How would you describe LEORM platform?
LEORM crowdfunding platform is a platform for investments in property backed loans in real estate high quality development projects, and for acquiring shares in buy-to-let properties, where investors can get stable returns by investing from as little as 100 Eur.
What are the biggest challenges in this first year?
There are a lot. The biggest of them is gaining trust of individual investors. Despite the fact that we had success in so-called “club” financing attracting for projects we worked with (in total, for 64 projects – this track record is mirrored on our platform since we wanted to stress out our previous experience), the work with individual investors differs significantly. Usually, there is a completely other mode of communication with club investors and the information volume disclosed to them is much larger, than the information available publicly, on the platform. Furthermore, the communication happens more personally. This is the approach we are assaying to keep for individual investors, as well.
What are the three main advantages for investors?
Safety, profitability, stability. On the LEORM crowdfunding platform, investors could expect investment opportunities in loans for high-quality projects backed by property and buy-to-let property deals, which are not widely offered by Baltic platforms. We should highlight that LEORM is not a platform for risky projects. We are for those investors who wish to ensure for themselves stable income by investing in property at it various development stages.
Is the technical platform self-developed or using white label solution?
LEORM platform is fully self-developed.
What ROI can investors expect?
Our historical average return on investment is 12.75%. Meanwhile, we have faced the quit natural situation when the stronger a project’s originator is (in the sense of collateral and ability to repay the loan), the higher are its chances to get traditional (bank) financing which is cheaper. Thus, we need to balance between the quality of the projects and the interest rates offered to our investors. To date, we prefer to have less risky and better quality projects for reasonable interest rates, which are from 8 to 11 percent. By this, we address those projects’ originators which potentially could obtain bank financing for their projects on later development stages, ensuring no-stress stable income for our investors. Besides, we are launching a new category of projects – buy-to-let, which assumes that investors acquire shares in properties, which generate income for investors by letting them. This will ensure stable income (yield) for the investors of the properties, which varies from 6 to 9 percent (depends on the acquisition price of a property). These are the projects for those investors who prefer stable income with minimum investment risk.
How does Leorm platform evaluate borrowers?
We conduct a thorough legal and financial due diligence check before projects onboarding. The project study is based on the 6C model applied by various banks, which includes studies of Character, Capacity, Cash, Collateral, Conditions, and Control. The use of the evaluation method allows us to estimate a borrower’s ability to repay a loan, as it includes qualitative factors, not only quantitative, since our main priority is investors’ funds safety. More about the projects’ evaluation process
Are you open to international investors?
For now, we are open for all investors which have their bank or payment institution’s account in the EEA. Meanwhile, we do not accept investors from the USA. More about registration requirements
Is your platform regulated?
Crowdfunding itself, as a way of funds’ collecting, is not a subject to any specific law in Estonia, for the time being. Licensing requirements depend on the platform’s business model, namely, who is the addressee of the collected financing. When a platform issues consumer credits for private persons, for instance, it should be authorised by the Finance Supervisory Authority (FSA) of Estonia, and must have a relevant license for such kind of activity. In case when a platform’s business model assumes to finance legal entities solely, (our business model), it should be authorised by Estonian Finance Intelligence Unit (FIU). Therefore, we are authorised for acting as a financial institution by obtaining the license from the FIU. Thus, we can say that we are regulated in the form which is required by the state.
How do you see LEORM platform in 5 years?
The future of any crowdfunding platform depends on the financing conjuncture on the whole. Thus, we can say that we have our strategic plans for the upcoming years regarding the Baltic projects, mostly, but the plans are rather flexible to match upcoming changes of financial markets themselves.