I haven’t written anything about my real estate crowdfunding portfolio since July. Enough changes happened in between, so I’m ready to provide new updates.
Let's keep in touch
Subscribe to our newsletter
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.
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.
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’ve seen, one property was listed since September 2018 and was still accepting funding 4 months later, 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.
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).
There’s no country restriction for joining the platform. You only need to be at least 18 years old.
Yes. There is a 2% fee when you make the investment and another 10% fee on the monthly rental income.
The website is pretty simple and it’s still missing a lot of functionality.
There are 2 active properties to invest in right now on the platform. The funding process takes lately between 1 week and 1 month, as the number of investors grew in the last months.
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.
You can see your portfolio on “My Investments” page:
The interface is very simple and it only shows basic information. No statistics, historical data, exact payment dates and percentages. Even fields like “repayment date” or “first payout” are not separate entities, but part of the property’s title.
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 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 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 who become entrepreneurs, but I feel like Reinvest24 is not being transparent when they describe their circumstances.
Investing in Reinvest24 comes with many risks. Most of them are not specific to Reinvest24 but are inherent to real estate crowdfunding in general.
Before investing in Reinvest24, you should take these into account.
Reinvest24 is a rather new and small and untried platform. One of the main risks in this category is of platform default. To minimize the investors’ risks, the investments are kept separately from Reinvest24’s assets. In the case of platform default, the investors’ funds are relatively protected.
One other risk involving the platform is due to the website’s security. The website doesn’t use 2-factor authentication, and this makes investors accounts more un-secure.
To mitigate this security risk, there is stuff investors can do as well:
Crowdfunding is a fairly unregulated domain in most of Europe. Any changes could affect existing platforms. This means Reinvest24 might find it hard to comply with the regulation changes and at the worst, they’ll have to suspend their activity.
The entire real estate market could collapse, and your investments would become unsellable. We still remember 2008. Although rental properties bear less risk, as people still need to rent a home even during a crisis.
The returns might be lower than advertised. Properties might sell for a lot less than anticipated, cutting the advertised 14% earnings. Rental income might be lower than expected due to unforeseen events (lack of tenants, fire hazard, etc.).
Reinvest24 has no secondary market or a way to sell back your investment to them and exit the platform. Until a secondary market is built, there’s no way for the investors to exit their investment.
I’ve invested in 3 properties and 2 development projects. 3 of the projects are in apartments from the same building in Tallinn. I think Reinvest24 bought and renovated the entire building.
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 decent chances to fail.
So far, I’ve received 3 monthly dividends of 0.66 EUR each for one property, and another rental dividend for another, so I’m on the right track.
The platform owners are fairly active marketing-wise, and things seem to move a bit faster lately. I think Reinvest24 is slowly gaining traction and there’ll be more projects in the future that will be funded easier.
Would I invest in it? I just did. A small part of my funds. Hopefully, it will pay off.
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 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 not entirely open. It feels like a one-man-show that outsourced everything, from real estate expertise to platform development. Which, if it’s true, is genius.
On the other hand, there’s nothing to complain about my experience with Reinvest24 so far. I receive monthly dividends along with a detailed pdf report on what was the income on each property, how many days it was occupied, what were the costs, what was the fee Reinvest24 took.
Given the total funds they collect each month from rent and the fact that the list of properties grows each month, my confidence in this platform increases. It looks like a profitable business.
If you plan to invest in Reinvest24, even though it’s not really safe, you can help me out by using my referral link. Unfortunately, it won’t give you any sign-up bonus. It will give me 1% bonus of everything you invest in the first year.