If you want to start investing in Rental Real Estate in Europe and make returns up to 14% you definitely have to explore investment opportunities offered by the P2P Real Estate Loan Investment platform from the Czech Republic, Fintown!
Today we will have an interview with Oleksii Zhytkov, CMO, at Fintown, and learn more about how Fintown helps people make money by investing in Rental Properties.
Oleksii thank you for joining today, please tell us how Fintown works and what investment opportunities the platform offers.
Fintown is a platform that focuses on Rental Real estate. We provide an opportunity to invest in operational apartments in Prague.
We are powered by Vihorev Group - a development and management company that has been operating in the market of real estate in Prague already more than 15 years. Our platform has a combination of all features on the market with focus on Rental properties. We are only in our second year on the market but we already gained the trust of our customers and becoming a mature platform that will become top of mind in the near future.
We have several different products like Rental and Development.
Rental - when you invest in property with a maximum term of up to 60 months and receive your interest on a monthly basis.Interest rates up to 12%
Development - a classic to investors projects when you receive your interest and principal at the end of the term. Interest rates up to 14%
FLEXI - is our disrupted project that allows you to invest in a project with a minimum term of 1 month. Interest rates up to 8%
All our loans are secured by a corporate guarantee from our Borrower. Our loans are mezzanine. According to the repayment structure, worth mentioning that we are working under a participation model. We issue a loan to borrowers and provide investors an opportunity to participate in it.
You can learn more here: How Fintown operates and is regulated.
Currently, we have 4000+ customers and around 8 million euros outstanding portfolio.
What tools and processes is Fintown using to decrease the risk of default and loss?
To decrease default risk Fintown is conducting a detailed project evaluation and risk assessment and besides that:
- Vihorev Group has 15 years of experience in the real estate market in Prague which provided them with the required knowledge to choose properties with the best potential.
- All projects are cofinanced by the Bank which has conducted project evaluation and agreed to finance it;
- Each property is evaluated by an independent appraisal that has determined a property price.
In Fintown investors invest in Mezzanine loans, meaning that loans are not secured with a property thus making them riskier than typical real estate crowdfunding where financed property serves as collateral. Therefore we pay higher yields and provide more security for Investors by obtaining a guarantee from Vihorev Group for each project, meaning that if the borrower fails to repay the loan Vihorev Group should takeover those obligations.
Should be mentioned that Vihorev Group has put around 20% of its own equity in each project which decreases loss risk in case of default.
Given that Fintown and borrowers are affiliated how investors can be sure that Fitown will protect investors' interests not groups?
To provide more assurance for customers all properties financed on Fintown are evaluated by independent appraisal and soon Vihorev Group's consolidated report will be audited, providing more transparency for our investors.
Vihorev Group report you can find here - Vihorev Group's 2023 Consolidated Annual Report
Currently, you are raising funding to refinance Equity in several projects could you please explain why you are doing that?
This is done for projects where property value is higher than borrowed capital thus property value is potentially sufficient to cover all loans therefore risk is not increased that much for investors.
Vihorev Group doing that to receive back part of Equity and then invest in new projects that are in the pipeline and awaiting development.
How do you monitor project progress to make sure that the loan will be repaid on time and what updates do you provide to investors?
Vihorev Group - provide us with consistent reports and photo/video updates. Our main focus is Rental properties and in this business, the crucial is the Cash Flow that the management company earns during the period. We are looking at this parameter as a main KPI because all interest is paid from the profit of the property if it's already launched.
If the worst thing happens and the borrower defaults how will you help investors?
The borrower will sell several of units from the whole property to cover all obligations. The borrower has at least 20% in each property - which gives an opportunity to sell it quickly.
If it will not help the process defined in law will be initiated. The property will be sold via auction or through a voluntary process. The money received from the sale of the property will be at first used to cover Bank loans (senior loans), and the remaining part used to cover via a Fintown issued loan. If funds will not be sufficient to cover the loan as a whole the Vihorev Group will have to cover the remaining amount.
What are other tools and processes Fintown is using to protect investors?
Regarding protection on the platform - we have several layers of account security and one of the most important is that we make 3 checks before receiving your funds and pay them back in autopilot. It means that your funds will never get to the wrong place.
Please tell us about Fintown future development plans.
We plan to develop our platform with the Autioinvest, Referral program and App.
Regarding properties, Vihorev Group has big plans for new future products.
In later stages when our funding potential will grow we are planning to fund projects using only funding from Fintow investors thus allowing investors to invest in loans that will be secured with property making them less riskier and providing wider investment options.
Oleksii, thank you very much for joining and answering all the questions, I believe after reading this Fintown existing and new inventors feel safer and more keen to invest.
Dear investors, I hope you now understand better how Fintown works and how it helps you protect your investments, but remember when investing there are always risks of losing all funds thus you should always conduct your own analysis.
Have a good day and we wish you successful investing!