Meeting The Demands of Gen-Zs… Industry Views!

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This month, I focused on the growing surge of young investors entering the bridging loan market. 40% of Brits aged 18-to-35 plan to own property to earn passive income, compared to just 14% of over-35s.

Head over to TikTok and you’ll find communities of Gen-Zs sharing tips on how to get started and continue growing portfolios. It was here I met two trend-setters, Yann-Kelvin Monney and Leon Kennedy. Aged just 24 and 22, they already have several rentals under their belt, and continue to expand their empires.

Interviewing property moguls, Monney and Kennedy was more insightful than I could have imagined.

Not only are these Gen-Zs incredibly serious and strategic investors… But they are also making a mint. I reached out to industry leaders to get their opinions on this juicy trend.

What’s your experience of Gen-Z borrowers?

“Younger investors are savvy! When our younger borrowers come to us, they tend to know a fair bit about bridging and have looked into what it may be able to do for them.

For example, we have a number of younger investors that have come to us to when starting portfolios, as they know bridging can move far more quickly than the high-street. We will also happily look at first-time landlords and first-time buyers.

They seem more willing to engage with the bridging world than their predecessors, likely because of the old reputation that ‘alternative finance’ had.

They are also engaging with specialist finance brokers and are therefore listening to those that have seen bridging used effectively already.

Tiba Raja, Executive Director, Market Financial Solutions 

Have you seen more interest from Gen-Zs over the last couple of years?

There’s no doubt the demand for bridging loans from this demographic is growing. In general, short-term loans are becoming an increasingly popular option as more borrowers appreciate the value this type of finance offers.

The main attraction of a bridging loan is how quickly it can be arranged. In a day and age where Gen-Z’s expect things instantly, there’s no surprise why bridging finance is becoming a popular choice.

Plus, for those looking to embark on a new investment opportunity, the allure of a bridging loan providing short-term flexibility, is key for allowing Gen-Z individuals to spread the cost of a loan over a short period of time.

It’s an appealing option when compared to traditional methods, which lack the same level of flexibility and may come with uncertainties and hidden fees.

Albeit a bridging loan isn’t always the most suitable option, as it depends on the borrower’s situation and what they’re looking to achieve, it’s certainly something to consider if they are looking for quick access to funds, which can provide a customised solution and flexibility.

Jonathan Sealey, CEO at Hope Capital

One of the young investors I interviewed had a great experience with MS Lending Group! Can you tell me more about your approach?

Great to hear Leon had a great experience with us that’s exactly what we love to hear!

When it comes to bridging we tailor our approach to all types of investors in the market whether they’ve been doing it for years or whether they’re very new to bridging.

When someone is new to the market we understand it often needs a more hands on approach as the first bridge particularly can involve some unknowns as well as an education piece on what we do and why we need certain criteria.

At MS Lending Group we pride ourselves on offering a human approach. We’re not tick box. We get to know the customer, what they need out of the loan/ deal. Whether they need to complete quickly and therefore we can often offer a no valuation or desktop valuation.

Where the deal may not typically fit certain criteria we always look for ways of how they can make it work and work closely with the client to understand their needs. It’s very much a partnership.

This takes up more time from a resource perspective, but we see it as an opportunity to help clients develop their careers personally and hope working with us encourages them to increase their property portfolio and use us on their future bridges.

Alexandra Stratton, Marketing Lead at MS Lending Group

Do young investors have different motivations from other generations?

[Gen-Z investors] don’t seem to have different motivations from baby boomers or Gen X investors. Just like their forbearers, they want to invest in the property market efficiently, and try to generate decent yields and returns as a result.

The main differentiator seems to be that younger investors really know that they have more financial options available to them, and they’re happy to utilise them if they work.

Tiba Raja, Executive Director, Market Financial Solutions 

Do you think the affordable housing crisis could drive under-26s towards less conventional homes? …Like auction properties which can’t be mortgaged?

Ultimately, the Covid-19 pandemic created a seismic shift in how the market operates. When social distancing rules applied, there was a significant increase in online auction purchases, a process which undoubtedly benefits the tech-savvy younger demographic.

This is a trend which has certainly stuck and continues to be utilised as under-26s look for the best method to purchase property as an investment opportunity.

Auctions tend to attract more than their fair share of properties that a mortgage provider wouldn’t consider. Most of the time these kinds of properties have defects, are very run down, or require renovation works.

In other words, they have the opportunity to add lots of value. This can be great for younger investors and property developers who are looking to kick start their property portfolio.

Auction properties are also extremely popular with those who don’t want to be struck in a chain and would prefer to go down a route which is more reliable.

Jonathan Sealey, CEO at Hope Capital

What do you think could be holding back Gen-Zs from bridging finance?

As we all know, buying a home is no easy feat and it’s growing substantially harder for younger generations. With Gen-Z’s facing the housing crisis with elevated prices and mortgage rates, confidence has no surprise been hit.

However, a bridging loan can be used for various reasons and caters for the requirements of different borrowers, their circumstances and their level of borrowing. It is therefore the responsibility of lenders to continue to raise awareness of the short-term market and its value to the younger generation.

At Hope Capital, we have worked with hundreds of borrowers from different age brackets and always keep a close eye on the market so we can create the most suitable solutions to meet our client’s needs.

As the appetite for bridging loans has increased significantly over the last few years, there have been many more bridging lenders entering the marketplace.

However, the specialist lending industry remains a specialised area, meaning the need to find an experienced bridging lender is paramount for both broker and borrower.

Jonathan Sealey, CEO at Hope Capital

It is definitely difficult to get there and the lack of information out there for young people is partly to blame because most people I speak to just don’t really know.

Leon Kennedy, 22-year-old property investor

Have you noticed that a lot of Gen-Z investors get advice from social media?

“The reality is that social media is the go-to source of news and information for lots of people – and certainly not just younger people. This includes financial products just as much as it does social trends and current affairs.

Being accessible on the phone at any time and place magnifies the fact that social media is a go to platform for real time information as well as guides and examples of how things are used in practice”

Tiba Raja, Executive Director, Market Financial Solutions 

… And do you have a social presence?

“MFS has profiles on Threads, Instagram, LinkedIn, Twitter and Facebook. There are many benefits to this. Firstly, we consider all the platforms, but particularly Facebook and LinkedIn, to have value in being able to share the high volume of quality, educational content we create for brokers and borrowers.

Our BDMs use social media – again, primarily LinkedIn – to network and build relationships. Plus, social media is also the ideal medium for sharing our values as a company; how we like to work and the qualities we pride ourselves on. It’s a great way to build brands and connect with different audiences.”

Tiba Raja, Executive Director, Market Financial Solutions 

Key Takeaways

For lenders looking to up their Gen-Z game, here are some of the best tips that I gleaned from the interviews:

  • Remember that Gen-Zs enjoy the INSTANT appeal of bridging loans, use this to your advantage
  • Be open to supporting young investors on their journey. Helping them to understand the processes now can bring fruitful partnerships later.
  • Develop a reliable social media presence – Facebook and TikTok seem to be the most popular platforms.
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