Investing in real estate is a great way to create passive income and increase your long-term wealth. There are many pros and cons to investing in property, the main con being the fact that investing in your own real estate requires a lot of capital. The entry barriers are high, but these days you can choose to invest in real estate through real estate investment platforms like Reinvest24, which work just like crowdfunding platforms. If you’re thinking about becoming a real estate investor, consider investing with these great advantages — think big, start small and act now.

1. You can start small, investing in Baltic real estate from only 100€

Real estate prices keep rising every year. These days, you need at least 100K to buy, develop and either rent or sell a decent property for a profit. However, with Reinvest24 you can easily become a real estate investor starting from 100 euros per investment. Investing small amounts during a long-term period can even make you a millionaire in under 30 years.

For example, by investing 10K (one-time initial investment) and 100 euros regularly for 30 years, you will have an investment portfolio worth 1,066,375€ by 2049. You can read our post about where does investing 100 euros per month get you to see more examples.

2. You don’t need to be a real estate expert

If you like the idea of investing in real estate but have no idea about what’s going on with the housing market, then investing in real estate on your own can be very risky. Fortunately, our real estate team has been dealing with high-profile real estate investment projects in for many years. We know exactly what is going on with the Baltic real estate market, what trends are on the rise, and which properties have the highest returns. Reinvest24 does all the market research for you.

3. Your legal overheads are optimised

Another time-consuming and stressful things about investing in Baltic real estate is all the legal procedures and paperwork you need to handle. Starting from notary fees and ending with various licenses needed to develop your property, legal expenses can seriously damage your budget and create a hole in your investment project.

With Reinvest24 your expenses will be optimised and you’ll only pay a small percentage of what you’d normally pay if you would be investing in property on your own. In conclusion, your expense will be proportionate to your total investment, not whatever the lawyers and notaries charge in total.

4. Reinvest24 takes care of all the real estate management and due diligence

What about the day-to-day expenses, maintenance and upkeep… is that something you’re willing to take care of? If you really want your passive income to stay passive, simply leave it to Reinvest24. We fix, furnish, clean and manage all our investment properties, allowing our investors to enjoy the perks of being a real estate investor without needing to deal with the headaches of property management.

As well as providing you with easy entry to the world of Baltic real estate investing, we also take care of all the due diligence. Reinvest24 chooses the best investment properties, but only after screening the market, making thorough financial calculations, conducting research on the market and its future potential, visiting the property and closing the best deal to ensure investors make a great profit.

5. You can diversify easily and receive passive income from multiple sources

A smart investor diversifies. In other words, multiple investments are made to assure income from various sources, minimising the risk of investing your capital. Our Baltic real estate investment platform allows investors to diversify easily. You can choose between different property types; commercial, residential, or investment types; development properties, long-term rental properties and attractive short-term rental properties. Reinvest24 is also constantly expanding its markets, offering real estate in different locations such as Baltic tigers, Moldova and soon other European destinations.

6. You can invest in exclusive properties that you otherwise couldn’t find

Investing in exclusive Baltic real estate requires a lot of money. Furthermore, the most interesting investment properties are never openly offered to the public. There’s a closed group of buyers, sellers and real estate professionals that deal with property very private. Hence, sometimes it’s impossible to get your hands on certain projects, even if you have the money. Read more about these smart real estate millionaires who invested in property and held on to it.

Through Reinvest24 you can gain access to the best selection of properties available. You can also invest in more expensive real estate properties collectively with other investors. Last but not least, we help you invest into exclusive Baltic real estate that’s not publicly on sale as we often lead direct negotiations and make deals on properties that aren’t publicly on offer.

7. It is quick and easy to cash out

Selling real estate can take a lot of time and patience. Sometimes it takes months, sometimes it takes years. Do you have enough time and money to wait out a market slump? Reinvest24 provides its investors with an easy exit. You can sell your shares anytime in our marketplace. Your money, including your earned dividends, will be paid straight into your account.

Furthermore, your shares can be sold in several parts, if you wish to liquidate only a small part of your assets. In any case, it’s a lot easier and faster than selling actual real estate. However, the secret to becoming rich through real estate lies in the buy-and-hold strategy. The longer you keep your investment, the more money you will make with capital growth. Read more about why real estate prices have grown and always will.

8. Your investment is protected by collateral

When investing in a property through Reinvest24 you receive the same level of protection that you would when buying your own real estate. Each property becomes an asset of a special purpose vehicle, which has a legal subsidiary status that minimises risks and keeps obligations to investors. All our properties remain safe and unaffected by the financial status of other projects.

Furthermore, every property is also mortgaged by an assigned law firm which takes on the role of a collateral agent that makes sure investors’ interests are kept safe. The property you invest in becomes the collateral, so your investment is always backed by the value of the capital. For your peace of mind, discover our article on 6 ways your investment is protected.

9. You will receive profit from rental yield and capital growth

Our total combined return is 14.6%* per year. That includes net yield, mostly from rental income (ca. 8%) as well as capital growth (ca. 6%). Reinvest24 provides investors with monthly passive income from rental yield, and investors also receive profit from capital growth when exiting the investment. In other words, you get regular returns as well as a healthy profit from the increase in the value of the property you invest in. Hence, you’re profiting from short-term and long-term returns.

So, there you have it! Nine reasons why investing in Baltic real estate with Reinvest24 is better than investing in property on your own. There’s no denying that investing in real estate on your own can bring you great returns, but it definitely requires more knowledge, more money and protection. Our real estate investment platform democratises real estate investing, so that you can grow your capital easily, affordably and safely. In conclusion; think big, start small and act now! Invest with Reinvest24 in real estate starting from 100 euros.

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By simply entering ‘real estate crowdfunding’ into Google, you will find millions of results. What you won’t find so easily is a clear, straightforward explanation as to what type of real estate crowdfunding each individual real estate investment platform offers. The main difference is that most platforms mediate real estate backed loans, whereas only a few offer real estate equity. So, let’s explore the main differences between crowdfunding loans vs real estate equity.

Loans vs real estate equity

The majority of real estate investment platforms are in the business of mediating loans. This means that your investment (the money you invest) gets put into a company, rather than the property that company is investing in. Other unique platforms, like Reinvest24, however, provide real estate equity, which is the similar to owning a percentage of the property you invest in. The latter will provide you with much more sustainable, high-yielding results, such as a monthly cash flow from rent.

Exploring the good and the bad of loan financing

Real estate backed loans, also known as real estate debts investments, are investments into, well, debts. Your money is destined towards a loan, taken by a company, to make an investment in a real estate project. When investing into loans, you’re essentially acting as the lender. Since these are usually short-term investments, you have various pros and cons. The main pro includes a shorter hold period, which means you’ll know exactly when you’re going to receive your returns and how much. The main con, however, is that you’re investing in somebodies efforts to earn profit rather than the potential value of a property. 

Pros

• Easier to find clients, who want a loan (more projects, more often)
• Shorter hold period (fixed investment periods)

Cons

• Developments depend and rely on other projects (if one project fails, it can jeopardise the others)
• Fixed investment periods (your investment period is capped) 
• Higher risks (what will happen when crises hits the market, or loan taker defaults) 
• Return relies on the company/loan taker (rather than the value of the property)

Investing in real estate with real estate equity

Investing in real estate equity, which is what Reinvest24 offers, provides the same benefits of owning a property. In this case, you’re acting as a shareholder, receiving both short-term and long-term profits, especially when dealing with rental properties. For example, you will enjoy monthly returns from rent, as well as any rewards received from capital growth when eventually exiting your investment.

The biggest pro would include not having a limit on your return, which means more money in the long run. The biggest con, when it comes to real estate equity is that it’s a long-term investment, which means it takes time and patience to obtain greater returns. 

Pros

• Same benefits as owning a percentage of the real estate (you own shares in the property)
• Passive monthly income (short-term profits from rental yield)
• Lower risk
• Access to exclusive property deals (you own part of a property you otherwise couldn’t invest in)

Cons

• Limited selection of properties (time-intensive investment which means less projects)
• Long-term investments (higher returns are obtained during longer periods)
• Property management (resource intensive, although Reinvest24 takes care of it)
• Slower payout (selling shares and receiving profits from capital growth can take time)

Which type of investment is riskier? 

When comparing the risks, investments into loans mean that the development stages depend on a number of things. You need to take into consideration the financing, the loan taker’s (and such platform’s) other projects and all the due diligence that goes into making a geared investment through a crowdfunding platform.

When it comes to collateral, crowdfunding platforms that mediate real estate backed loans don’t always offer the property as guarantee and even if they do, the value is often a future estimation of it’s price. This means, if the loan defaults, the actual amount of monies recovered will depend on the progress of development works.

Recent announces of default of rather big lending companies on the market confirms, that the declared value of collateral is almost always lower than the actual loan. If it would be the other way around, then the loan taker could easily finance himself via bank loans and on better terms in most cases.

On the other hand, crowdfunding platforms that offer real estate equity always back your investment with the same property you are investing in as collateral. In Reinvest24 we always evaluate all potential risks of each property.

Investing in properties is safer than financing loans

When you invest in rental properties with real estate equity, you benefit from rental yield on a monthly basis. This source of passive income is key to creating long-term wealth as it will withstand market fluctuations, ensuring a better cash flow. For example, at the peak of the last housing crisis in 2008-2009, the real estate prices in Estonia dropped up to 50-60%. Meanwhile, rental prices remained more stable, dropping only around 10-15%.

The fact is people still need somewhere to live, regardless of the economy. So, even if banks aren’t granting loans and there’s a decrease in real estate buyers, there will still be a solid rental market with tenants needing a place to call home. Rental income will ensure you endure and survive a market downturn, at least until real estate prices get back on track. Overall, the long-term price growth of properties for the past 15 years has been above 300% (housing crises period included). 

Properties provides cash flow and long-term wealth 

Even if there’s another housing crisis, investing in rental properties will still generate a healthy monthly cash flow while you wait for things to recover. And eventually, the real estate market always does. So, in terms of long-term returns on periods over 10 years, the market growth is still estimated to be at least 6% per year on average. This estimate includes the next real estate market correction period. When your long-term real estate investment provides rental yield, combined with capital growth, you are bound to receive great returns, with relatively low risks.

In comparison, when investing in loans, the next market correction or housing crises will leave the developers who are taking the loans in a sticky situation with interest rates over 10% and platform fees over 4%, and no rental yield to reward investors. If the developers are unable to sell their real estate, while paying an expensive mortgage with high interest, your returns are in jeopardy. Hence, the potentially high rewards come with high risks.

Get rich quick or get rich for life?

In terms of liquidity, investments into real estate equity can provide you with both long-term and short-term returns (especially when dealing with rental properties). You’ll even enjoy monthly rental income when the market is down. However, compared with investments into loans, it may take more time to enjoy your profits, as your returns will come from long-term periods, which is more sustainable if you’re looking for long-term wealth. In comparison, investments into loans are generally faster since they are short-term investments with fixed periods.

Should I invest in loans or real estate equity?

In conclusion, investing in rental properties will grant you a monthly cash flow to withstand any storm, and the real estate market eventually always recovers. However, when it comes to real estate loans, the investment can become a risk. Many loan takers and developers will never recover from a market correction, especially when using expensive high-interest loans for fast real estate developments. Investing into the loan deal can hold a huge risk when the market is not stable.

If you would like to invest in real estate through a crowdfunding platform that provides real estate equity, take a look at Reinvest24. We are a unique real estate investment platform based in Estonia. Our properties have been providing a total combined return of 14.6% per year, with encouraging projections for 2019. If you would like to start receiving monthly passive income, invest in real estate today, starting from 100 euros. Discover our high-yielding rental properties.

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