How Investown switched to crowdfunding

How Investown's original business model worked

Investown allowed users to invest in rental housing in the Czech Republic from April 2021 to July 2022. In cooperation with his subsidiary (Investown Family s.r.o.), he purchased properties for rental housing and presented them to users who could invest in them. Users then earned income from the rent in that apartment. Unlike the current model, the property was owned directly by Investown.

During the existence of this model, the number of Investown users began to rise rapidly (more than 30,000 in 2022 alone), who began to show interest in a greater choice of properties and, above all, higher yields.

However, investing in rental housing did not allow either a large variety of options for choosing properties to invest in, nor higher annual returns than the then 4-5%.

Investown therefore changed its business model to a newly established, legislatively regulated credit crowdfunding model in the Czech Republic, where returns are up to 10,5%.

In what condition are the purchased apartments now?

In total, by July 2022, we bought over 200 apartments worth CZK 400 million. Users who have invested in apartments still receive monthly returns. At the moment we are trying to sell all apartments gradually in order to free up funds for even more profitable projects for users, unfortunately, in the current market situation, the sale is more difficult and takes longer than we would like. In specific regions, we cooperate with local real estate companies, but sales in this respect depend on the strength of demand in the real estate market, which also depends on the situation on the financial markets. We upgrade or renovate apartments to increase their attractiveness and subsequent chance of sale.

We have sold 9 apartments so far, another 2 are just before the sale and another 9 are already on reserve. We also pay 100% principal to users interested in pre-sold properties along with a proportional part of the proceeds for the month.

After the successful sale or standard completion of the investment round of the apartment (project), the first deposit investment is returned to the users with the payment of the last income.

If the apartment in which you are invested, sell early (i.e., for example, 10 months before the official end of the investment round of this project), approximately within a month of signing the sales agreement with the new buyer, we will return to investors the principal (deposit investment) of the Investown Wallet investment.

If the apartment fail to sell prematurely, we will close the project only after the official end of its investment round. In this case, investors will receive the principal only then.

Since last year we have already ended: Domažlická 147, Donátova 8, Namesti Republiky 977, Nejdecká 8, Zdeněka Štěpánek 10, Josefa Suka 7, Josefa Skupa 34, Svazácká 46, Svojsíkova 13.

How the current model works — crowdfunding

Crowdfunding is a financing model in which a higher number of individuals (investors) contribute less financial burden to achieve a certain amount. At the same time, the mentioned smaller volume may not only be in units of hundreds or thousands, but also hundreds of thousands. In the case of Investown, crowdfunding thus makes the implementation of real estate projects accessible to people and companies who would not have achieved their interesting vision through the traditional way of financing.

Investors on Investown no longer invest in apartments, but in real estate projects - more precisely, in loans for the implementation of real estate projects. With their investments, they help to implement real estate or development projects throughout the Czech Republic. Investments function as a loan to the project owner, mostly for the construction or renovation of a property or the purchase of land. This means that investors invest in a loan that the project (some part of its implementation) is yet to be financed, rather than in the property itself.

Investown distributes the proceeds from the investment they receive from the loan payment of the owner of the given real estate project.

Investown acts as a reinsurance agent throughout the process, whose task is to analyze the project on behalf of the investors, consider possible risks and inform them about them. Investown also processes all financial collateral with the real estate or other forms of collateral.

Investors will then receive the first return on investment in the project from two to four weeks after the target amount for the project has been collected.

Revenues with the new model range from 9.5% to 10.5%, which is more than double the returns of the original model.

‍

How does crowdfunding work?

1. We get a loan application for a real estate project.
2. We evaluate the quality and safety of the project.
3. We publish the approved project in the application.
4. Investors invest in the project until the target amount is reached.
5. When the target amount is reached, we send it to the partner (project owner).
7. We start paying monthly returns for the entire length of the investment round.

‍

The transition to crowdfunding made it possible to provide investors with more diverse projects with much higher returns and the opportunity to participate in interesting Czech projects.

‍

You can look at example projects:

Click here to view currently open crowdfunding projects.
‍

Advantages of crowdfunding:

Fixed interest (same throughout the investment).

A greater number of properties in different locations and with a higher yield.

Greater security of accounts for users in accordance with European regulations.

Possibility to sell or buy investments in the secondary market.

More information about projects and greater prestige of real estate projects.

Better evaluation of the quality of projects — security of investment.

Autoinvest → we are currently working on this function. The investor sets the parameters according to which he wants to invest, and the application will do it for him. It saves a lot of time.

You can read more about crowdfunding in our article.