Meet the music lawyer-turned crowdfunding entrepreneur
Rubbing shoulders with the rock stars like David Bowie, Elton John and the Spice Girls as a music lawyer was not enough for Frazer Fearnhead.
Fed up with the high life in London, Fearnhead turned his back on the glitz and the glamour and returned to his Altrincham, Greater Manchester roots to launch The House Crowd, the world’s first property crowd funding company.
Having raised more than £62m since The House Crowd launched in 2012, the 48-year-old Manchester University law graduate now runs perhaps one of the property sector’s most disruptive companies as its chief executive
To the uninitiated, a highly-paid job working for a law firm like Lee & Thompson in the capital with easy access to such iconic stars would be a dream come true.
But not for Fearnhead, whose father and grandfather were both estate agents.
“Working as a music lawyer in the 1990s was all very well when you’re in your 20s,” Fearnhead told TheBusinessDesk.
“But I had reached the stage when I had done it all, so I moved back to Altrincham (he was brought up in nearby Bowdon) in 2004.
“I had already started buying properties in 1994 and rented out my property in London.”
Soon, Fearnhead teamed up with long-time school friend and now business associate Suhail Nuwaz at about the time of the financial crash of 2008.
He went on “I had been dealing in property in London and I could tell there was an appetite for investment in property and the banks weren’t lending.
“Suhail and I built our first website to launch the crowdfunding concept. At first, we were told it was illegal, but we managed to put a legal structure in place.
“Our first property was a £40,000 terraced house in Salford, and it took a month to raise the cash with an average investment of £2,000.
“We went on to bigger and better projects and now our largest investment is now £4m.”
The House Crowd is now funding its own developments – the largest of which is next to Wilmslow rail station, a conversion into 32 apartments – also including a 36-home development in Mossley, Tameside, all completely funded by the “crowd”.
“Our model gives the investors a fixed return on their money without the use of bank leverage,” continued Fearnhead.
“When a high net worth person is putting money into a development deal, the top 20 to 30% will be paid in as equity.
“That’s great if everything goes to plan, but if things go as badly as they did in 2007 and property values fall by, say 25%, the equity share is completely wiped out.
“The bank’s capital isn’t raised until the values fall. What the banks did when property values fell was they seized assets from under the noses of investors and sold them off.
“Our method is a lot more safer and risk averse. People know what they are getting if the end value is misjudged. We are about providing protections and consistent returns.”
The House Crowd has organically moved away from buy-to-let investment and is now focusing on debt-based investments or its own developments.
By the end of this month (November) there will be 30 people working for the company.
It also has a small base in London – where many of its investors live – including Dave Roberts, investments director, Bill Anthony, chairman and Paul Stallard, commercial director.
Fearnhead said: “We’ve got a total of about 2,000 investors, and 16,000 people registered on the website.
“We’ve got students to merchant bankers, doctors, factory workers – anyone who is prepared to think outside the box. Putting money into six to 12-month loans.
“There is a dashboard that people can use to track their investments. It takes a bit of effort to get better returns.”
Last year’s turnover (to May 31) was £500,000, and this year’s £1m, according to Fearnhead.
“Our target is to make a profit of £2m by 2019,” he said.
Meanwhile, Fearnhead has also turned his hand to one of his first loves – writing. His work The Alternative Guide to Property Investment was a number one bestseller on Amazon.
Fearnhead added: “Our business is not just about making money. I hate the fact that the Government and pension companies have let the people down. We are helping provide people with a better financial vehicle.
“If something isn’t done people are going to be living their old age in poverty.
“The Government isn’t building houses for people. I am really proud of the developments we are doing. We are building houses for people, funded by the people.”