When I started investing in crowdlending I shared my investments 50/50 between property developments and business loans. I am still not into personal loans and I am not sure I ever will be.
But I have moved forward balance my investments 75/25 between property development and real estate on one side and business loans on the other site.
My reason for this is security (the loans are backed by real-estate properties) and the fact that while I believe the housing market either has or is about to peak in Western Europe there is still room for growth in Eastern/Central Europe like the Baltic countries, Belarus, Czech Republic, Poland, etc.
Simply because I like to secure a steady passive income. Rental yield is normally lower than a riskier personal or business loan but as it is backed by a building or piece of land it is safer.
On platforms like Grupeer, I have both types of crowdlending investments, but on Crowdestor and BitOfProperty I have only property developments like hostel renovations and a depot house. Now I have decided to diversify my portfolio further and turned my attention to Reinvest24.
Some of the team members behind the Estonian based platform have worked in the real-estate market since 2005 and are experienced in property development and sales. The platform was founded in 2017 and has invested more than € 10,000,000 since then.
On their homepage, you can see all their projects, both the funded (closed) and the open opportunities.
Setting up the account was rather easy. On the homepage, a framed “join now” button can be found and when pushed a sign up form appears. You will then have to verify your account by uploading a picture of your national ID-card, driving license or similar.
I faced a minor problem after having uploaded the front of my driving license, as my account said “KYC needs more information” but I just needed to upload a picture of the backside of the driving license as well and I was ready to invest.
You can add funds to your account by bank transfers (Revolut and TransferWise are both accepted) or via a Visa or MasterCard. Be aware that a 3% service fee is added if you choose the Visa/MasterCard transfer! By transfers, you must remember to add your reference number which is stated under “deposit”.
How to invest
When funds are added you can, at the moment, chooses between to open projects: a land plot development with an existing rental contract and a commercial space with an Italian restaurant/wine boutique – both located in the capital of Estonia, Tallinn. The minimum amount of investment is € 100.
As you can see from the above screenshots the yields vary from 6.81% to 7.45 on these two projects. I decided to go for investing in the land plot investment as I could see some future potentials in this opportunity. A part of the land plot is rented out to a tech company on an existing rental contract meaning a rental yield starts from day one.
The land plot is 6,716 m2 and the acquisition price was € 272,550. The latest appraisal report from May 2019 valued the property at € 288,000. The report can be downloaded on their homepage as well as a project sketch that outlines the future development plans for the area.
The exit strategy for this project is to sell the land plot to real estate developers in 2-3 years and earn on the estimated capital growth of approximately 7%. This is 100% in alignment with my investment strategy which is seen in a long term perspective as I try to secure steady cash flow.
I asked the Reinvest24 CEO Tanel Orro why the company does not develop the area and sell with even more profit. His response was that their main expertise is in the preparing of the development regarding legislation and city council permits and then sell to local area developers. To me, that sounds like a fine perspective on their main potentials and they know what they are good at.
In general, I feel the information level is sufficient and they are open on transaction costs of your investments which can be seen in the below screenshot.
As you can see their costs are € 1.96 (2% entry fee) from my 98 shares purchase. Immediately after my investment, I received a confirmation and my first rental earning of € 0.04 has been added to my account after one day.
My potential annual profit on this € 100 investment is € 14.60 which is calculated on average rental yield and the property price increase. This means the annual profit based on the potential price increase itself is not secured. As they say, it is a potential profit. The rental yield though is secured.
Safety or buy-back guarantee?
There is no buy-back guarantee on these projects. But they are screened and a risk assessment is carried out by Reinvest24 and your investment is secured by a collateral agent mortgage.
€ 100 is a good investment to start with and I will observe the platform in the future. If they continue their development I am certainly open to further investments.
At first glance, I like what I see when looking at Reinvest24. I feel it is a serious business and as they have been in the market a few years now and presented a fine growth I have confidence in them.
The 2% entry fee has caused some discussions on their facebook page though. However, from September 9th, 2019 until September 23rd, 2019 they will skip the 2% fee and give an exclusive opportunity to invest with this cashback campaign:
Cashback % levels:
0,5% Cashback from a total of 100 – 999 EUR gross investments
1% Cashback from a total of 1000 – 9999 EUR gross investments
1,5% Cashback from a total of 10000 – 19999 EUR gross investments
2% Cashback from a total of 20000 – 29999 EUR gross investments
2,5% Cashback from a total of 30000 – 39999 EUR gross investments
3% Cashback from a total of 40000 – … EUR gross investments
I find the 3% cashback very generous but must at the same time admit that I will face a hard time finding € 40,000 in my budget for investments. But it is certainly worth considering if you are about to invest real estate properties in the near future.
Feel free to take a look at Reinvest24 here.
Too many platforms?
There have been some discussions on various crowdlending facebook forums regarding the number of platforms. Are there too many now? Has the p2p financing markets gone bonanza? Are they all 100% serious? Etc.
I am not to decide or predict how many platforms the market can support. Nor can I predict which crowdlending platform will have success and which will not. I suppose some will go bankrupt in the future and some will remain and grow. That’s is why I diversify my investments and thus spread out the risk.
With this, I hope you have enjoyed reading my review and I wish you a nice day 😊