By signing a partnership agreement with Letsinvest, BrikkApp adds another platform to its portfolio. What exactly is Letsinvest and how it positions itself? Vytenis Kinduris, the company’s founder and CEO, an expert in business development and real estate with 25+ years’ experience, explains.
Letsinvest was started to allow everyone – not just banks and other large financial institutions – to invest in large real estate projects. In the past, it was hardly possible to come up with 1 000 or 50 000 EUR and participate in a 1M EUR real estate project, let alone have your investment guaranteed with real estate pledged as collateral. The founders created an accessible investment opportunity where investors have both – low risk and a stock market-worthy return (around 10%). Mortgaged property, valued by professional and reputable companies, along with the company's own experts strictly vetting every project is what creates one of the safest investment opportunities on the market. Investors also do not have to commit for anywhere between 3 to 10 years or wait for the bond/stock markets to go up in order to realise their returns. In Letsinvest, the average investment term is 12 months, providing a lot of flexibility to investors. Further, most crowdfunding platforms focused on acquiring many smaller investors and offering a larger number of investment projects. In Letsinvest, the founders chose a different path and positioned Letsinvest as an investment boutique – offering fewer, but large-scale and carefully selected investment projects.
Another reason for starting Letsinvest – in Lithuania, if you are not a top 10 real estate developer, it is very hard to get bank funding, the process is long, expensive and inflexible. Letsinvest corrects this market failure by making financing more accessible. Further, Letsinvest provides bridge loans to reach the development phase, at which point another financial institution takes over the financing.
Letsinvest crowdfunded the first project in the beginning of 2021 and all the evidence points to the fact that the aforementioned reasons for starting the company have paid off.
1. How popular is real estate crowdfunding in Lithuania?
Real estate crowdfunding is a relatively new concept. However, since 2016 the Lithuanian regulatory environment has allowed for the steady development of this sector. According to official statistics by the Bank of Lithuania, in the 1st quarter of 2022, 54.89M EUR were financed in Lithuania through real estate crowdfunding platforms. In comparison, in the 1st quarter of 2021, 43.19M EUR were financed. This translates into an almost 30% annual growth of the sector, which, considering the market disruption and uncertainty brought in by the war, shows that real estate crowdfunding platforms are growing increasingly popular in Lithuania.
2. What are your top 5 tips for first-time investors?
- Do your research – familiarize yourself with the industry, and explore different investment opportunities. It is important to understand where and why you are investing and how it works.
- Decide on your investment parameters – amount, annual return, and investment time. Check what the minimum investment is as many investors prefer to start with a lower amount and then gradually increase their investments.
- Diversify – plan your investments, and allocate funds to projects. Although we believe all of the investment projects offered carry minimal risk, diversification is the golden rule of investment.
- Be up to date – read the latest news about the industry, about existing and new projects, loan and interest pay-outs. Sign up for newsletters which can help investors stay up to date with both their investments and the market itself.
- If you have unanswered questions – ask! It is important that you have the opportunity to ask questions, so check what customer service is available.
3. What type of investment opportunities does Letsinvest offer? Will other investment types be available in the near future?
Letsinvest has so far offered direct investing into commercial real estate projects and business loans, backed with real estate as collateral. The platform also already has the required framework and, in the future, we will offer the opportunity to buy into the equity of already up-and-running rental businesses, or investing into real estate developers’ bonds backed by their own real estate assets.
4. How do you find new investment opportunities? What is your vetting process? Is it challenging to find good deals?
Letsinvest finds new investment opportunities in a number of ways – some real estate developers contact Letsinvest directly to ask about funding opportunities; others are discovered by Letsinvest. Once an application for funding is received, Letsinvest’s experts assess the developer’s credit score, business plan and appraisal report of the collateral to ensure that the developer can make the loan repayments and avoid putting investors’ capital at risk. Once the loan request is approved, the loan is published on the investment platform, where investors can assess the risk and invest in the loan.
Due to the economic situation and Russia’s war against Ukraine, there has been a lot of uncertainty in the market and a lot of real estate projects have slowed down or gone into stagnation. However, this has actually only helped filter out the projects that did not have a sustainable business plan.
5. How much money have you raised on your platform? What type of investments do you fund?
As of January 2023 Letsinvest's investor community has raised almost 11M EUR since the launch of the platform. With 4.1M EUR raised in 2021 and 6.9M EUR in 2022, there has been an almost 70% growth in the second year of activity, outperforming the growth of the market sector. 4.4M EUR worth of loans have been successfully returned to investors along with 421,437 EUR in interest payouts. Letsinvest has so far provided funding to commercial real estate investment projects as well as business loans, backed with real estate pledged as collateral. The projects funded have been of at least 1M EUR total value – which goes with Letsinvest’s goal to cater to large investors who seek large-scale projects to invest into.
6. How much do you expect to raise in 2023? What future do you predict for real estate crowdfunding? Are there any specific trends you foresee in the next 2-3 years?
In 2023 Letsinvest plans to raise around 12-14M EUR, maintaining the current organic growth rate. Due to the development of the EU crowdfunding sector regulations, we are planning to acquire an EU license soon and expand further internationally. Although the real estate crowdfunding market is already relatively saturated in Lithuania compared to other countries, there is still a lot of room to grow. Real estate developers are beginning to see crowdfunding platforms as a convenient, flexible funding candidate whilst investors are becoming increasingly familiar with the concept and have started reaping the benefits. We believe that in the next 2-3 years, crowdfunding will gain more popularity among real estate developers, including large-scale developers who will increasingly use crowdfunding platforms for bridge loans. As about half of Letsinvest’s investments have already been coming from legal entities, the expectation is that companies will become more likely to invest spare funds into short-term projects with conservative risk – and Letsinvest provides the perfect opportunity for that.
7. What would you consider to be Letsinvest’s biggest success so far and are there any challenges that you face?
It is hard to point to one specific milestone that we have achieved and call it the biggest success. Letsinvest’s organic, successful growth is a result of two factors – a strong investor community and the company’s competence when it comes to the project selection and vetting process. Although investments start from as little as 100 EUR, Letsinvest’s aim to form an investment boutique by focusing on large investors has been shown to work. This can be seen from the average investment of 48,000 EUR — one of the largest among European crowdfunding platforms. Further, the 0% late payment statistic is proof that our project vetting process is effective. These two factors together allowed the company to end 2022 by completing a 2.2M EUR financing round — which could be considered a symbol signifying the success of the platform.
8. What are your plans for the near future?
Acquiring the European crowdfunding license in 2023 will open many doors and bring exciting possibilities in terms of international investments. Speaking about new projects, Letsinvest promises investors to have a number of exciting, yet safe projects planned for the beginning of 2023! We plan to grow the Letsinvest investor community as that’s the very point of crowdfunding — as the community grows, each individual’s opportunities grow too. It is undeniably a win-win scenario!