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Our approach to risk

Gustas Germanavičius
Our approach to risk
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inRento platform has been created in order to provide easy to understand investment type and generally low investment risk, which is correlated with the cash-flow of the asset underneath.

When we first approached the Bank of Lithuania, we have been straightforward that our mission and vision is to create the lowest risk crowdfunding platform there is in Europe. What we are seeing today across Europe is that the number of crowdfunding platforms is increasing, but yet most of them are working on the financing of the properties development or other higher-risk investments. 

We are here to change that. inRento platform has been created in order to provide easy to understand investment type and generally low investment risk, which is correlated with the cash-flow of the asset underneath. After all, if you ask most of the people where they would like to invest, they would most likely say, they would like to acquire a rental property. As all of us understand, acquiring a full property just by yourself could be pricey, especially if you wouldn’t take bank financing. Therefore, inRento’s vision is to enable everyone to invest in rental properties with as little as 500 EUR and act as an intermediary which helps to evaluate the investment risk and structure the investment.

Our deal-sourcing philosophy comes down to the holy triangle of inRento:


Tenant(s)   |     Borrower


Tenant(s) - the letter (s) can already give an impression that we value loans with multiple tenants higher, over the ones with single. The reason for that is rather simple, the more tenants there are, the exposure to vacancy risk is reduced. Our philosophy for the first ten projects is to offer investors to invest in loans for properties which already have at least a single tenant. By doing so, our investors can already accurately predict what the rental income of the investment will be. The tenant also covers an important aspect of the deal-sourcing is the % yield of the asset. The higher the yield, the more place there is to reduce the price for the upcoming tenants in order to rent out the asset quicker.

Borrower - when selecting the loan applications, we strongly evaluate who is the borrower, meaning what is his experience in the real estate market or administration of rental properties. Among borrowers experience, we also evaluate his/her reputation including any existing liabilities, disputes or other factors that could have an impact on the outcome of the project. We strongly encourage our borrowers to establish special purpose vehicles to facilitate the investment, in order to add additional security for our investors.

Asset(s) - just as with tenant(s) the letter (s) also indicates that we value loans with multiple assets or higher, due to the reduced vacancy risk. With assets, we begin our analysis with the location of the asset(s), central, prime or areas with large count of transactions that reduce the level of risk. Lastly, the general asset condition is evaluated, whether it would need significant investment in renovation during the loan’s period and what is the percentage difference between the acquisition cost and the independent 3rd party valuation.

Furthermore, to decrease the risk, the investments are being structured as loans which are secured with mortgage security. Because the investments are structured as loans, they have a combination of fixed-interest rate 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. Where as if property would be sold for profit - investors can also participate in the profit share. 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 investors and if needed enforce the mortgage and repossess the property.