A simple way to invest in real estate projects

Your investment is secured by a first or second mortgage on the property, as well as by other collateral (e.g. a surety or guarantee). Different projects have different risk mitigation measures, which you can find in the self-service under "Collateral" in the project information for each project.
Funds in your user account that have not been invested are held on your behalf by Lemon way, a licensed payment service provider. These funds are held by Lemon way in segregated accounts with credit institutions in the European Economic Area (EEA) and are covered by a deposit guarantee scheme. Profitus does not manage or control these funds.
Your investments are not subject to the deposit guarantee schemes set out in Directive 2014/49/EU of the European Parliament and of the Council (*1). Your investments are also not covered by investor compensation schemes established under Directive 97/9/EC of the European Parliament and of the Council (*2).
Please also note that investing always involves risks, including the risk of partial or total loss of the money invested.

The Profitus platform is obliged by the government to submit all investor information to the State Tax Inspectorate, so you do not need to provide any additional information. If you still want to see this information, you can do so by logging into your account and selecting the "Transactions" tab in the menu on the left. There you will see all the information you need.

The amount of the interest earned depends on the amount invested. As the platform works on the interest principle, the higher the investment, the higher the earnings. The interest on projects varies from 5% to 14%.

If you invest as an individual, the interest earned is classed as Class B income, which you must declare on Form GPM308 and in the "Taxable Income" annex to this form. You must pay 15% personal income tax on this income. We will provide the State Tax Inspectorate with the necessary details of the interest you have received during the calendar year.

The borrower is urged to fulfil his/her obligations in accordance with predefined rules. If the payment or payments are not made within the set period of time, a recovery process that is administered by Profitus is initiated. You will be kept informed of the entire process via the contacts provided.

Profitus acts only as an intermediary, so that the direct relationship between the investor and the project owner would be preserved in the event of cessation of activity. As the assets of the project owner are pledged to the platform, which represents the interests of the investors under the law, the assets would remain with the investors.

Profitus pools money for various types of business loans. Currently, Profitus platform finances two main products. The first is business loans with real estate mortgages, where real estate is pledged as a primary mortgage to secure investors' interests. The second, business loans where real estate is secured by a secondary mortgage to secure the investors' interests, in which case the personal guarantee of the company's CEO or a related person is also provided.

All projects on the platform can also be financed in stages. This is a particularly attractive financing option for property developers when the current value of the property to be developed is significantly lower than the total investment required for the project. It is advantageous for the project owner to finance the development project in instalments, gradually increasing the value of the mortgaged property and not overpaying for borrowed funds that cannot be immediately employed in the project. This type of project has a maximum LTV which cannot be exceeded when financing new phases of the project. All loans are financed on the basis of the then current value of the mortgaged property, and in the case of a phased loan, once the maximum LTV has been reached, a new appraisal is carried out by independent real estate valuers.

As all projects are secured by mortgages or other guarantees, the total loss of the investment is unlikely. Be that as it may, investing always involves the risk of losing part or all of the investment.

In case the investment required for the project is not raised in the first instance, the developer is offered to accept the amount raised and, once part of the project has been completed, to create a new project for the next phase. In case the developer declines the option, the funds are returned to the investors within 21 days.

When applying for a loan to develop a project, one must also submit a plan for repaying the investment and interest. In most cases, this will be the funds raised from the sale of the properties developed, but that is not a rule. The terms and conditions of each project may be different, but without a plan of how the investment and interest will be repaid, no loan is granted to the developer.

Unfortunately, there is no early withdrawal option, but you can sell your investment on the secondary market. On the secondary market, you sell your projects on your own terms. 

There is no single formula for choosing a project to invest in, as the needs and opportunities of all investors are individual.
When choosing a project, we recommend looking at 3 main criteria:
LTV ratio - this indicates the loan-to-value ratio, the lower the LTV ratio, the safer the loan is in the event of a default, i.e. in the event of a recovery process, i.e. sale of the mortgaged property;
Project rating - this is calculated by our specialists taking into account all the circumstances of the project. The higher the project rating, the lower the interest rate because the project is lower risk;
Project period - usually the loan is repaid at the end of the investment period, less often it is repaid in instalments with interest over that period.

The rating of projects is determined by an algorithm we have developed. The ratings are A+, A, A-, B+, B, B-, C+, C, C-, D, with A+ being the highest rating we give (lowest risk). To determine the rating, we assess the project itself (value, profitability, marketability), the developer (its reputation and creditworthiness), the shareholders (their reputation and creditworthiness) and we carry out a "stress" test ("what if?" as an example - if sales stop would the company be able to continue paying interest and repay the loan at the end of the term). The higher the rating, the lower the interest rate as the project is rated at lower risk.

Investors' money starts working when the loan agreement is signed. In almost all cases, this happens one day after the project is financed.

Investors' funds are held in a separate account created for this purpose only. It is a transit account whose purpose is not to carry out banking operations, but is intended only for the transfer of money.

Depending on the amount invested, the transfer period can be up to 24 hours. In rare cases, the process can take up to 4 business days. If the funds have not reached your account after this period, please contact us at [email protected]

There are two ways to top-up your wallet, neither of which requires you to add a bank card to your account. You can either top up your account by wire transfer or by entering your account details on our payment partner's page, which will transfer your money directly to your Profitus account.

If your wallet has multiple IBANs, select the account you want to transfer money to. Once you have done so, select the amount you want to transfer (no more than the balance in your wallet). Confirm the transfer by clicking "Withdraw" and the withdrawal will be completed. Please note that withdrawals within SEPA normally take up to 2 days. Withdrawals outside SEPA may take up to 4 days. If the funds have not reached your account after this period, please contact us at [email protected]

Refinancing of a project takes place in several cases. In most cases, refinancing is granted to the project developer when it becomes apparent that it will not be possible to meet the project's repayment and interest repayment deadlines. The purpose of refinancing a project is to cover the existing debt, thereby extending the maturity term of the debt.

Loan-to-value (LTV) is the ratio of the loan to the value of the asset. It shows the percentage of the mortgaged real estate or other assets that the loan represents. So if a borrower is looking to raise €70,000, his collateral must be at least €100,000, in which case the LTV is 70%.
The lower the LTV percentage, the better, because it means that more assets are pledged to investors. However, it should be kept in mind how the assets are secured, whether by primary mortgage, secondary mortgage, etc.

We provide all the necessary information about the interest paid through the platform to the State Tax Inspectorate (STI), so there is no need to do additional work for those investing in Profitus projects. You can view your interest earned and other information by logging in to the system and clicking on the overview button. If this and other information related to the individual's income tax is correct, the investor only needs to confirm the declaration by logging into the Electronic Declaration System (EDS) and pay the automatically calculated income tax fee.

The terms of each project may vary, so investors are advised to carefully review all the information provided about the project before making an investment. In the event that the developer fails to make a payment on time, we will charge +5% increased interest. The interest is calculated inclusive from the date of delay. We distribute the project interest and investments to the investors within 3 business days of receiving the money in the Profitus account.

Every natural or legal person can invest in publicly announced projects after registering on the platform's website. To ensure this, all projects are published publicly on the Profitus website.

In certain cases (e.g. for a project raising a higher than normal amount of investment), the Profitus platform will make future projects available to all investors. Upcoming projects will be displayed in a common list of all investment opportunities, with the selection (button) "invest" indicating that the project will be available "soon". This gives investors the opportunity to prepare their investments in advance, accumulate the necessary sums of money, etc.

A sophisticated investor is an investor who understands the risks involved in investing in capital markets and has the appropriate resources to take on those risks without incurring excessive financial consequences. Investors may be classified as sophisticated investors if they meet the specified identification criteria.The following natural or legal persons shall be considered as sophisticated investors:

(1) legal persons meeting at least one of the following criteria:

• own funds of at least EUR 100 000;
• a net turnover of at least EUR 2 000 000;
• a balance sheet of at least EUR 1 000 000;

(2) natural persons meeting at least two of the following criteria:

• a personal gross income of at least EUR 60 000 per fiscal year or a portfolio of financial instruments of more than EUR 100 000, consisting of cash deposits and financial assets;
• the investor is employed or has been employed for at least one year in the financial sector in a professional capacity requiring knowledge of the transactions or services envisaged, or the investor has been in a managerial position in a legal person for at least 12 months;
• the investor has executed an average of 10 large transactions per quarter in capital markets in the last four quarters of the year.

The investor has the possibility to fill in a template provided by the platform, which the investor can use to apply to be considered as an experienced investor. The template provides outlined identification criteria and a clear warning clarifying that if the investor is classified as an sophisticated investor, he/she will lose the investor protection which gives the sophisticated investor a 4-day cooling-off period for investment.
The application to be considered as an sophisticated investor shall contain the following information:
(1) a certificate setting out the identification criteria that the investor meets;
(2) a statement that the applicant investor understands the consequences of the loss of investor protection afforded to non-experienced investors;
(3) a statement that the applicant investor accepts responsibility for the accuracy of the information provided in the application.

Inexperienced investor - an investor who is not an experienced investor: According to the Crowdfunding Regulation, Profitus is required to distinguish between experienced and inexperienced investors. An investor with little knowledge or experience in investment services is considered an inexperienced investor. Inexperienced investors can still invest on the Profitus platform, but they must be prepared to accept the risks associated with the investment and Profitus must provide them with additional information about the risks. Investor protection measures are in place for inexperienced investors using our services, such as a 4-day cooling-off period during which you can withdraw your investment.

The cooling-off period for an inexperienced investor shall start from the moment a prospective inexperienced investor makes an offer to invest or expresses an interest and shall end after four calendar days.

The cooling-off period does not apply to experienced investors. If you think you should be subject to the cooling-off period because you consider yourself an inexperienced investor, please contact us at [email protected] 

Regulation (EU) 2020/1503 (the Crowdfunding Regulation) is a Europe-wide regulatory framework that requires a licensed crowdfunding provider to meet the same or similar regulatory requirements in all EU Member States and can therefore operate on a pan-European basis. The main purpose of the obligations of crowdfunding providers under this regulatory framework is to protect small investors.

Due to legal requirements, we are obliged to check the suitability of our services for all inexperienced investors. The test is based on the legal requirements arising from the EU Crowdfunding Regulation, which are mandatory and unavoidable.

If you do not provide answers to the knowledge and experience test, you can continue to invest in loans with real estate collateral, but you will need to familiarize yourself with all the risks presented before each investment.

Projects are grouped into Risk Categories using Profitus' unique algorithm. Each Risk Category corresponds to a certain probability of default, which is determined on the basis of a theoretical company model, for which historical default data was used. As new historical data becomes available, the probabilities of default for the identified Risk Categories are regularly reviewed and, if necessary, modified. The following default probabilities are currently provided:

Under the EU Crowdfunding Regulation, we are obliged to ask all inexperienced investors to calculate their capacity to absorb losses. However, if the Investor does not want to provide this data, they are not obliged to do so, but we are obliged to provide the information and the tool in the Investor's own environment.