Another of the platforms that we are trying to introduce to you through a series of interviews is Reinvest24. We interviewed its CEO – Tanel Orro. He seems to be a man in the right place, because apart from his passion for the whole business, he showed that he has a huge overview of the P2P industry and real estate projects.
Tanel, could you briefly introduce your investment portal? How is it different from other platforms in Europe?
Reinvest24 is an Estonian real estate investment platform. The platform was launched in 2018, but our team has been investing in high-profile real estate for more than 10 years. We provide equity-based loan characteristics that give investors the same benefits and security as ownership of an apartment, proportional to their investment contribution. In other words, we are the European version of REIT (Real Estate Investment Trust).
It is possible to start investing with only 100 EUR and earn up to 16% from investing in projects from Latvia, Estonia, Spain and Moldova.
Apart from that, our mission is to provide a secure environment for investing in real estate. We always work on project quality first, rather than quantity. That’s why after operating on the market for more than 3 years, our default rate is still zero %.
What is the offer for the investor? How is the investor secured and protected against loss of capital?
We aim to create a portfolio of different types of real estate investments, so anyone could find its best fit. Currently, the platform provides residential and commercial projects from 4 markets. The duration of the projects varies from 3 to 36 months. Besides, all of our projects come with collateral, which means that if anything challenging happens with the property, the collateral can be sold and funds received back.
“We expect, that once Moldova will become a part of the EU, the real estate prices will skyrocket.”
You have alreday mentioned that investors at Reinvest24 can choose projects from the Moldova market. Could you tell us more about the opportunities, potential and risks there? What makes this market interesting and why should the investor think about it at all?
Moldova offers big potential in terms of real estate developments and price growth. Currently, the market is 10-15 years behind Baltics, moving towards joining the EU. Also, it receives a lot of financial help and development programs from the EU, aimed to overall improve the country’s living standards. We expect, that once Moldova will become a part of the EU, the real estate prices will skyrocket. Already now we see big growth, which is only an advantage for our investors. Of course, it has its challenges and risks, for example, the legislation is still adapting, but overall it gives outstanding opportunities which are not so accessible in the European Union, thus allowing us to operate with high yielding projects that still possess low LTV. The Moldova topic is very unique and to get more insights, we suggest you watch this interview.
In addition to Moldova, you offer opportunities from Latvia, Estonia and Spain. Do you plan to expand your activity to other countries or do you prefer to bring more project from countries you operate on?
Actually, for a couple of months already, we are working on entering one more market and soon we will publish our first projects from it so stay tuned! Apart from that, we are planning to increase the property volumes from the current markets as well, thus strengthening our positions on them.
What are the current statistics on the number of investors or successfully launched projects? Is the limit of your further growth the invested amount or finding new projects?
Our investor’s community counts a bit more than 9300 members. As of today, the platform published 70 projects (including property stages, as each stage comes with independent collateral), out of which 22 are successfully exited properties. Only last month we exited 10 projects, overall repaying back to our investors more than 1,1m EUR. As per the limit, of course, at some point, we might face the risk of lacking investment properties, but to avoid it, we will do our best to work proactively on it. For this year, we have already a great pipeline of projects. So far we had to turn down quite a few great projects as the funding target has been too big for the investor community we had at the time.
What is the current default rate and what default rate do you expect in the future?
During all 3 years of our operations, we did not experience any project default, therefore the rate is 0%. It doesn’t mean that we did not have any challenges, especially in times of COVID-19. It is always a question of how well you manage the risks. And in terms of our risk approach, we are rather conservative, as we clearly understand – it is easy to give the financing, the main challenges come when you need to get it back. So we are not willing to take unreasonable risks and the projects we are not understanding ourselves.
In regards to the expected rate, as we offer rental projects that cannot really default. In the worst case scenario this type of property can lose the tenant – not paying monthly income for investors, but it doesn’t mean capital loss for investors. In terms of real estate backed loans we only work with high profile developers, so I want to believe it will not exceed 1-2%. Our team works on quality over quantity and all our due diligence efforts have paid off successfully.
Some of our readers may have seen Reinvest24 on the EvoEstate portal, which acts as an aggregator of offers from different platforms. How satisfied are you with this cooperation and how does it work exactly?
We started to work with EvoEstate in 2019 and so far, we see our cooperation being beneficial for both parties. We are happy with the possibility to expand and deliver our products to the broader audience, however, we still believe that it is always better to use a direct provider, rather than the middleman. Besides, on EvoEstate we publish only some of our projects, making the rest exclusively available only on the Reinvest24 platform. The same goes for the cashback and additional bonuses for certain projects – they are applicable if the investor uses our platform directly.
You have recently launched the secondary market, how do you rate it after half a year of operation? At the same time, you reduced commission from 2% to 1%. Are you planning further positive steps or new tools for investors?
The secondary market was a long-awaited feature that opened a new chapter in terms of platform’s development. Already after its launch, we received amazing feedback from our investors, who found it to be one of the most outstanding secondary markets in the whole crowdfunding industry. Now investors can reinvest their monthly payouts, starting from 1 EUR, thus increasing their returns overall. As per our rental projects, the income for the whole month will go to the user who holds the claim unit at the time of the income payout. For example, the seller owned claim units for 29 days and the buyer owned them for 1 full day of the month, in this case, the buyer will receive all the dividends accrued for 1 month. I believe mathematics says it all.
This year we are planning to introduce a loyalty program and implement additional security solutions for our investors.
How have you dealt with the coronavirus pandemic over the past year? Have you noticed an outflow of investors during this period? Is there anything you have learned from this crisis?
We tend to believe that every crisis comes with opportunities. And in our case, the pandemic became the best time to strengthen and improve the platform, as well as look forward to expanding our product line. And this was exactly what we did. We welcomed new team members, added new investment types and countries to our portfolio, opened our first international branch in Spain, strengthened platforms financial stability, by increasing share capital and so much more.
In terms of projects, our risk management proved itself, as even in times of COVID-19, we were able to successfully exit 5 of our properties, earning great returns to our investors, thanks to capital growth.
One of the most important aspects of P2P portals and crowdfunding platforms is transparency and communication with investors. What steps is Reinvest24 taking in this regard?
Transparency was one of the aspects that we improved a lot during the pandemic. We implemented many overview series for our properties. For example, one of the most recognized is our Insider Updates, where we share very comprehensive updates on the development progress and show the pictures from the construction fields.
Also, we often make video overviews for our properties, where I personally visit premises and try to give as many insights about it as we can. Everything is available on our Youtube channel.
Besides videos we really like the “Insider update” section on your blog, where you inform about the development of individual projects. How was the idea for these articles born and do you see it as your competitive advantage?
COVID-19 was the period of reshaping and reconsidering many things in regards to our platform. For ourselves, we clearly understand that from now on, we will do everything that is needed to become the most secured and trusted player in the alternative investment industry. For us, trust is not something that you can buy but gain. Besides, I do believe in a personal approach and great customer experience above everything, therefore we decided to work proactively and become closer than ever to our community. Insider updates were one of the ideas that we had in mind. And as time has shown, the idea came at the right time and right place.
Answering your question, yes, the Insider updates are one of our competitive advantages and something that differentiates us from others, as to date, we are the only ones who share such comprehensive updates for our projects. As an example, You can take a look at our Bauskas project, which was exited recently and follow its development from the very first month (editor’s note – really try to have a look at the report, in our opinion it should look like this, on other portals too).
Moreover, soon we will implement one more transparency solution that will bring our investors even closer to our projects.
“In the long run, we believe that P2P market interest rates will go down, as for now, this is more as an outstanding opportunity, rather than a sustainable paradigm, that is here to stay.”
We have not discovered the option to download the financial reports of Reinvest24 on your website, do you plan to publish them publicly?
Currently, the financial reports are not available for download straight from the website, but we share them on demand. If investors would like to get acquainted with our financial information, they are very welcome to request this information by contacting our support team – m. Apart from that, they are already publicly available in the Registry of Estonian companies.
When you look at the P2P market as a whole – how do you see its further development? Do you expect more platforms to be founded or, conversely, market consolidation?
The long-awaited regulation is expected to come into force later this year and we believe that it will strengthen the alternative investment industry overall. By that, I mean that there will be fewer market participants, but those who will stay, will become the masters of their products and services. Also, retail investors will become more educated in terms of different types of investments and will understand risks involved with each of them better.
As per the projects offered, one trend that has already come is the lowering of interest rates. Many factors should be taken into account when evaluating the high interest rates. In our case, we are currently able to offer returns up to 16% because we are working on developing markets, with a big potential for capital growth, as well as we develop the majority of projects by ourselves, thus, lowering the expenses as much as possible. In the long run, we believe that interest rates will go down, as for now, this is more as an outstanding opportunity, rather than a sustainable paradigm, that is here to stay. And one should definitely consider using it while it lasts.
Is there anything you would like to say to investors in the end?
I would like to say, “Thank You!” to all our investors, who are already with us. Also, we are always happy to welcome new investors to join our community and create together a sustainable investment environment.
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Where to next?
- Reinvest24 official website
- Reinvest24 overview page at P2Ptrh
- Comparison table with more than 30 P2P lending platforms