Reinvest24 real estate crowdfunding platform review

Published by Daniel on

(Last Updated On: January 20, 2019)

Reinvest24 might be the newest player on the real estate crowdfunding landscape in Estonia. The platform only launched last year and already has 3 funded projects and another 2 in progress.

Key highlights

  • Very new and small platform
  • Lets you invest long term on rental properties in Tallinn (and maybe later in other places)
  • 2% fee on investment plus 10% fee on rental income
  • Properties are incorporated into SPVs (Special Purpose Vehicles) to protect the investors
  • No secondary market yet (but to be added in the future)
  • Minimum investment 100 EUR
  • Average rental income 6-8%

My portfolio

Started investing: January 2019

Deposits: 200 EUR

Current value: 200 EUR

I’ve invested in a short-term rental property (think Airbnb) and a development project – in 2 apartments from the same building in Tallinn.

I’m not sure yet if I should be sorry or happy that I started to invest in this platform. On one hand, the returns for rental properties are extremely good. Average rental income in western Europe is at only 4%. On the other hand, Reinvest24 is just a small startup that has good chances to fail.

So, what is Reinvest24?

Reinvest24 is a new player on the real estate crowdfunding market from Estonia. It lets you buy shares of residential and commercial properties and receive rental income for life.

Besides rental properties, they also invest in development projects. They buy land or an old house, renovate it, maybe convert it into multiple apartments to increase rental yield and then either sell it or rent it.

One other type of investment they’re planning to do investments is what they call “store of value”. Meaning buying plots or land in areas that are planned to be developed in 5 years or so and hope that they’ll increase in value.

How does it work

You can start investing on the platform from 100 EUR. The maximum amount is the total price of the property.

Reinvest24 does the valuation of the properties and then puts them up for funding on the platform.

If funding round fails, the funds will be returned to the investors who invested in the property. From what I see, one property is listed since September (4 months now) and it’s still accepting funding, so I’m not really sure when a funding round fails.

If the funding is successful, the property is incorporated into an SPV (Special Purpose Vehicle), essentially a subsidiary company that separates the investment from the assets of Reinvest24.

Additionally, the property is mortgaged to a collateral agent (a law firm) that acts as a watchdog and guards the investors’ interests. If the investment doesn’t perform as expected, this collateral agent takes control of the property and sells it at the best market price and distributes the funds to the investors.

Can I join?

There’s no country restriction for joining the platform. You only need to be at least 18 years old.

Are there any fees?

Yes. There is a 2% fee when you make the investment and another 10% fee on the monthly rental income.

How do I exit my investment?

There’s no plan to sell the properties funded on Reinvest24. If you want to exit your investment, you could do it at any time by selling it to other investors in the marketplace.

Problem is, there’s no marketplace implemented yet. But it’s in the works. I’m assuming it would be something similar to the one on Property Partner.

Reinvest24 would do yearly valuations on the properties, and at any point in time when there are new developments on the property (like renovations).

Investing on the platform

There are 2 active properties to invest in right now on the platform. They’re both from the same building. The first one is a rental property that’s been in funding since September 2018. The other is a development project loan to Reinvest24 with a period of 9 months.

reinvest24 properties

Each project contains details about the property and what is Reinvest24 planning to do with it.

It would be nice if instead of building plans and floor plans it would contain some sample legal document describing the agreement between Reinvest24 or the investor.

What I don’t like about Reinvest24

The website is not entirely honest when it talks about their team.

It talks about the decades of experience the team has in real estate, how they invested more than 10 million EUR in private projects and how they returned more than 3 million EUR to their investors so far.

It talks about the years of leadership experience at LHV Asset Management that the CEO Tanel Orro has.

It also brings in Kirill Tripolski, the CTO, who leads the IT and programming team.

There’s so much talk about “us” and “the team”, but in fact from what I see the company has a CEO and an employee, and these 2 might be one and the same person.

And the employee was only hired in the second part of 2018. I don’t know if it’s the CEO paying himself a salary, or the CTO working part-time, or hopefully a software developer actually adding features to the website.

As for the years of experience in real estate and the many projects finished by “the team”, they’re all projects done by Tina Kinnisvarabüroo, the real estate agency they’re working with. I assume the “more than 10 million EUR invested” is actually the portfolio of the real estate agency and is not related to Reinvest24 in any way.

Talking about Tina Kinnisvarabüroo, the average fee real estate agencies in Tallinn ask for apartment sales is around 2-4%, so I can only assume the 2% fee paid when investing into the property is the fee paid to the real estate agency.

If there is no close collaboration between Tina Kinnisvarabüroo and Reinvest24, and the entire investment fee is going to them, I’m wondering from what funds is Reinvest24 surviving.

The current number of the rental properties on the platform is too low for them to survive from the 10% rental income fee.

So, do they have enough funds to survive until the platform takes off?

And the worst part is their CEO, Tanel Orro, the one with “years working at LHV Asset Management, leading his own sales team”, just finished university a year ago. And he’s been a sales rep at LHV for 4 years, and in the last year, he led his own team. And has no other visible work experience. That’s all the leadership experience he’s added to his LinkedIn profile.

I admire young people become entrepreneurs, but I feel like Reinvest24 is being dishonest when they describe their circumstances.

Conclusions on Reinvest24

The prospect of investing in the Baltics real estate is really enticing. I like that the platform plans to hold long-term the rental properties it invests in.

The rental income is extremely good, at around 8%, compared with other platforms like Housers, in southern Europe, and Property Partner, in the UK.

The platform is really raw right now, missing essential features like a secondary market where you could sell your investment. From what I understand, it’s under development.

I don’t like that their team presentation is dishonest. What they offer is a great product, and it shouldn’t need to be packaged into something it isn’t.

It feels like a one-man-show that outsourced everything, from real estate expertise to platform development. Which, if it’s true, is genius.


Daniel

Learning and sharing what I learn about alternative investments.

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