Blend Network review
Ratings
Loan types available
Development loans
Bridge loans
Renovation loans
Website and investment product features
Auto-invest
Secondary market
Manual selection
What is Blend Network? How does it work?
Blend Network is a small but promising British P2P investment site. It is run by a team of former investment bankers who identified that niche lending opportunities were available, in segments and locations where British banks were not serving the market. As of August 2019 they had lent around £8m but this is expected to grow quickly over the next 12 months. So what are these niche opportunities? The loans that appear on Blend are typically in geographic areas that banks pay less attention to, such as Northern Ireland, and certain areas of England and Scotland. They are also often loans for small developments or building renovation works, which many banks stopped funding after the financial crisis. All loans are secured on real estate and the LTVs are usually quite low. This focus on profitable, niche lending opportunities provides very attractive opportunities for investors, with interest rates of 8-15%, and a current average of around 11.3%. The downside is that supply is limited. Many of the loans sell out very quickly, and there tends to only be 1 or 2 loans per month that come onto Blend. Blend has a minimum investment of £1,000 per loan, which means that its investor base is high net worth and professional investors.
What we like
What we don't like
- Returns are high - up to 15%
- Good lending record so far - no arrears and no defaults
- Loans are well structured with sensible LTV ratios
- Website operates well and is easy to use
- High quality information is provided about each loan, including independent collateral valuation reports
- Blend lends in areas that have a shortage of housing and moderate house prices
- Good management team
- Supply of loans is very limited currently
- Only suitable for high net worth or professional investors
- Ability to workout defaulted loans has not been tested yet
Risk and return profile
Conclusions on Blend Network
The two most common types of loans that appear on Blend Network are:
- Loans to small developers with a successful track record operating in their area. The development will often be only 6-8 residential properties. The properties will be mid-market in terms of cost and quality. Interest rates will be 10-12% and funding will be released in stages, with a typical maximum of 65% LTGDV
- Conversion projects. An existing property is being acquired and is being converted for a different purpose. Examples include the conversion of an office building into flats, or a restaurant into a medical office. Interest rates and LTVs are similar to the development projects.
Blend Network is most suitable for high net worth and professional investors with larger sums to invest in P2P loans. The minimum investment of £1,000 per loan and limited ability to diversify means it won’t be suitable for many people. As there is only limited loan availability currently we would expect that most Blend investors will have other P2P investment accounts, and will invest on Blend whenever new loans become available.
Blend offers some of the highest rates available in the UK right now for secured P2P loans, and that is the main attraction of the site. We recently interviewed the Blend CEO, and was impressed on his focus on finding under-served niche lending opportunities that can offer superior returns to investors.
We hope that Blend keeps focusing on these types of opportunities, even if it potentially limits how big the site can get. Some other British P2P platforms grew too big, too quickly and loan quality suffered. If Blend maintains its current focus on quality loans with high returns for investors, they will be successful over the long term.
Other sites to consider
CrowdProperty provides finance to smaller British developers. The team have built a very good lending track record so far, based on having strong real estate expertise. Growing strongly
Kuflink is probably the most similar British site to Blend Network. It is bigger and offers more loans, but the interest rates tend to be lower - around 7 to 8%. However the risk profile is also typically a little lower too which makes it worth considering.
Proplend is a British P2P investment site offering secured real estate loans. The returns range from 5-12% and there is a wide range of products and loan tranches to choose from.
Bridgecrowd does one thing and it does it very well. It offers investors British secured bridge loans with interest rates of 9-12%. Like Blend Network it has a very good lending record, and is for investors with large sums to invest.
Capitalrise offers investors access to loans that are secured on developments and properties in super-prime areas of the UK such as central London. The quality of the website is excellent. Rates are normally around 10%
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Great review! I’ve been considering investing through Blend Network, and your insights on their platform and performance have really helped me understand the pros and cons. Appreciate the detailed analysis!