This article was published in the news media.
Investing in real estate by purchasing and renting it has long been considered one of the safest forms of long-term investing. However, it often requires significant financial resources, time, and effort. In contrast, crowdfunding platforms for buy-to-let projects offer a simpler alternative, allowing investors to take advantage of opportunities in the property market while avoiding the usual challenges landlords face. How does this investment approach differ from traditional property management, and what opportunities does it open up for investors?
Start Investing with Less Money and Time Commitment
For self-purchase property in Lithuania, the down payment typically ranges from 15% to 30% of the property's value. On top of this, additional investments are often required for renovation before renting out the property, as well as ongoing maintenance, insurance, and unexpected repairs.
“The crowdfunding model allows you to invest in buy-to-let projects with smaller amounts. For example, on platforms like InRento, you can start with as little as €500. This gives investors the opportunity to test this approach and diversify their portfolio without needing a large initial capital outlay,” says Deividas Urbanovičius, Head of Investor Relations at InRento.
In addition to financial costs, property management often presents time challenges. Finding tenants, drafting contracts, resolving conflicts, and handling maintenance require expertise and significant commitment. This process can become a full-time job.
“Crowdfunding platforms reduce these concerns because the borrower is responsible for the property’s administration and day-to-day management. Investors can focus on other priorities, with their role limited to monitoring the investment,” adds D. Urbanovičius.
Steady and Competitive Returns
The benefits of crowdfunding extend beyond lower financial and time costs. One of the key advantages of this model is the stable income stream and the potential for competitive returns. This option is also appealing to investors with larger capital, as they can invest more than EUR 50,000 in a single project.
According to Global Property Guide data, the average rental yield in Lithuania during the second quarter of this year was around 6.44%. In comparison, the average annual return on realized projects on InRento, including capital gains, currently exceeds 12%.
Expected project returns often exceed expectations due to variable interest rates and indexation. “A careful and conservative project selection process ensures a steady income stream and often higher returns compared to traditional real estate rental. Payments to investors are made on a monthly basis, similar to a conventional rental model,” says D. Urbanovičius.
Risk Management
Effective risk management is one of the most important factors when choosing how to invest in property. Homeowners who purchase with a loan may face unforeseen circumstances, such as market fluctuations or interest rate changes, which can increase loan repayments. These factors can reduce profitability and create additional challenges.
“In a crowdfunding model, this risk is borne by the borrower, and the loans are secured by conservative real estate collateral. This structure provides investors with a greater sense of security when facing market fluctuations or interest rate changes,” explains D. Urbanovičius.
Crowdfunding also makes it easier to diversify investments. Investors can spread their capital across different real estate projects in various regions, countries, or sectors, thus reducing the risk that difficulties with one project will significantly impact their entire portfolio.
Access to Expert Knowledge
Crowdfunding platforms simplify risk management and give investors access to professional expertise. The property market is complex and constantly evolving—selecting the right time, location, and property type can be challenging, especially for less experienced investors.
“When investing independently, decisions are often made based on emotions, such as choosing a property due to its design or the subjective appeal of its location. On crowdfunding platforms, we rely on objective data and analysis, ensuring our projects are focused on delivering the most attractive financial outcomes,” says D. Urbanovičius.
Increased Liquidity in the Secondary Market
Another advantage of crowdfunding over traditional property management is greater liquidity. In conventional real estate investment, it can take months or even years to sell a property—especially in smaller cities. This can make it difficult to recover all or part of the invested capital quickly. However, some crowdfunding platforms offer a secondary market, allowing investors to sell their investments before the project is completed.
“The secondary market offers flexibility, allowing investors to exit part of their investments more quickly, or to sell only a portion of their holdings while retaining the rest of their portfolio. This year, InRento saw EUR 1,400,000 in trades on the secondary market, demonstrating the active and dynamic interaction between investors,” emphasizes D. Urbanovičius.
Investing involves the risk of losing some or all of the amount invested, so it is advisable to diversify your investments and invest responsibly.
