EU's first & largest regulated buy-to-let crowdfunding platform
TABLE OF CONTENTS 03 Founder’s words 05 Opening statement 06 How does InRento work? 07 InRento in numbers 08 Key benefits of investing via InRento 10 How are we different? 12 Secondary Market 14 How does InRento benefit? 15 Income taxes 16 How does InRento make money? 17 Real-life example: project exit 18 Risk management 19 Ready to start investing? 20 Contacts & additional content
FOUNDER’S WORDS
Hi, my name is Gustas Germanavičius. I’m the founder and CEO of InRento and in order to understand the story of InRento, we have to delve into the story of EvoEstate.com - the largest European Real Estate crowdfunding aggregator, a company I have co-founded as well. Together with my co-founder Audrius Višniauskas, we have decided to create EvoEstate back in 2018 to enable people to invest across different platforms from a single account and provide all the investment features that other platforms lacked. As we continued to build EvoEstate we have felt that there's one more thing that the crowdfunding industry lacks - lower-risk real estate crowdfunding opportunities (in my purely personal opinion, buy-to-let crowdfunding or rental properties offer a great risk-reward ratio). This made me wonder, why shouldn’t we create one. Fast forward several months to December 2020, InRento was launched.
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“InRento is the EU's largest licensed buy-to-let crowdfunding platform.”
However, I wouldn't make the final decision without the help of... my mother. She turned to me asking for advice about where to invest €20,000. I could have listed the options, but I knew my mom would not understand either of the products to invest in nor the risks, as it would be too complicated for her. And if a person does not dig deeper into what they are doing with their money and what are the risks, this means the investment product is simply not suitable for them. This is often the case with investing in real estate development projects, although the returns do seem tempting at first. My goal has always been to encourage people to save money by investing wisely, safely, and consciously. So I created InRento with people like my mother in mind. In November 2021 InRento acquired a similar platform from Estonia - BitOfProperty - and in March 2022 InRento merged with EvoEstate. InRento is now the EU’s largest licensed buy-to-let platform. Sincerely, Gustas Germanavičius
OPENING STATEMENT
WE START WITH "WHY"
One should have “why” in any organization. Let’s dig into InRento’s “why”. Thanks to new real estate trends like crowdfunding and PropTech (property technology) platforms, almost anyone can become a real estate investor today. As a result, the number of crowdfunding platforms across Europe is increasing but most of them are working on the financing of real estate development projects or other higher-risk investments. Investors lack lower-risk real estate crowdfunding opportunities. What are those lower-risk opportunities?
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“InRento unites more than 12,000 investors around the world.’’
A safer option for those willing to invest in real estate is buy-to-let. However, acquiring a rental property may take years of work and patience in order to save up the required capital. Therefore we have created the possibility to invest in buy-to-let from 500 EUR and without worrying about finding tenants or managing the property. Buy-to-let crowdfunding is something rather new. This whitepaper aims to guide you through how does InRento works and what are the key benefits of this platform.
How does it work?
SO WHAT IS INRENTO? InRento is a buy-to-let crowdfunding platform where you can start investing in rental properties from €500, earn monthly interest and capital gains once the property is sold for profit.
InRento connects real estate administrators (borrowers) with investors and creates an easy and secure method to facilitate transactions.
After analyzing the project, performing the real estate appraisal, and other necessary procedures, InRento offers the investor community to lend its money to the project owner who intends to purchase the real estate for rent.
Investors don’t have to worry about day-to-day tenants management and get interest payments to their InRento accounts on a monthly basis.
20% 40% 40-60%
Investors (40-60%)*, The borrower (40%), InRento (up to 20%)
* When investing bigger sums, the capital gains percentage distributed to the investor is also growing (you can find the exact percentages in projects' descriptions)
Borrowers get their loans and take care of tenants. When the property is sold at a higher price, the three parties share the capital gains.
There is a Secondary Market if there is a need to sell your investment (exit) at any point. Read more about it on the next page.
INRENTO IN NUMBERS (Q1 2022)
Amount funded: €14M SAN MARINO MONACO ANDORRA
SOUTH KOREA
SINGAPORE
Investors community: 12,000 from around the world
These numbers reflect the data about investments of InRento and companies InRento acquired and merged with.
Average annual return rate 8%
Average investment portfolio €5,670
Average annual return: 19.49%
Projects with late interest payments: 0
NOMINATIONS & RECOGNITION
1 2
InRento raised the most Venture Capital in Lithuania among proptech (property technology) companies based on Crunchbase data.
InRento came second as Public’s Favorite in Startup Awards in Lithuania.
InRento has been nominated for the Lithuanian FinTech Awards 2022 as Company Of The Year & FinTech Startup Of The Year.
KEY BENEFITS OF INVESTING VIA INRENTO
LICENSED AND REGULATED
EARN INCOME FROM RENT & CAPITAL GAINS
Income on the InRento platInRento is the EU's first and form is generated from rent largest licensed buy-to-let and capital gains. Income crowdfunding platform. Serfrom rent is distributed vices of InRento are licensed monthly, while capital gains and regulated by the Bank https://www.lb.lt/lt/finansu-rinku-dalyviai/uab-inrento-1 are distributed at the end of of Lithuania. Learn more the project. here.
List of things you will NOT have to pay while investing in rental properties via InRento:
ANTIDOTE FOR INFLATION In most of the projects, income from rent is adjusted to inflation to protect your capital from depreciation. The historical data of the real estate market shows that real estate tends to outperform inflation by around 1% in the long run.
Property insurance Homeowners administration fees Utilities Brokerage fees Cleaning, maintenance, and repairs Professional fees (legal and management fees) Mortgage interest
COLLATERAL & SECURITY
ZERO HASSLE
SECONDARY MARKET
All investments on the InRento platform are secured by 1st-rank mortgages. In most of the projects, the interest rate that is being paid by the borrower doesn’t exceed the rental income, which reduces the borrower’s default risk.
InRento connects experienced real estate project owners with investors. As a result, investors can feel like landlords who have invested in rental properties without having to worry about day-to-day asset management at all. The borrower does all the work.
Worried that you will need your money sooner than the project is finished? You can exit your investments early at any time by selling the investment on the Secondary Market. Discover Secondary https://inrento.com/secondary-market/ Market opportunities.
HOW WE ARE DIFFERENT?
FIRST AND LARGEST
UNIQUE: INVESTORS EARN CAPITAL GAINS
InRento has become the first buy-to-let platform that’s licensed in continental Europe. And after the merger with EvoEstate, InRento has also become the largest licensed buy-to-let crowdfunding platform in EU.
By investing in rental properties, you can earn not only from interest but also from capital gains when the real estate is sold at a higher price. Income from capital gains is what no other real estate investment platform has offered before InRento.
FINANCIALLY BENEFICIAL: INTEREST INDEXATION
INNOVATIVE: TIMESHARE
Interest indexation is protection against inflation. Even with the high inflation rate, your actual return on investment may not be declining. The interest for many InRento projects is recalculated and indexed to inflation each year.
Timeshare is another innovation offered by InRento in Europe. What is it? It is a possibility to stay in the property you have invested in. Timeshare is offered only for certain projects.
INTEREST INDEXATION EXAMPLE “Let's imagine that in 2021 the investor received 100 EUR in rental income each month. As we already know, annual inflation in 2021 reached 10.6 percent. Indexation of income would mean that from 2022 onwards, the investor will receive a correspondingly higher amount of 110.60 EUR in fixed Interest. In other words, despite the rise in inflation, the real return of an investment may not change.” Deividas Urbanovicius, Head of Investors Relations
EXIT YOUR INVESTMENTS EARLY AT ANY TIME
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SECONDARY MARKET “Liquidity is the price for stability.”
"InRento is not just another platform where you can lend money to someone for a few months at a fixed interest rate. The goal is to bring a safer way to invest money over the long term so the income can be adjusted to inflation in order to ensure stable returns."
Historically, when choosing real estate, investors had to pay the price of liquidity for stability. The InRento platform solves the liquidity problem for investors by creating a Secondary Market where existing investments can be sold ahead of schedule. Currently, the fee for the Secondary Market transactions is 2% of the principal value, which is being charged to the seller.
RENTAL PORTFOLIO DIVERSIFICATION What are your options? Through crowdfunding, the best approach is to diversify your rental portfolio. It is easy to do so via InRento - different types of rental projects in different countries are listed on the platform. The 2021 InRento portfolio consisted of well-diversified properties: 12% Medical, 41% Commercial, and 47% Residential.
12% 47% 41%
HOW DOES INRENTO MAKE MONEY?
Operator’s fee for publication of the application (3.5-7%) 3.5-7% of the amount of crowdfunding funds collected for the project. Capital gains (up to 20%) The percentage depends on the invested amounts. Usually the bigger the investment by the investor is made, the lower the capital gains percentage is distributed to InRento. Secondary Market fee (2%) 2% of the sale price of the subrogated right to claim. Late loans administration fee (0.1%) 0.1% of the overdue amount per day
INCOME TAXES
FOR FOREIGNERS / NON-LITHUANIA RESIDENTS
“InRento is EU’s largest buy-to-let crowdfunding platform.”
If you are a foreign investor or non-Lithuania resident your interest income (from rent and capital gains) earned on InRento is currently taxed at a 15% tax rate. Meaning that if you earn 1000 EUR in income from interest, you will be taxed for 150 EUR and you will receive 850 EUR. However, it’s possible to reduce this tax. Read more about it here. https://inrento.com/blog/important-information-about-taxes
Income earned from late payments and penalties is not taxed.
Filing for taxes and paying them in your local tax residency is your own responsibility.
FOR LITHUANIAN RESIDENTS If you are a Lithuanian resident, withholding tax will not be applied to you for your interest income (from rent and capital gains) earned on InRento. This means that if you earn 1000 EUR worth of interest, you will receive all 1000 EUR, then paying taxes on this income will be your responsibility while declaring taxes. Read about tax relief for Lithuanian residents here. https://inrento.com/blog/important-information-about-taxes
Income earned from late payments and penalties will be taxed at a 15% tax rate. Please note, that this tax is automatically withheld and you don't have to pay it on top.
HOW DOES INRENTO WORK IN THE LONG TERM?
REAL-LIFE EXAMPLE Project exit InRento fully completed its first 2 rental projects in Q1, 2022 which sums up the whole idea of InRento.
sold the property at a higher price, investors, instead of the projected 6.06% annual return, additionally earned from capital gains.
The first rental project - a modern office in Vilnius at Ateities str. was successfully sold in February. The investors earned 21.5% (annualised ROI). How?
Shortly after, another rental project - an office in the Newtown of Vilnius - was fully completed. The annual ROI of this project has reached 17.48%!
This buy-to-let project was crowdfunded in a few weeks last year. After the project owner
As a result, the average annual return on rental income and capital gains from InRento's completed projects is 19.49% now!
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“InRento investors earned 21.5% (annualised ROI) after the Modern Office in Vilnius was sold.” Learn more
WHAT DO WE DO TO LOWER THE RISK OF YOUR INVESTMENT? Risk management in more detail As InRento's primary goal was to create a lower-risk investment platform, there are multiple features in place in order to achieve this. First, to decrease the risk, the investments are being structured as loans that are secured with a 1st rank mortgage. Because the investments are structured as loans, they have a combination of fixed-interest rates and variable interest. In simple terms, this translates that if the property would be vacant, the borrower will be obliged to pay the fixed interest rate. In case the borrower would fail to meet financial obligations to the investors, InRento will take all the necessary measures to resolve them in the name of the investors and if needed enforce the mortgage and repossess the property.
READY TO START INVESTING? To start investing, you have to open a free investment account, which you can do in nearly no time. Register on inrento.com, verify your identity, choose a payment method, and voila! When the account is created, you can choose one or more real estate asset types on the platform and the amount you would like to invest. The platform provides all information about the property and the annual rental yield. In addition, the built-in calculator helps to estimate what kind of return will be generated by an investment. Once you top up your account and sign the General and Special loans agreements (need to mark a checkbox) you can make your investment and begin earning payouts as soon as the next month, without any investment fees.
A TEAM OF EXPERTS WORKING FOR YOU
ADDITIONAL CONTENT https://www.youtube.com/watch?v=LJ8Y6dhUftc&feature=emb_title How to invest in real estate with little
money?
https://www.youtube.com/watch?v=j1RhFWbMqGY Investing your money in rental properties?
What to know.
https://www.forbes.com/sites/forbesbusinesscouncil/2022/02/01/real-estate-and-crowdfunding-a-duo-with-staying-pow CEO talks on Forbes about the impact of
real estate crowdfunding platforms
Gustas Germanavičius CEO / Founder
Deividas Urbanovičius
Head of Investors Relations
https://www.eu-startups.com/2021/11/lithuanian-inrento-acquires-estonian-real-estate-platform-bitofproperty-and-expands-to-sp EU-Startups about InRento acquisition of a
similar player from Estonia
https://emerging-europe.com/business/made-in-emerging-euInRento has raised 530,000 euros for
expansion
market
FintechBaltic about InRento & EvoEstate’s https://fintechbaltic.com/5818/fintechlithuania/lithuanian-crowdfunding-startup-merges-with-europes-largest-real-estate merger -aggregator-evoestate/ Mindaugas Vaičiūnas
Inga Norke
Product manager
CMO
EXTERNAL INVESTORS Adrian Capraru
Paulius Palevičius
Head of Community
Client Support and Sales
CONTACT Phone: +370 647 83 507 Email: info@inrento.com
It is one of the leading Venture Capital funds based in Vilnius, Lithuania.
It was the #1 Venture Capital fund in the CEE region in 2019.