Compatriots who have left Lithuania do not forget their homeland and are investing more and more in Lithuanian real estate every year.
Quite often people think about buying and renting a house, but it turns out not to be such an easy way, so Lithuanians who are in emigration are finding alternatives.
Faster and higher earnings
Due to complicated financing from banks and other difficulties that emigrated people face, an opportunity to invest in real estate through crowdfunding is becoming more and more popular. Such an opportunity is simple as it allows investing small amounts in real estate projects and business loans, and you can earn more.
The real estate expert and the founder of the crowdfunding platform Profitus says that she is currently noticing the growing interest of emigrants to invest in Lithuanian real estate through crowdfunding platforms.
'The investment community on our platform is already more than 4 500, and more and more migrants who are working in the United Kingdom, Norway, Sweden, and Germany are joining it. They usually invest larger amounts, 10 000 - 20 000 euros. However, sometimes they invest in many different projects in smaller amounts of a few hundred euros with the aim to diversify their investment ' - says V. Cijunskyte.
According to her, emigrants are attracted by several main aspects: speed, a higher return than from housing rental, and investment security measures - the primary mortgage is pledged to investors by real estate.
"Those who want to invest through crowdfunding platforms can do so in just a few minutes online and expect an average of about 8-11% annual interest. Also, the value of real estate pledged to investors is always higher than the loan to the business itself, so if the real estate developer or business could not return the investment, then the pledged property is sold to investors and the money is returned” says the real estate expert.
What do you need to know?
For those considering investing in crowdfunding platforms, it is important to pay attention to several key aspects: whether the platform is licensed by the Bank of Lithuania, what is the loan-to-value ratio (LTV), whether the property is secured by a primary or secondary mortgage and risk rating.
'One of the key indicators is LTV (loan-to-value ratio). The lower this percentage, the safer the investment. So, if you lend 70 000 the value of the pledged property must be at least 100 thousand to reach 70%. LTV. If the value of the pledged property is even higher than the loan, LTV decreases. The PROFITUS platform has a maximum of 70% LTV' - claims the expert.
According to V. Cijunskyte, it is important to pay attention to whether the pledged property is a primary mortgage or a secondary one, as the primary mortgage guarantees that investors will be the first to receive investments from the pledged property. And in the case of a secondary mortgage, the probability that the mortgaged real estate will not be enough increases, as the first ones will be in the first place.
A way already recognized by investors
The founder and CEO of PROFITUS say that although more than a year has passed since Profitus was founded, she is already happy to have crowdfunded more than 9 million euros on the platforms and investors earned more than 10,54% of annual interest.
'We have already successfully financed 52 real estate projects, and the earnings of the 19 projects have already been successfully returned. Investors have already earned more than 324 000 euros through the platform' - says V. Cijunskyte.
She adds that crowdfunding not only helps to make your money work for you but also becomes an increasingly attractive way to borrow.
'As commercial banks introduce stricter conditions to borrow, more and more real estate developers are applying for financing. However, the main reason why crowdfunding is attractive to businesses is the speed and flexibility of obtaining a loan” says the founder of the PROFITUS platform.
Although in Lithuania alternative borrowing platforms make up only 1% of the whole borrowing market and is behind when compared to the markets in Latvia and Estonia, the general trends in the Baltic region highlight alternative borrowing as a serious challenge for traditional banks and credit unions.
In Lithuania, Latvia, and Estonia, alternative financing is playing an increasingly important role both as a source of financing for companies and as an investment opportunity or alternative to a deposit.
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