September 14, 2021
We would like to inform you, that the mortgage on the P97, Vilnius assets has been successfully placed (document is attached in the documents section).
InRento is introducing the new buy to let investment opportunity located in the capital of Lithuania, Vilnius. The investment case consists of a studio apartment located: at Pramonės str. 97, Vilnius (referred to as P97, Vilnius).
InRento has already financed properties in this building in the project named - Studio Apartments. The project owner wants to consolidate his position in the building.
Currently, the property is rented out and are generating a 250 EUR per month of rental income, which results in an 8.11% gross rental yield.
The net rental yield is 225 EUR that is distributed to the investors, or in a percentage value equal to 7.3% per annum net with the given situation of the tenancy.
Reasons to invest in P97, Vilnius -
Capital growth change:
According to en.aruodas.lt statistics, the prices of these types of properties in this district of Vilnius increased +12,18% in the recent year, while in the last five years the change was +23,65%.
The tenant is a natural person and paying 250 EUR per month for rent and the outstanding rental contract is valid until 2022-05-23.
Financial terms of the investment:
InRento investors are granting a loan to the borrower for the acquisition of the rental property. 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 borrower 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 250 EUR per month, which results in 225 EUR distribution to the investors, or in a percentage value equal to 7.3% per annum with the given situation of the tenancy.
The capital growth distribution:
15,000 - 29,999 EUR - the capital growth will be distributed in the following structure: 50% investor / 45% borrower / 5% InRento.
30,000 EUR and more - the capital growth will be distributed in the following structure: 55% investor / 45% borrower.
Rental income (interest):
This project has a 30 day funding period. The interest is being calculated from the moment the investor places the investment.
The project owner (borrower):
The borrower - UAB ‘’Real Assets’’, is a legal entity established 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.
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 charged to the seller.
What happens if the tenants leave the property?
In a scenario of the tenant cancelling the tenancy, the borrower is liable to pay a 2% annual interest rate for the first month of vacancy. If the borrower does 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 is sold?
When the property is sold at a higher price than it was acquired, the capital growth will be distributed in the following structure: 45% investors / 45% borrower / 10% InRento. The project owner assumes potential loss if the property is sold at a lower price.
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 are currently fully rented out, there is a risk that the asset can lose a tenant and it can take time to find replacements.
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 vacancies, the borrower is required to distribute fixed-interest payments, which protects your bottom line.
|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||0 / A|
|Property price comparison to a 3rd party valuation||0 / A|
|Property type||0 / A|
|Is there a tenant already||0 / A|
|Borrower's experience with rental properties||0 / A|
|Property occupany over the last 2 years (if it was rented)||2 / C|
|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?||1 / B|
|Does the property have dedicated parking slot near premises? (long-term rent)||0 / A|
|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:||8 / B|
*InRento Risk rating is of an informative nature only and can not be considered investment advice. InRento is licenced and regulated by the Bank of Lithuania.