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What is ReInvest24? How does it work?
ReInvest24 is best known for offering investors the opportunity to purchase shares in residential and commercial properties in Estonia and Latvia. This allows investors to have exposure to any growth in property prices in the region, without having the hassle of being a landlord. ReInvest24 aims to find properties that they can acquire at below market value, and that can generate strong rental yields. In other cases, the ReInvest24 team will find properties that require renovations or minor development works. These works are performed once the property is acquired. This can add significantly more value to the property than the cost of undertaking the works.
The team at ReInvest24 have been very successful so far in achieving profitable exits for their investors. 12 properties have been exited so far, with average IRRs (returns) of around 15%, and as high as 24%. That is an impressive result. Other projects are designed to be held on the ReInvest24 platform for several years. ReInvest24 is close to launching a secondary market, which will allow investors to buy and sell shares in these longer term projects.
So, how does ReInvest24 make money? For crowdfunded property investments, ReInvest24 charges a fee of 1% on new investments. It then receives a management fee of up to 10% on the rental income generated. There are no exit or success fees. Overall we think the fee levels are very reasonable, particularly now that the new investment fee has been reduced from 2% to 1%.
ReInvest24 is led by Tanel Orro, who has a background in asset management. You can find our interview with him here. He has a small team that operates the platform, and he works with a real estate consultancy to provide additional expertise and management capabilities.
The early projects on ReInvest24 were in Estonia and Latvia, and the site is now expanding into Moldova. It is now offering development project loans, with typical interest rates of 13-15%.
The property investments offered by ReInvest24 have a different risk and return profile than most of the sites we cover on ExploreP2P. The investments have more downside risk (if values fall) but obviously they also have the potential of generating strong returns, which would come from rental income plus property price appreciation.
The ReInvest24 team performs significant research before selecting properties. This covers location, liquidity, price, existing contracts, development options, financing, visual appeal, limitations, market potential and rental yield.
One notable aspect of the baltic real estate market is that rental yields are significantly higher than in Western Europe. Most of the rental yields generated by ReInvest24 properties have been in the region of 6-9%, which is substantially higher than available in most other European countries.
If considering an investment we suggest reading the research published by Ober Haus, which is the leading real estate broker and analyst firm in the region. Prices have tended to be very stable, growing very consistently at around 3% pa for the last 10 years. Housing prices are inexpensive when compared to other European countries, but more importantly, prices are low relative to typical local income levels too. This should make the housing market at lower risk of a downturn than in many other European markets.
ReInvest24 has also recently started to offer property development loans at yields of 13-15%. While the interest rates are high, we feel that the quality and quantity of information provided on the site to potential investors could be significantly improved. At the moment it seems that there is not sufficient information available that would allow sophisticated investors to make an informed decision on whether to invest. We would be cautious about the development loans until this is improved.
Development finance can be risky and we are also not sure if ReInvest24 has sufficient experience and expertise to underwrite and manage these types of loans, particularly in foreign locations such as Moldova.
We think the most compelling types of opportunities available at ReInvest24 are those which the team can demonstrate an excellent track record. That means crowdfunded property investments into residential properties in Estonia and Latvia. ReInvest24 can add a lot of value for its investors through refurbishment activity, careful property selection and in the negotiation of purchase and sale prices.
In the current economic environment we would be more cautious about the commercial real estate sector as there is uncertainty over future demand levels for office space and physical retail. It feels like there is more downside risk than upside potential in these sectors currently.
We are also cautious about the development loans listed on the site. Hopefully the team at ReInvest24 can prove us wrong, develop a track record, and improve the analysis / information provided to investors on future deals.
Overall, we think ReInvest24 property investments could be a good opportunity for investors to diversify their investment portfolios, and generate strong returns. It is one of the few sites available that allows European investors to invest in real estate without the considerable time and costs associated with owning a property directly and is worth consideration.
Bulkestate is a small but growing site focused on loans secured on real estate. It offers loans secured by real estate. Their rates are the highest in Europe for secured loans currently (11-14%)
EstateGuru is an excellent site that offers loans secured on real estate. Rates are high - around 11%. Currently mainly focused on the Baltic region of Europe but with plans to expand into other countries.
Crowdestate offers development loans from several European countries. Quality varies, but we really like the quality of information provided about each loan, which is some of the best we have seen so far.