Original review date: 11.12.2018 Last update: 21.02.2019
Reinvest24 is a new crowdfunding platform providing an opportunity to invest in a Real Estate for a rental income. If you ever wanted to be a landlord without dealing with tenants and invest a huge amount of money Reinvest24 is your wish come true. They buy, renovate and manage the properties, then rent and deal with tenants on day to day issues. They even collect rent and distribute it to their investors. It’s a completely passive and secured investment and the easiest way to make real estate investments starting with just 100 euros.
Reinvest24 allows you to invest into properties using smaller amounts than what is available from being a sole investor and start benefiting from your investments almost immediately. You also have a better opportunity to diversify your investments between different properties and keep your investments safe.
What is Reinvest24?
It is a very young platform open to investors only for a couple of months. Reinvest24 was founded in 2018 in Tallinn, Estonia from experts in the field of real estate, IT and finance.
According to their blog, they have more than 10 years of experience with property development. Before founding Reinvest24 the team developed and managed the projects in a similar way to private fund. There were strong investors demand and they decided to offer access to this asset class to private investors without significant capital to invest. Reinvest24 allow retail investors to invest in real estate projects with a minimal investment of 100 Euro per project.
How investors earn money on Reinvest24?
The monthly yields offered are very good for this type of property secured investment. There are two ways investors earn money on Reinvest24. You can be a shareholder of a property and benefit from monthly rent payments. You will also participate in the value increase of the property. The properties will be revalued periodically or when a development milestone is reached. The investors have the option to vote on selling the property.
There will be a secondary market, a place where you can sell your shares over or under its actual value. The secondary market is not yet operational, but the CEO assured me it will be before the end of the year. There will be no fee for selling on the secondary market. However, the main focus of Reinvest24 is to hold the properties long-term and generate passive income from renting. The secondary market is just a way to exit your investments early if you need to do so.
What projects are available on Reinvest24?
Currently, there are only two projects on Reinvest24 open for funding. You can see all the details in the project description. One of the projects is a rental apartment with 8% net rental yield. Projects like this are the main focus for the platform.
The other project available is an apartment for sale with a fixed interest rate of 14% annually and 9 months duration. It’s more like bridge financing. This project was published on the platform to give new investors more options to invest at the beginning. It seems investors like these types of projects. If the team sees good opportunities, they will add new projects in the future with fixed return rates and duration.
Funded and exited projects
There is one already funded project which is closed for new investments. I didn’t have a chance to invest in this project, since it was already funded when I joined the platform.
There are two projects labeled with “exited”. This means the properties were already sold. I was really surprised that this is possible since Reinvest24 is a very young platform. There is a simple explanation these projects were actually never opened to the public. The team just decided to process these two for testing purposes through the platform.
From now on there will only be limited exits on good offers, and they would only occur if the shareholders agree with it by voting. How exactly voting will be implemented is not very clear at this early stage.
Investment structure
I really like Reinvest24‘s investment structure, since my investments are secured by collateral. Each development project is processed through an SPV (Special Purpose Vehicle), which represents the interests of the investors. This SPV is a legal entity (company) created especially for the particular investment project.
After platform sources, the capital for an investment project, the property becomes an asset of a special purpose vehicle (SPV). An SPV has a legal subsidiary status that minimizes the risks and keeps its obligations. Since every property has its own SPV, all properties remain safe and unaffected by the financial status of other projects. An advantage of this structure is that every project is independent, so if any problems occur with one project, it has no impact on the others.
When a property is purchased, it is also mortgaged by an assigned law firm which takes the role of a collateral agent. A collateral agent acts as an impartial watchdog, making sure investors’ interests are kept safe.
If a certain criteria is met according to the collateral agent’s agreement, they receive control over the property in question with the sole task of selling it at the best possible price, distributing the received assets between the investors. So even if something goes south, you can relax, knowing that professionals are doing the best they can to protect your interests. In other words, the property you invest in becomes the collateral.
Fees for investors
Usually, I don’t like P2P platforms that charge fees for investors. But in this particular case, there is no other way for the platform to make money. This is not the usual marketplace platform like Mintos that just resell loans to investors, collecting fees from originators for each loan listed. Because of the platform’s business model, there is no one to charge fees, but investors. There are some very real expenses for SPV incorporation and administration as well as property management and rent collection.
I find the fees reasonable. When you invest in property there is a 2% fee. It is automatically deducted from your investment. This fee applies for secondary market purchases too, but selling your shares is free. This means of every 100 euro invested, you get 98 euro worth of shares. The current project’s yields are very attractive and should compensate for the fees quickly. Reinvest24 charges 10% of the rental income for managing the properties and deal with tenants. It seems fair to me.
My experience with Reinvest24
I really like Reinvest24‘s on-boarding process. It’s very easy to open an account. The platform is open to investors worldwide. The verification process is quick and easy. All you need to do is to provide a photo of your passport or personal ID (front and back).
Once your account is verified, you can add funds to your Reinvest24 portfolio. The process is simple and there aren’t fees involved from Reinvest24. Currently, the only method to add funds is via bank transfer. Payment services like Paysera, TransferWise or Revolut are accepted which is a great way to avoid high bank fees in some countries.
I placed a bid on both open projects, but it will take a moment until it is financed completely. Once you place a bid there is no way to cancel your investment, even before the project is funded.
So far my experience with Reinvest24 is positive. I will write a more detailed review on Reinvest24 when I spend more time with the platform.
Why I did like Reinvest24?
I like platforms which allow investors to buy real estates and get rental income. In Great Britain, this model is very common, but you have to invest GBP and for most European investors there is currency risk. Another concern is that UK property market is quite overvalued and there are lots of regulation changes for BTL (buy to let) investors. Some UK platforms don’t even accept investors that aren’t UK residents.
That is why I like Reinvest24 – you can invest in euros in Baltic real estates and get rental income and some additional yield from property prices appreciation if any. The platform is open to investors from all around the world and the user experience is nice.
10 reasons to invest in Reinvest24:
1. It is very different from most real estate crowdfunding platforms. They do not resell or mediate loans, they invest and manage the property.
2. Investors benefit from real estate in the same way as owning a percentage of the property. You get your share of rent and eventual sale.
3. Investing in real estate is one of the safest investments you can make. Your investment is secured by collateral in SPV for each property.
4. An easy entry into the world of real estate investments starting from 100 euros.
5. Short-term/long-term profits from monthly rental yield and capital gains from market growth.
6. The platform’s team increase property values with development, renovation, and construction work.
7. Investors enjoy passive income since the platform’s team do all the property management and due diligence.
8. Investors can diversify their portfolios with different properties and types of investment.
9. Investors start small and end up investing more when seeing the results of their investments.
10. Experienced team – a good mix of finance experts, IT professionals and real estate pros.
Preliminary conclusion
I like the concept of Reinvest24, since I missed the possibility to generate rental income in euros. I also like the implementation. The platform user experience is nice and smooth. I especially like Reinvest24’s emphasis on investment security using a separate SPV for each property. It is something different from most P2P platforms.
The team seems to be quite knowledgeable and very motivated. I was in contact with the CEO Tanel Orro for the last weeks and he promptly answered all my questions in detail. You can contact him too, if you have questions. He is very responsive and his answers are spot on and detailed.
I am planning to write a detailed review after several months investing in Reinvest24, but so far my first impressions are very positive. You can wait for the detailed review or if you find Reinvest24 offer compelling and it fits your investing needs, you can give them a try right now and follow me to Reinvest24.
I would like to hear your opinion and discuss Reinvest24 and other P2P platforms available for European investors in my Facebook group https://www.facebook.com/groups/P2PLendingEurope/. You guys are very welcome!