British Lithuanians are discovering new ways to invest in Lithuanian real estate
Compatriots who have left Lithuania abroad do not forget their homeland and invest more and more in Lithuanian real estate every year.
Dažnas often thinks about buying a home and renting it, but it turns out not to be such an easy way, so Lithuanians in emigration find other alternatives.
Faster and higher earnings
Due to the complex financing of banks and other difficulties, the opportunity to invest in real estate through crowdfunding platforms, which allow even small amounts to invest in real estate projects and business loans, is becoming more and more popular among ex-pats, because it is simpler and can earn more.
The real estate expert and founder of the crowdfunding platform Profitus says that she is currently noticing a growing interest of emigrants in investing in Lithuanian real estate through crowdfunding platforms.
"On our platform, the community of investors already consists of more than 4,500, and an increasingly prominent part of them consists of emigrants who work in the United Kingdom, Norway, Sweden, and Germany. They usually invest in larger amounts, 10-20 thousand each. euros, but there are also small investments of several hundred, in order to split investments into different projects", says V. Vanagė.
According to her, emigrants are attracted by several main aspects: speed, a higher return than from renting a house, and means of ensuring the security of investments - real estate is pledged to investors with a primary mortgage.
"Those who want to invest through crowdfunding platforms can do so in just a few minutes online and expect an average of 8-11%. annual interest. Also, real estate is always pledged to investors that is larger than the business loan itself, so if the real estate developer or business could not repay the investment, then the property pledged to investors is sold and thus the money is returned," explains the real estate expert.
What do you need to know?
For those considering investing through 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-asset value ratio (LTV), whether the property is mortgaged with a primary or secondary mortgage, and the risk rating.
"One of the key indicators is LTV (loan-to-value), or in other words, the ratio of loan to property value. The lower this percentage, the safer the investment. So, if you borrow 70 thousand euros, the value of the mortgaged property must be at least 100 thousand in order to reach 70%. LTV. If the value of the mortgaged property is even higher than the loan, the LTV decreases. A maximum of 70 percent is applied on the Profitus platform. LTV", the expert teaches.
According to V. Vanagė, it is also important to pay attention to whether the mortgaged property is a primary mortgage or a second mortgage, because a primary mortgage guarantees that investors will be first in line to recover their investments from the mortgaged property. And in the case of a secondary mortgage, the probability that the mortgaged real estate will not be enough increases, because others will be first in line.
A method already recognized by investors
The founder and manager of "Profitus" say that although just over a year has passed since the start of operations, she is already happy to have raised more than 9 million. euros and investors earned more than 10.54% on average. avg. annual interest.
"We have already successfully financed 52 real estate projects, 19 of which have already been successfully returned. Investors have already earned more than 324 thousand through the platform. EUR", says V. Vanagė.
She adds that crowdfunding not only helps recruit money but is also becoming an increasingly attractive way to borrow.
"As commercial banks tighten their lending taps, larger and larger 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," the founder of the Profitus platform assures.
Although in Lithuania, alternative lending platforms only account for up to 1 percent. the total value of borrowing in the country lags far behind Latvia and Estonia, 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 plays an increasingly significant role both as a source of financing for companies and as an opportunity to invest or an alternative to a deposit.