As you may recall, Reinvest24 invested into a luxurious rental apartment in the impressive Avangard building in the centre of Tallinn back in March 2019. In September 2019, we successfully exited the investment, earning our investors 24.3% in total combined return. This has been one of our most successful P2P investments in real estate to date, and this is how it happened.
P2P investments made into a luxury apartment in a historic rental building
When Reinvest24 first came across this Art Nouveau property, we took into consideration a number of factors. The high initial price of the rental apartment was a downside, but we also saw lots of potential in the great location, and the fact that it was a purpose-built rental building with modern amenities such as a laundry room and shared rooftop terrace. The investment property also passed our comprehensive selection process. Read our article: How we choose the right investment objects.
Global P2P investments in real estate
Peer-to-peer investments, also known P2P investments, were made by various international investors. In total, Reinvest24 issued over 79,000 shares to online investors from around the world, looking to build their investment portfolios with passive income from real estate. Read our article: 9 Reasons why investing with Reinvest24 is better than buying your own real estate.
The perfect short-term rental property to invest in
Our team decided this would be the perfect opportunity to invest into a profitable short-term rental property, which could be listed on rental platforms like Airbnb. We put a lot of focus on selecting the perfect rental property for investments in terms of layout, size, and its location within the building, on the quiet side, with nice views towards the backyard.
Investment case: 8.3% net yield from rent
After successfully funding the property with P2P investments, worth 79,076€ in total, we managed to furnish the micro-apartment and we also hired a property manager to take care of Airbnb bookings. The property was successfully rented out during short-term from April until September 2019, earning our investors 8.3% net return from short-term rental yield.
Why did we sell the property and exit the investment?
While enjoying the monthly rental yield, we were able to identify many additional potential risks:
- Property managements costs
- Liquidity issues
- Competition within the building
Having just one apartment in the building meant our small scale operation was costing us more in terms of labour. For example, cleaning just one micro-apartment would cost 10-15€ instead of 5€ when hiring someone to clean 20 apartments at a reduced price, but with more earning possibilities. This is usually the case with economies of scale – higher output, lower costs.
We had many performance risks and the chance to sell
Despite the good performance, the property was expensive, and if the holiday rental market would tighten, we would start loosing liquidity. Another factor that we took into consideration included the high-level competition within the rental building itself, including larger and even cheaper rental apartments. Luckily, we found a buyer and sold for a profit.
Investors made over 8% capital gain in just 6 months
Considering all the risks, our team decided it was time to sell. Reinvest24 found a buyer for this investment property, selling with over 8% capital gain. All in all, our P2P investments into this property earned 8.3% rental yield, which was paid out monthly. Investors also gained from 8% capital gain over 6 month, which would become 16% annual capital gain in total.
Our total combined return exceeded our expectations
Indeed, our initial estimation for capital gain was 3.1%, based on modest expectations and the current market’s performance. Reinvest24 likes to play it safe when it comes to numbers. It is our policy to under promise and over deliver as a result. Hence, we are always conservative with our estimations. No unrealistic numbers, and no excuses, just profitable P2P investments in property!
How much did investors make from P2P investments in this property?
In conclusion, the investors who invested into this property received 24.3% return on their P2P investments in real estate. Reinvest24 exited the investment in September 2019. By now, all our investors have already received their share of the profits, paid out directly to their accounts. We often highlight our 14.6% returns, but in this case it was much higher.
How much can I make from P2P investments?
Our P2P investments in real estate start from 100€ per investment. However, you can invest as much as you like and in as many different properties as you like. This way, you will diversify your investment portfolio and ensure long-term capital growth. Read our article: Where does investing 100 euros per month get you or how to become a millionaire?
Don’t miss out on our next P2P investments in property
Reinvest24 is a leading real estate investment platform, founded in Estonia back in 2017. Our P2P investments include investments in rental, commercial and development properties. Our real estate investment platform has helped over 5500 people in over 50 countries become online property investors. Why not join them? Check out our available properties to invest in real estate starting from 100€.