In the world's largest cities, where the population is constantly growing and the living space is limited, there is a great demand for microflats. For the last five years, the demand for such housing has been growing in Lithuania as well.
"People who need housing for personal needs will always try to buy real estate with the largest possible dwelling space. Meanwhile, for those who are looking for an investment, one of the most attractive objects is microflats," says Gustas Germanavičius, the CEO rental properties crowdfunding platform called Inrento.
Today, the demand for such housing in Vilnius already exceeds the supply, which makes it increasingly difficult to acquire the desired object. First of all, these dwellings are relatively affordable even for people with smaller savings, and secondly, the rent per square meter is much higher compared to larger dwellings in the same location, so it is more financially attractive for those who want to invest in rental properties.
Microflat is not just an extra small space
Most people understand the term microflat as a tiny space, but this category also includes common and industrial premises that have been converted into residential premises in full compliance with the requirements.
Depending on the area and the infrastructure of the building, microflats may have kitchen and bathroom inside the flat. It may also be a shared with several apartments. This is a less common solution in Lithuania, but very popular abroad.
What to look for when purchasing such a housing
If you are planning to buy and rent a microflat as an investment, you should first assess the potential tenant's needs. Micro-housing is usually in demand among younger audiences, for whom location and modern interiors are important. Acquired housing in the center or closer to it will be much more expensive to rent and, if necessary, sell more successfully than the housing of the same size in the further located residential area.
According to G. Germanavičius, when looking for a microflat, it is worth paying attention to the industrial buildings that have been converted into residential premises. In the largest cities of Lithuania, these objects are usually located in strategically good places, close to the center. Location is one of the most important criteria when buying any real estate.
Another advantage is that most of these type of buildings have extremely high ceilings. By paying for 20 m2 and installing a mezzanine, you will be able to increase the total living space to 32 m2. Such premises are likely to be correspondingly more expensive to rent or sell. Note, however, that buying remodeled industrial space with a loan may make it more difficult to obtain financing or you wil have to pay a higher down payment.
Future trends in real estate investing
G. Germanavičius, the head of Inrento, notices that the rapidly growing demand for micro-dwellings in the largest cities of Lithuania will continue in the future, so those planning to invest in real estate should hurry now. It is quite challenging to buy a micro-dwelling for a reasonable price in Vilnius today (currently, InRento is financing one rental project of this type), but in Kaunas, where this trend is still growing, more options can be found.
For those who want to invest in real estate, but do not have enough capital, it is worth considering other popular ways of investment in rental properties. Last year, Lithuanian startup Inrento became the first licensed crowdfunding platform in the European Union, providing an opportunity to invest in rental properties and earn from interest and capital growth by selling the property at a higher price.
This method could be attractive to anyone as the minimum investment starts from 500 euros, interest is paid every month, and the amount invested can be recovered at any time by selling the investment on the secondary market. When investing in rental properties via InRento, investors don't have to worry about day-to-day management at all - this is taken care of by the project owners.
