie you into long-term, third-party investment strategies
That’s because the income from your investment isn’t dependent on any volatility in equity value. The equity risk is taken by the borrower, who pays you a fixed return.
Any fall in property value will first be absorbed by the borrower who will lose all equity before the lending group suffers any loss.
For example, if the senior debt facility is 50-55% of value when first drawn, and the CapitalStackers portion makes it up to 75% for instance, property values would need to fall by more than 25% before lending members were to suffer any capital loss.
The platform allows you to invest alongside other members, with (in most cases) the senior debt provided by one of the traditional high street lenders. The CapitalStack then fills the gap between this senior debt and the borrower's equity.
Deals are posted in the primary market place for a set period and members bid to participate. These bids may be pre-agreed (i.e. on a first come first served basis) or subject to being outbid – and the deal is driven by the market.
What’s more, it allows us to layer the CapitalStackers debt to create a spectrum of risk and reward profiles within each individual deal (and across a portfolio of deals), split by deal type, sector and geography.
To find out more, see the "Returns" section.
