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Monday, November 03, 2014

Easyproperty, easy money

I've just been reading about the success of Easyproperty's fund raising exploits. It turns out investors have been piling into the bright orange brands future as an online agent via a crowd funding site.

Well, good luck and all that...

I've shared my worries about 'crowd funding' before. It strikes me it makes the perfect forum for fleecing lazy/click happy investors.

You never know, Easyproperty might just be a gold mine, though to me it looks ladled with risk.

This business concept is hardly new - many online agents already exist, many have launched, spent a lot of money, then burned.

The crowd funded segment of Easyproperty raised them £1.42 million, for which, internet investors bagged themselves a eye wateringly pitiful 2.12% of the business.

Sharp in take of breathe. By my rudimentary maths, Easyproperty is already valued at a mouth dropping £67 million.

Let's just remember the business has barely started trading.

So, a company that has done pretty much nothing, other than make a website, splashed about some orange and got some press coverage is now already worth £67 million!!!

Am I missing something?

I admit I can be a bit of a dunce, but I'm always ready to be enlightened, so do EP own their offices? Or do they have existing profits or a strong turnover? Does the Easy brand have a 100% success rate (  Sadly Easy cinema, Easy internet cafes are part of a list of failed Easy concepts )

Sorry, I'm now struggling for breath on behalf of those who've thrown their cash at this one, and can only hope it was part of some kind of tax saving vehicle.

One more concern worth airing about Easy property, whereas some industries, such as starting an airline for example, have significant barriers to entry, not least owning a couple of jumbo jets - the online agency business strikes me as very different, in fact, there are very few industries more 'easy' to enter.

The online agency business can be entered by anyone equipped with a laptop and an understanding of databases and html or £40k to splash out on a small team in India.

This market place is already crowded with sites offering landlord chance to get a property advertised for a few pounds less than the site sat above it on the 'online letting agent' Google search page.

BTL crowd funding as safe as houses

I've previously advised people to steer clear of crowd funded BTL, but in comparison, BTL crowd funding appears to be - well as secure as bricks and mortar. At least there is some foundations to the investment,  unlike a virtual agent splashed with a zest of tangerine orange.

So good luck to those online investors out there who think differently, and could any of you share more information on Easy property to help enlighten me as to why you thought this was a good investment.

I'll be sat in the corner of the room with the dunce's hat on, trying my best to understand.

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Anonymous said...

EasyProperty has less than 350 properties - multiply that by the average fee of say £300 and there isn't much revenue let alone profit. That equates to £105k if the were 100% successful and profits are rarely more than 35%. This week Xperience sold for £6m based on a profit of £700k. In the crowd funding pitch, the EasyProperty guys said they have lots of pre registered landlords with around 13,000 properties. Whilst EP never claimed to have all these properties listed, the implication is clear and the question one has to ask is why didn't they get listed?

When people invest, they do so in the hope of increasing the value of their investment. At some point, investors will start to question the accuracy of the pitch.

As a business transfer agent, we work on certain rules. EP has very little value and the name is but a licence.

Most agents are valued at 1 - 2 times revenue or 4-6 times EBITDA. (earnings before interest, taxes, depreciation, and amortization)

There is no way EP can be worth even a few percent of their self valuation. I suspect serious questions will be asked at some point.

Hawkeye said...

Thanks anon. You're points are very much in line with my perception.

It makes you wonder if investors are really that stupid - maybe they thought they were buying the airline...???

I'd still love to know how they can substantiate this valuation.

Can anyone help me make the figures add up?

Anonymous said...

There will be LOTS of very unhappy investors when they find their investment wont break even in the next decade. It was all puff and will soon be found out for what it is.

Wishful thinking, great PR and the belief it was part of the EasyJet phenomenon. It isn't. easyProperty and are registered trademarks of easyGroup Limited used under licence by eProp Ltd.

Hawkeye said...

Sixty seven million pounds for a share of a licence agreement??!!! Wow! The figures become even more frightening.

It would be nice if someone from EP could come and justify their valuation - unless they've already jetted off to Brazil.....

I'm intrigued.

Anonymous said...

As far as my research goes, the chap behind this is Robert Ellice who runs a number of small-time 'Arthur Daley' businesses. Seems he got a slice of parental money and an 'in' to the family business, Ellice Investments!

Again with help he got an 'in' to Clarke Hillyer, a small comm and res letting agency that had a couple of branches (which have now closed). Seems the company now exists from a small industrial office unit these days (The lock-up, as Arthur would have called it!!!).

Check out Derek Kingsley Wilson. He crops up as fellow director in a number of Ellice's enterprises and Wilson is also the man fronting the pitch for the crowd funding from his company Chrystal Capital.

The point is, Ellice is no big time CEO with real skill and experience, more like a front man from which the real player/s (Kingsley), can make a wedge of cash. If I didn't know better, I'd say Ellice will be left holding the baby when the scam crashes and burns whilst Kingsley will be sipping the champers on a yacht somewhere off the Caribbean coastline.

Whole thing stinks of 'lets raise money and run'.

Anonymous said...

Dear Hawkeye.. I read with interest your article and the comments thereafter.
I am one amongst the number of crowd cube funding investors who read the pitch, examined the financials and gambled a few pounds - fortunately it seems - not too many pounds..!

Having followed easyproperty's progress during 2015, I am less than satisfied with a. the amount and detail of reporting available b. the company's actual sales figures - which if correct, are no more than any high street agent could expect to achieve.

Right now I am teetering on regretting my investment.