Reinvest24 is an Estonian real estate crowdfunding platform that offers European citizens investments in debt notes secured by a property. The platform allows you to invest in real estate located in more than six countries such as Estonia, Latvia, Moldova, Spain, Germany, and Switzerland. In this interview, you will hear from the CEO Tanel Orro what it means to invest at Reinvest24.
To learn more, read the Reinvest24 analysis or get a quick overview of Reinvest24.
First, could you tell the readers a bit about your background? How did you become interested in working with finance?
I've been the CEO of Reinvest24 for almost 5 years, since the very beginning. I studied international business in Estonian Business School and before Reinvest24 I worked almost 4 years for LHV asset management. As long as I can remember, I´ve always had an interest towards economy and finance. I'm also interested in tech and online business, Reinvest24 as a fintech platform covers both of my interests therefore I decided to join the team and become a part of it.
How do you find and assess the investments Reinvest24 makes available to retail investors?
The real estate property comes to the Reinvest24 platform in different ways. Our team is constantly monitoring the market for projects with good potential, we are working with many real estate agencies as well as the borrower might come to us directly.
After that, Reinvest24 performs due diligence on the borrower and the project and signs preliminary agreements. In this blog article, we shed more light on how we choose the right investment objects.
Why should the readers choose to invest at Reinvest24?
While our project selection process is conservative, we have been able to provide our investors above market yields over the years. Also, we are more involved in the projects we offer, as we don't simply finance the 3rd party borrowers but develop and manage some of the projects ourselves. For investors it means that if these projects don't go as planned, we are the first ones in line to lose money and investors are first in line to recover their funds. We take the risks and the project's management very seriously, and this is the reason why after almost 5 years, we still have a 0% of project's default rate.
Apart from that, we offer one of the highest interest rates for real estate investments in Europe, and on average, our investors are earning 14.9% per annum.
What sets Reinvest24 apart from other real estate investment platforms?
Reinvest24 is unique in different ways. First and foremost - it is a boutique concept platform, where investors will find cherry picked projects with great performance. We always have been working on quality over quantity and the fact that after 5 years of operation we still have zero projects defaulted proves our management approach to be working great.
Apart from that, we provide different investment opportunities for our investors. So, You can invest in rental projects, benefitting the same way as owning Your own rental property or development projects from 6 different European markets and we have also started to originate green energy projects. There are a plenty of opportunities for diversifications. And of course, currently, we are one of the most reputable platform on the market, which still offers very high interest rates in return.
How do you decide when a loan is defaulted or with minimal chance of recovery?
Defaulting project is the final step in the recovery process. In some cases it's not the fastest path to recover investors' funds, so we usually seek for other solutions before defaulting it. The important aspect here is that the borrower cooperates and works together with us. So far we have 0% defaults, but it does not mean that we never faced any issues with our projects.
How is Reinvest24 regulated?
We are in the process of becoming a regulated market participant. So far we have been compliant with the laws of Estonia and working towards ECSP (European Crowdfunding Service Provider) license.
What do you think the future of real estate crowdfunding looks like? Which challenges do you see for the industry in the coming years?
The upcoming European regulation (which is postponed for another year for existing market participants, by the way) will definitely strengthen the crowdfunding industry overall. By that, I mean that there will be fewer market participants, but those who will stay will become the masters of the products and services provided. As per the real estate, it will be very interesting to follow how the market will evolve with the potentially difficult times ahead and how platforms will handle their project management as we are about to enter a quite challenging period. Which of course, will bring its own opportunities as well.
Also, retail investors will become more educated in terms of real estate crowdfunding, project types and will understand better the risk profiles that are coming in hand with different types of investments. Many factors should be taken into account when evaluating the high-interest rates.
In our case, we are currently able to offer returns up to 16% because we are working on developing markets and we are involved with the majority of the projects, optimizing the costs to increase the profit margins.
In the long run, we believe that interest rates will go down. As for now, this is more like an outstanding opportunity rather than a sustainable paradigm that is here to stay. And one should definitely consider using it.
What’s next for Reinvest24? Where do you see your platform in five years?
Our main goal is to become a regulated platform in the near future and continue to develop the platform in every meaningful way, therefore all the efforts are put towards this.
Apart from that, for a couple of months already we have been working on entering a new investment property market. It is expected that soon we will publish our first project from this new market and propose to our investors one more opportunity to geo diversify their investments.