Fintown Review

Fintown Review Summary

Fintown is an attractive, small, unique platform offering up to 14% return from rental properties. Our experience with the platform has been satisfactory so far. Given the current market environment, it can be a good alternative for further diversification in the P2P lending industry.

The platform pays interest monthly without any pending payments. Investors' funds are being used to replace equity, which will be reinvested into new rental projects.

Fintown's business model is one of the most sustainable in the P2P lending industry, as investors can invest money in already profitable rental units. We have invested over €12,000 with Fintown since March 2023, and so far, our experience with Fintown has been excellent.

You can review our current exposure on our portfolio page. 

Main Takeaways:

If you are ready to invest on a platform that pays out up to 13% rental yield from short-term rental units in Prague, Fintown is worth considering.

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Or continue reading this Fintown review to learn how the platform works.

What is Fintown?

Fintown is a Czech-based crowdfunding platform that started offering investments in rental properties in Prague's city center. The available investments generate between 8% and 14% yearly yield.

The rental projects pay out monthly interest, while the developments are structured as full bullet loans with the interest payout at the end of the term.

In this Fintown review, we will examine the investments more closely to determine whether Fintown is a legitimate platform.

Our Opinion Of Fintown

While rental property investments are nothing new, Fintown offers a slightly different product. You can participate indirectly in the short-term rental business with as little as €1.

The currently available investments are operational rental units with high occupancy in one of the most visited cities in Europe and some of the best guest reviews.

During our research for the Fintown review, Maxim Vihorev sent us the actual list of the current bookings, which presents the occupancy for the listed units. We have also received a new appraisal report for some of the rental units that haven't yet been listed on the platform, confirming the data published about individual projects.

The funding for the currently available loans will enable the company to deploy the equity elsewhere. Vihorev Investments is also developing other highly attractive real estate projects, which you can review in Vihorev's projects overview.

The type of investments offered by Fintown don't fall under specific regulations in the Czech Republic. The regulator also confirms this in a separate statement, which you can find on Fintown's website.

Investing in already operational rental units decreases the risk. When investing in development projects, you should be aware of the specific risks that are associated with the construction of properties.

Based on the information we evaluated, we believe that the currently listed investment opportunities on Fintown are attractive.

Since Fintown has only launched its operation in 2023, the platform will list investments with higher liquidity and return to remain competitive and build its investor base. You should expect that after the platform has funded its projects, it will lower the interest rates for a new listing.

This has been the case on all established platforms such as PeerBerry, Esketit, or Robocash.

Fintown offers similar returns by investing in rental properties in Prague, whereas competitors offer investments in unsecured payday loans from Africa, Asia, or South America.

While Fintown is a very young platform that has to build trust with the investors, the company backing Fintown has enough experience to justify a minor exposure to the available rental properties.

We believe the currently listed projects offer a reasonable risk-return ratio. Only time will tell whether this will always be the case.

Given the current market environment and the lack of loan availability on established platforms, Fintown offers exciting investment opportunities at attractive terms.

That is why we have decided to invest our funds to gain our own experience with Fintown and improve our reporting about this Czech crowdfunding site.

Did we mention that all rental income is paid to your account monthly? As long as you invest in rental units, there is no need to wait until the end of the loan term, like is the case with full bullet loans on EstateGuru, to receive interest from your investment.

Are you ready to test Fintown yourself?

Our readers have the unique opportunity to get a €15 bonus after investing €300.

Requirements

To invest on Fintown, you have to meet the following requirements:

It's essential to understand that users should only transfer EUR. The platform might charge you a €20 fee if you transfer a different currency. You might be charged a €10 fee for an incorrectly marked deposit.

The deposit of funds from our Revolut account to Fintown's business account took 24 hours during a workday. Fintown's business account is operated by Ceska Sporitelna, one of the largest and most regulated Czech banks.

Risk & Return

Evaluating the risk and return ratio on newly launched platforms is difficult as we lack performance-orientated data.

Before evaluating the long-term performance of Fintown's investments, we will review the following information:

Investment In Rental Properties

Fintown currently offers investments in rental properties or development projects in and around Prague, managed by the Vihorev Group.

If you have been to Prague recently, you have probably noticed that short-term rentals are costly, and the more affordable options typically don't look as good.

If you want to stay close to the city center to explore all the city's main highlights, you will pay at least €150 to €250 per night during the high season. The apartments on the Fintown platform are listed on Booking.com and charge similar rates.

Here is a snapshot of one of the apartments offered for short-term rental and owned by Fintown's founder. 

The Booking.com rating of 9.0 certainly makes a good impression on potential guests, which increases the listing's occupancy.

During our research of the Fintown platform, we talked to the founder and requested additional information that is not available on the platform.

The chart below shows the occupancy of listed apartments in Honest Smichov, managed by the founder and his company.

In the project overview of available investments, you can also review the occupancy for previous periods.

The ADR metric represents the average daily rate charged to guests in 2022. According to our latest talk with the CEO of Fintown, the average daily rate increased to €100 in 2023. The ADR remains similar also in year.

If you are familiar with the rental industry, you might wonder about the costs of running this type of business. 

Fintown is breaking down the financials for every project so you can better understand the profitability generated by the rental income.

The chart above shows only the capital structure of one apartment available for investment on Fintown.

As you can see, a senior loan was used to purchase and renovate the building. The rest of the capital was paid with equity.

Fintown and, subsequently, the Vihorev Group aim to exit a portion of the equity to fund new projects. This will be done through refinancing with a mezzanine loan.

As of month year Fintown offers investments in three projects: Karlin, Ricany and Michle. All three properties are in different stages of development. 

Honest Karlin

The rental property in Karlin, Honest Karlin, is already operational and generates monthly revenue from short-term rental yield. It is situated next to the main bus terminal in Prague, making it suitable for tourists.

Honest Karlin has 31 rental units that can accommodate between two and four guests. 

Fintown offers investments in Honest Karlin with an annual yield between 9% and 13%.

Honest Ricany

With 140 units, Honest Ricany is Fintown's largest project yet. The property is situated 30 minutes by train from Prague's city center. Honest Ricany offers modern living in fully equipped studios with dedicated workspaces.

We were able to visit this property one month before its opening. At that time, 50% of the apartments were already pre-booked. Honest Ricany will target students and young professionals seeking affordable accommodation near Prague. 

Fintown offers investments in Honest Ricany with an annual yield ranging from 9% to 14%.

Honest Michle

Honest Michle is Fintown's latest development project. As of July 2024, it is still in the early construction phase. This property is similar in size to Honest Karlin, and it should be completed by early 2026.

Fintown offers investments in Honest Michle as a development loan with a loan term of up to 18 months and an annual yield of 14%. The interest and the principal will be repaid at the end of the loan term, whereas the yield from already operational rental units is paid out monthly.

Development & Early Rental

Fintown is part of the Vihorev Group, developing multiple properties for rent in and around Prague. Some investments on Fintown are full bullet loans with a relatively short loan term and the principal repayment at the end of the loan period. 

The development projects listed on the platform already have a valid construction permit, which decreases investors' risk. 

"Early rental" projects on Fintown are investments where investors invest in a development loan for a specified number of months, after which the project becomes a rental unit with monthly interest payouts. That way, investors can secure a future rental yield at attractive rates. 

Investment Structure

Fintown offers two different investment products:

What is a mezzanine loan?

A mezzanine loan is essentially an unsecured form of subordinated debt. This means that if the borrower defaults, the borrower's assets will be sold to cover a senior loan (mortgage, for example) before covering other obligations such as subordinated debt.

As an investor who invests in rental units on Fintown, you are essentially investing in a mezzanine loan. The platform pays out interest from the yield generated by the rental properties.

The investment amount can be withdrawn after the minimum lock-up period. The platform follows strict liquidity management to ensure that the company always has enough funds on accounts to repay investors after the minimum lock-up period.

What is participation?

Participation is essentially debt to a borrower in which you share the entire income and losses resulting from the loan contract.

Both forms of investments are riskier than loans backed by a mortgage.

If you decide to earn yield from attractive rental properties on Fintown, you should know that your investment is backed by a corporate guarantee issued by the Vihorev Group. You can read the terms of the group guarantee in the guarantors declaration.

Refinancing Equity

When investing on Fintown, you are refinancing the developer's equity. This means that Vihorev Group can use this equity from individual properties to finance further developments. You can review the capital structure of every listed project directly on the platform.

Fintown will always keep at least 20% of its equity in the rental property, which can also be seen as "skin in the game".

As Fintown is a relatively new platform, we have reviewed the appraisal report and additional information about the occupancy, regulative environment, contract, and appraisals.

During our research, we retrieved the appraisal reports for the entire building. You can review it in Czech here:

• Appraisal (part 1)
• Appraisal (part 2)

The appraisals confirm the value of the building and its properties.

FLEXI Projects

Around 20% of Fintown's outstanding portfolio is allocated to FLEXI projects, investments with a lower interest rate and high liquidity. The purpose of FLEXI projects is to enable new investors to test the platform while having the option to exit after only 30 days. These projects come with a lower interest rate of around 8%. 

After you have successfully tested the platform, you might want to exit your FLEXI investments and reinvest your funds into long-term rental deals. These deals yield a higher interest rate and have a minimum lock-up period between 12 and 24 months. 

The Most Significant Risk: Fluctuating Interest Rates

During our talk with Maxim Vihorev, the founder and CEO of Fintown, he shared that the biggest challenge his company ever faced was the increase in interest rates. Every project is co-financed with a senior loan with a variable interest rate connected to the PRIBOR.

If those interest rates change within a short period, Vihorev's costs increase, which impacts its profitability. Maxim shared with us that during that time, they had to increase the rental rates for guests in Prague to increase revenue and manage this risk. 

Fintown vs Competition

The currently available investments on Fintown enable you to invest in rental properties that are already occupied and generate revenue.

The owner of the properties has been operating the rental business for several years, and it follows all the local laws and regulations.

These investment opportunities differ from some of the rental projects on InRento, where investors have to raise funds either for the entire property or fund the loan that will be used to renovate the property before it can be rented out.

Rental properties on other platforms yield between 5% and 7% rental yield per year, whereas Fintown is aiming to attract investors with higher inflation-adjusted initial interest rates.

If you decide to invest on Fintown, you earn yield from the first day as you are often investing in operational rental units. This isn't the case on other platforms that have to find a tenant to pay interest. 

It's worth pointing out that you may exit the investment after the agreed term for free or for an exit fee before the end of the proposed loan term.

Usability

Fintown's user interface is fundamental and functional.

You will find a brief overview of your investment account, a section with the currently available open investments, and another section showing you critical data relevant to your investments.

The platform doesn't offer fancy-looking charts to present your portfolio visually.

However, you can find all the required information and the option to deposit and withdraw your funds.

As Fintown is a relatively small and new platform, you shouldn't expect exceptional functionality as you might be used to from other players in the industry.

On the other hand, you don't need to deal with "funds in recovery" or "pending payments" as is the case on more established platforms.

During our recent talks, we got insights into the platform's upcoming features. Investors can expect a dedicated statistics page, audited financials, a referral program, a secondary market, and a mobile app. 

Liquidity

Every listed project on Fintown comes with a minimum term representing your funds' lock-up period.

The terms vary from 9 to 36 months. After the end of the period, you can request to withdraw your funds at any time at no extra cost.

If you wish to exit your investment before the end of the loan term, you can request it directly by emailing Fintown at info@fintown.eu.

However, Fintown will charge you an exit fee depending on the length of the remaining period.

Note that when requesting an Early Exit, the following conditions apply:

Unlike other platforms in the industry, Fintown doesn't yet offer a secondary market where you could sell your investment to other investors.

The fees are quite high if you wish to exit before the end of the investment period. We suggest not using this function unless necessary.

Support

Fintown's support is good enough for a small, newly launched platform. During our research, we were in touch with the two co-founders, who answered more complex questions within 24 hours.

As a user, you will likely be in touch with the support team, which is reasonably responsive during business hours. To get in touch with Fintown, email them or use the live chat option after logging in to your account. Alternatively, you can use Fintown's telegram group.

As with any small platform, you shouldn't expect an immediate answer. The platform has a dedicated FAQ page where you will find the answers to basic questions.

Fintown Alternatives

Fintown is an excellent small platform suitable for investors looking to diversify their P2P-lending portfolio in a new product type: rental units.

Whether you are experienced or new to P2P lending, diversification across a few well-performing platforms is the key to maximizing your return while keeping the risk balanced. Let's look at some of the Fintown alternatives to consider. 

Crowdpear

Crowdpear is a Lithuanian-based and regulated crowdlending platform offering investments in development projects in and around Vilnius. The platform was launched simultaneously with Fintown and offers mortgage-backed loans with an interest of 10% - 12%. 

The interest is typically paid out every quarter, and so far, none of the funded projects on Crowdpear are delayed or defaulted. This means that you can expect to earn the promoted yield. The platform is operated by the team behind PeerBerry, one of Europe's best P2P lending sites. Learn more about Crowdpear in our Crowdpear review. 

InRento

InRento is a regulated crowdfunding platform from Lithuania that offers investments in rental properties. The yield on InRento ranges from 8% to 12%, depending on the project type. Some of the loans on InRento come with a fixed annual capital growth, which can increase your return on investment. 

The platform manages more than €10 M of investors' assets without delayed or defaulted loans, making it one of Europe's best-regulated P2P lending platforms. Learn more about InRento in our InRento review. 

PeerBerry

If you want a P2P lending platform with a flawless track record, PeerBerry is the right place. This platform protected investors even during black swan events such as the global pandemic or the war in Ukraine. 

Unlike other platforms, PeerBerry is honoring all buyback and group guarantee agreements, making it the most sustainable platform on the market.

While the loan availability is lower than the demand from investors, you can invest manually and earn between 9% and 11% interest per year, with a much lower risk than on some other platforms. Learn more about PeerBerry in our PeerBerry review.