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Isn't that really just another name for loan sharking, though?  With the Internet, maybe more loan sharks can enter a market for capital and drive down costs of financing, but I think I'd like to see a comparison between costs of capital under your plan and costs of capital under traditional financing methods.  It's the cost of obtaining financing and the ability to do it at in huge amounts that will determine whether or not P2P will ever emerge.
by santiago on Mon Feb 23rd, 2009 at 08:08:11 PM EST
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santiago:
Isn't that really just another name for loan sharking, though?  

There's no loan involved in my proposal.

Investors buy (say) units (eg billionths) in a pool of index-linked rental revenues. The pool could run to thousands, if not millions, of properties.

Investors are not entitled to any repayment of their investment, but they are entitled to an index-linked return provided properties are occupied.  Since the rents are affordable it is by definition more likely that the returns will be paid.

The market price of this new asset class will be a matter of supply and demand. It is a close relative of a Real Estate Investment Trust, and Islamically sound, unlike conventional debt, a fact which broadens the pool of potential investors.

By way of an indicator, Wessex Water -a UK regulated water supplier - raised a 50 year loan last year at 1.49% index-linked.

I believe there are huge amounts of money out there looking for just this type of secure index-linked return, and the fact that UK base rate (on non-index-linked money) is now 1% would make it even more attractive for risk averse investors

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Feb 23rd, 2009 at 08:38:50 PM EST
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