BTL crowdfunding platform InRento hits €15m funding milestone
European buy-to-let crowdfunding platform InRento has attracted €15m (£13m) in investments with no late projects to date.
The Lithuania-based firm said it has a community of more than 17,000 investors and generates an average annual return of 12.43 per cent.
InRento has increased its investment volumes by 50 per cent in just half a year, according to an article in Delfi.It posted on InRento’s website.
Read more: InRento launches new secondary market feature for larger investors
Gustas Germanavičius, founder of InRento, said that higher interest rates in the Eurozone have led to a decline in house purchases but boosted the rental market.
These conditions have also resulted in more developers considering alternative finance, he said.
“Larger, more experienced developers are starting to turn away from banks and are looking for alternative sources of finance, as in the current environment, borrowing from banks is losing its advantages,” he said.
“With the rise in Euribor, rental property managers may have to pay nine to 10 per cent interest per annum on their bank loans, and with the interest, they have to start repaying the principal of the loans immediately, which is why we are getting a lot more requests to finance a project, because on the platform, only the interest is paid each month, and the loan amount is paid back when the project is completed.”
Read more: InRento upbeat about 2023 after second-quarter lending volumes rise
Additionally, Germanavičius warned against investors chasing the highest returns, as they are usually accompanied by higher risks.
“InRento focuses on lower- and medium-risk projects with a stable rental income stream, which is not as affected by changes in property values on the market as development projects,” he said.
“All investor investments are secured by real estate collateral. In most projects, the interest rate paid by the borrower does not exceed the amount of the rental income, which reduces the borrower’s default risk.
“Economic changes in a country, region or market segment may result in underperformance – falling property sales prices or rising costs will have a direct impact on the returns investors earn. The current situation with rising interest rates is a good example that this is not just theoretical.”
Read more: InRento increases share capital to fund expansion plans
InRento last year merged with Estonia-founded EvoEstate, to become the largest licensed buy-to-let crowdfunding platform in Europe.
Users can invest in real estate rental projects under development in Lithuania, Spain and Poland.
