New investment opportunities
It's no secret that investing in real estate requires substantial capital, whether buy-to-let or buy-to-sell. However, crowdfunding platforms have solved this problem, allowing investments in real estate projects with a fraction of the required capital. The potential return on investment depends on the projects and risk you are ready to take.
At the end of 2020, a buy-to-let crowdfunding platform, InRento, was launched. Recently it has become the largest licensed crowdfunding platform in the EU by the number of investors, providing an opportunity to invest in rental projects.
InRento’s clients invest in already existing properties and earn from monthly interest and capital growth once the property is sold at a higher price. Income from capital growth is what no other real estate investment platform has offered before InRento.
"Some investors look only at what they will receive from the rent but often forget another part of the return - capital growth. We offer our investors the opportunity to earn from both, says Gustas Germanavičius, the founder and CEO of InRento. Our company pays great attention to the security of investments, so if the property is sold cheaper than it was purchased, the project owner will be obliged to bear this loss and pay the full amount to the investors. If the property is sold at a higher price, all parties will benefit - the profit is distributed proportionally to the investors, the project owner, and InRento."
Recently a rental project - modern office in Vilnius, Lithuania - was successfully sold. As a result, instead of the projected 6.06% annual return, the investors earned more than 20% in ROI.
"This buy-to-let project was crowdfunded in a few weeks last year. After the project owner sold the property at a higher price, investors earned an additional 14.26% capital growth ("net")," says Deividas Urbanovičius, InRento's Investment Manager.
Shortly after, another rental project - an office in the Newtown of Vilnius - was fully completed. The annual ROI of this project has reached 17.48%!
As a result, the average annual return on rental income and capital growth from InRento's completed projects is 19.49% now!
Trust is the most crucial factor
To ensure a more stable asset value and protect clients' investments, the specialists of the InRento platform carefully select the projects to be funded. The platform’s community is offered projects in central parts of cities and developing districts. Also, real estate appraisal is performed for each project, and its potential profitability is analyzed today and in future perspectives.
"When looking for projects and placing them on the platform for funding, we aim for the generated rental income to exceed the interest on the loan. In this way, the interest payable does not cause significant financial challenges for the project owner and reduces the risk of insolvency. Before embarking on the project, we also analyze the possible price change and sales perspective; therefore, we work only with professional project owners, who sell the property when the best opportunity arises," says G. Germanavičius.
According to InRento's management, mentioned project exits prove that a well-thought-out investment can yield a much higher-than-average return. There is no doubt that there will be more examples in the future when investors earn not only from rental interest but also from capital growth.