I don’t usually write about small platforms but Reinvest24 intrigued me and, although I’m not yet an investor, I keep an eye on it for the future
What is Reinivest24?
Reinvest24 is a website where I can invest in real estate properties online without paperwork and hassle. I can do it according to a concept that is a little different from what we are used to with ordinary real estate crowdfunding platforms.
Reinvest24 is real estate equity, not lending, so it is like owning a percentage of real property.
In real estate crowdfunding, I lend money for a project in exchange for the interest paid on the debt. So, I borrow money and the borrower pays me back with interest.
Unlike real estate lending as we know it, with Reinvest24 I can buy shares of property and earn money in two ways. One is by the rents paid by the tenants, and one is by any increase (should it increase) in the value of the property.
Another big difference to what we are used to is that projects may not have time limits.
So, for example, you could invest in several apartments that pay rent and benefit from them indefinitely. This is game-changing for me.
Investing in this way is as close as possible to the passive income that so many aspire to.
Housers tried a similar concept years ago but I wasn’t very convinced about how well it worked.
Since I like very much this way of investing, here is a second chance.
Why do I like this way of investing?
The reason lies in the fact that using a concept like this is the closest thing to an ordinary real estate investment.
Then why don’t you invest directly in real estate?
I love that question.
Investing in real estate requires much more quality and commitment than you suspect. If you are a landlord you might have learned it the hard way.
To invest well in real estate, you need it:
- A big initial capital (especially for the first deal)…
- The ability to search, locate and buy the right property
- The ability to negotiate an affordable loan
- The patience to handle all the bureaucratic aspects (which in some countries is impressive)
- The capacity to find good tenants (ouch!)
- The ability to keep good tenants in the property for as long as possible
After that, if possible, you need to in a way to pay taxes efficiently.
If I wanted to delegate all the hassle to an agency that does it for a living, I would have to pay a lot of money and it would inexorably reduce my return on investment.
Often then the margins to pay an agency that manages my property are not there because the returns in certain cities do not allow it.
Another aspect that I consider important is that by investing in real estate if I make a mistake with my first deal, I may not be able to buy other properties. Game over.
So I appreciate the fact that on Reinvest24 the entry barriers are very low, only 100€ per property.
By diversifying I can lower the risk by spreading it across multiple properties.
An additional advantage that I can mention is that by investing in this way I have access to properties that I would never have had access to as an individual shareholder.
Should I trust Reinvest24?
I like the team because they are people with a background in real estate and banking.
They use the support of this Estonian agency that is on the market since 2005.
The CEO is Tanel Orro and he has worked for LHV in the past years.
Here is the link to a funny video from the founder.
What I don’t like is that the physical address is missing on their homepage.
The rest of the information is available and the FAQ section is one of the best I have ever found around.
Why are they able to scoop the right properties better than me?
They apply a blueprint to the selection of the deals.
The main concept is to have properties that are easy to sell, easy to rent and with a reasonable price growth expectation.
How to invest with Reinvest24?
They designed a website to make it easy for investors to understand what they do and make the process smooth.
Honestly, I believe they have a good and user-friendly website.
The workflow to invest is more or less similar to the other platforms:
- Register to Reinvest24
- Go through the ‘Know Your Customer’ (KYC) procedure
- Deposit your funds
- Buy shares starting from 0,1€
- Forget about the investment
The best aspect of investing in crowdfunding platforms is the hands-free mode.
Once I’ve made a selection of deals they will keep going. It is not like bridge loans or development loans, where after the repayment is completed I am left with the problem of finding new loans to invest. This is very attractive for long term investors.
Here is the in house tutorial on how to invest on Reinvest24:
With Reinvest24 I know I am investing in the Estonian real estate market.
This is why I need to know how it has been performing during the last years.
Here is a chart with the price per square meter of the last years:
Investing in this tool I can benefit also from the future appreciation of the properties I invest in. We all know that this is not a certainty. What we know is that on the very long term, if we study the past performance, we can expect an average growth up to 6%. Past performance is no guarantee of future results, but it is a good starting point.
One of the best deals on Reinvest24
Last year Reinvest24 sold a property used for short-term rentals mostly in Tallinn. We can consider this an example of good property management.
The CEO Tanel Orro explains what happened in this 2 minutes video:
What I like / What I don’t
Reinvest24 is very new but the people behind it are showing great talent and passion for what they do. At this stage I cannot expect to see hundreds of deals on their platform but, as I said, I keep I wide eye on them.