InRento team is introducing a new buy to let investment opportunity - Žemaitijos 3, Vilnius.
The investment case consists of an apartment located in the center of Vilnius, Žemaitijos str. 3. Currently, the property is rented out and is generating 1,170 EUR per month of rental income, which results in a 7.8% gross annual rental yield.
The net monthly rental yield is 1,053 EUR that is distributed to the investors, or in a percentage value equal to 7.02% per annum given the current situation of the tenancy.
Reasons to invest in Žemaitijos 3, Vilnius:
- Centre of Vilnius, Old Town district;
- Modern and premium apartment;
- Minimum 2% annual capital growth;
- Long term rental contract for more than 5 years that is indexed to the inflation rate;
- Attractive rental yield;
- Independent valuer valued the premises at 225,000 EUR.
Capital growth change:
The prices of these types of properties in the Old town district of Vilnius increased +12,74% in the recent year, while in the last five years the change was +33,16%.
The tenant:
UAB “Fėjos delikatesai“ - company’s main activity is renting and subrenting rental properties for short and medium term rentals on Airbnb and Booking.com platforms.
The company will pay a monthly rental fee of 1.170 EUR per month for rent and the outstanding rental contracts are valid until 2026-12-01. The project owner has a 3 months rental deposit, which in case of tenants insolvency would be distributed to the investors proportionally to the rental income share.
Financial terms of the investment:
- Maximum term: 60 months (5 years)
- Rental income share: 90% investors / 10% borrower
- Fixed-interest rate: 2%
- Increased interest rate: 7%
- LTV (Loan-to-value): 80%
- Security: 1st charge Mortgage
InRento investors are granting a loan to the borrower. The loan is secured with a first-charge mortgage which in case of the borrower’s inability to fulfil financial obligations would be used to repossess the asset.
The revenue-share between the project owner and the investors is set at 90/10, meaning that the borrower is obliged to distribute 90% of the income to the investors. Current absolute income is 1,170 EUR per month, which results in 1,053 EUR net income distribution to the investors, or in a percentage value equal to 7.02% per annum with the given situation of the tenancy.
The capital growth distribution:
The profit sharing after the Assets would be sold, happens only when the Borrower has paid out the 2% annual interest rate. In a situation where there would be no capital growth, the project owner is obliged to cover the 2% annual interest of capital growth by his own funds.
Distrbution:
- Investors: 60%
- Borrower: 30%
- InRento: 10%
When investing:
15,000 - 29,999 EUR - the capital growth will be distributed in the following structure: 65% investor / 30% borrower / 5% InRento.
30,000 EUR and more - the capital growth will be distributed in the following structure: 70% investor / 30% borrower.
Rental income (interest)
This project has a 60 days funding period. This project rental yield will be distributed on June 7th and July 7th day even if the project would not be fully funded.
The project owner (borrower):
UAB “Ryto Projektas“ - manager Daumantas Mikučionis is a former consultant at Ernst & Young and a founder of "15min" - one of the leading news media portals in Lithuania and developed a well known Pan-Baltic company "Coffee Inn".
When is it possible to "exit the project"?
When the project is fully funded you will be able to sell your investment on the secondary market. The fee for the secondary market transactions is 2% of the principal value, which is being charged to the seller.
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 2% annual interest rate the first month of vacancy. If the borrower would not rent out the assets within 1 month, the fixed-interest rate would be increased to 7% 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: 60% investors / 30% borrower / 10% InRento. The profit sharing after the Assets would be sold, happens only when the Borrower has paid out the 2% annual interest rate. In a situation where there would be no capital growth, the project owner is obliged to cover the 2% annual interest of capital growth by his own funds.
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.