InRento is introducing the new buy to let investment opportunity. The investment offer consists of commercial premises located in the capital of Lithuania, Vilnius.
Currently, the properties are rented out and are generating a 665.00 EUR per month of rental income, which results in a 7.39% gross rental yield.
The net monthly rental yield is 545.30 EUR for the distribution to the investors, or in a percentage value equal to 6.06% per annum net with the given situation of the tenancy.
Reasons to invest in a modern office in Vilnius:
- The investment is generating a 6.06% (7.39% gross) annual yield with the current situation of the tenant.
- Premises for rent - modernly equipped and are popular among various technology companies.
- The premises were renovated in 2016.
- Inreal - an independent valuer valued the premises at € 135,000.
Tenant:
The premises are on the fifth floor of the building and have a separate independent entrance/exit. The total premises area of the premises is equal to 133.69 square meters, which is leased to an information technology company. The tenant is paying 665.00 EUR per month for rent and the outstanding rental contract is valid until 2021 08 31.
The project owner informed that he has reached a verbal agreement with the tenant to extend the lease for another two years. According to the preliminary agreement, a monthly rent of EUR 660.00 would be paid in the first year and increased for the second year based on the inflation rate.
Financial terms of the investment:
- Maximum term: 84 months (7 years)
- Rental income share: 82% investors / 18% borrower
- Fixed-interest rate: 1%
- Security: 1st charge Mortgage
InRento investors are granting a loan to the borrower for the acquisition of the rental properties. The loan is secured with a first-charge mortgage which in time of borrower’s inability to fulfil financial obligations would be used to repossess the asset.
The revenue-share between the borrower and the investors is set at 82/18, meaning that the borrower is obliged to distribute 82% of the income to the investors. Current absolute yield is 665.00 EUR per month, which results in 545.30 EUR distribution to the investors, or in a percentage value equal to 6.06% per annum with the given situation of the tenancy.
- Increased interest rate: 5%
- Capital growth sharing: 70/20/10
What would happen if the tenants would leave the property?
In a scenario of the tenant cancelling the tenancy, the borrower would be paying a 1% annual interest rate until the new tenant would be found. If the borrower would not rent out the assets within 3 months, the fixed-interest rate would be increased to 5% per annum.
What will happen when the property will be sold?
When the property will be sold and it will be sold more expensive than it was acquired. The capital growth will be distributed in the following structure: 70% investors / 20% borrower / 10% InRento.
The project owner:
The borrower - UAB Real Assets, is a newly established legal entity to serve as a special purpose vehicle for a purpose of increased security for the investments on Inrento. The manager of this company- Justas Kaveckas has been working in the Real Estate industry for the last 15 years. He has successfully commercialised residential, commercial and hospitality projects internationally and counts numerous successful sales of companies operating in the real estate industry.
Key investment risks:
Risk of falling prices: the price of the property might fall due to the increase in supply or decrease in demand in the area or other economic factors.
Liquidity risk: The borrower might be unable to find a buyer in order to sell the property.
Tenant risk: Although the assets currently are fully rented out, there is a risk that the asset can lose the Tennant and it can take time in order to find the new tenant.
Investing with InRento, is similar to owning a rental property, however with us you don't have to worry about day-to-day property management and in the periods of vacancy, the borrower is required to distribute fixed-interest payments.
The capital gains distribution:
If the Loan is repaid after one year, a fixed return of 1.75%
is applied.
If the Loan is repaid after 24 months, a fixed return of 3.5%
is applied.
The profit margin is payable whether or not the Loan is repaid from the sale of the
property.
These numbers reflect the data about investments of InRento and companies InRento acquired and merged with.
These numbers reflect the data about investments of InRento and companies InRento acquired and merged with.
Mortgage
These numbers reflect the data about investments of InRento and companies InRento acquired and merged with.
Investment bonus:
InRento Risk Scoring
| Criterion | Score |
|---|---|
| Borrower's equity exceeds the amount of financing needed |
1
/
B
|
| Borrower's last year's net profit is sufficient to cover the fixed-interest |
1
/
B
|
| Borrower's Debt / Equity ratio |
2
/
C
|
| Borrower's ability to repay liabilities in the past |
-1
/
A+
|
| Property price comparison to a 3rd party valuation |
0
/
A
|
| Property type |
1
/
B
|
| Is there a tenant already |
0
/
A
|
| Additional point: if the tenant has paid on time during the tenancy |
-1
/
A+
|
| Borrower's experience with rental properties |
0
/
A
|
| Property occupany over the last 2 years (if it was rented) |
0
/
A
|
| Will the property require renovation |
0
/
A
|
| Micro-location |
1
/
B
|
| Years since last renovation of the premises |
0
/
A
|
| Does the property have elevator if it's not ground floor? |
0
/
A
|
| Does the property have dedicated parking slot near premises? (long-term rent) |
1
/
B
|
| Does the property have security? (for commercial) |
0
/
A
|
| Property has been for sale for less than 1 year? |
0
/
A
|
| Property has all applicable certificates/zoning rights with at least 2 years before expiry date |
0
/
A
|
| Total: |
5
/
B
|
InRento Risk rating is of an informative nature only and can not be considered investment advice. When assessing risk UAB InRento bases its risk scoring on independent information gathered from Creditinfo, State Registries, Appraisal reports, etc., and financial data is being assessed based on unaudited accounts.
InRento is licenced and regulated by the Bank of Lithuania.
Property in the map
Real assets, UAB