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Profitus news Invest in real estate for rent or through a crowdfunding platform?

2021-04-30 08:30:00


Invest in real estate for rent or through a crowdfunding platform?

Although for Lithuanians, investments in real estate (NT) are one of the safest and most attractive, only about 10% could do it. population (according to LB data on 10/20/2020). One of the main reasons is that not everyone has the necessary several tens of thousands of euros.

However, with the acceleration of crowdfunding platforms (SFP), the situation is changing, because in order to invest in real estate, it is enough to have just 100 euros. It is already used by thousands of Lithuanians, and the average amount of investments in these platforms reaches 700 - 800 euros.

Investing in real estate through crowdfunding platforms is attractive, although it also has its drawbacks. One is that you don't get ownership. However, you get more returns and your investments are "withdrawn" faster and easier, and you can break them up even by a few hundred euros for different projects, thus reducing the investment risk.

I will highlight a few key differences between investing in real estate by buying it and crowdfunding.

Investment amount. In order to purchase liquid and income-generating housing in a big city or by the sea, you need to have (or borrow) at least 50 thousand euros. The SFP "starting" investment can reach up to 100 euros.

Investment return. Owning housing, and renting it out, will generate about 6 percent. investment return. When renting a house, 10 months' income is usually calculated, because the remaining 2 months it is advised to save income for future repairs. Both housing and furniture or household appliances. Rented housing needs to be repaired more often. The return on funds invested through SFP is from 6 to 12 percent.

Investment security. When buying a home, you will put your savings "in one basket". If there are fluctuations in the real estate market, the value of your purchased property will also fluctuate. Selling a home quickly isn't easy either, usually selling quickly won't sell it at the best price for you. When investing through SFP, it is possible to distribute your savings not only to different platforms but also to different objects on the same platform. Which generate different returns (some - 7 percent, others - 10 or 12 percent). It also depends on the size of the invested amount.

Read the full article here.