How does it work
We've designed our product to give you similar benefits and returns as a typical investment property owner. These include regular rental income (and rental growth where applicable), capital value growth as well as security in the form of the asset’s registration in the land registry. At the same time, we save you the hassle associated with such investments including for example, searching for suitable tenants, dealing with contractual documentation and operating & maintaining the property. This is really why InvestBay was created – to provide opportunities to invest in real estate and benefit from its ownership but with minimal hassle. You can learn in more detail about how it all works here.
How does the collateral agent work and who is the property registered to?
In order to maximize the security of your investment, we use the services of a collateral agent who acts as an intermediary and guarantor between you, us and the invested property.
The property is registered directly in the Land Registry to InvestBay, more precisely to our legal name BIT & BLOCK VENTURE s.r.o. We then enter into a contract with a law firm who acts as the collateral agent to protect your interest. For the Czech Republic this agent is HKDW HOLASEK s.r.o., which have the first lien on the property.
Your investment is thus secured through its registration in the Land Registry and the key advantage is that the operation and profitability of the investment in the property is completely separated from the operation of InvestBay as a company.
Investing in real estate
Investing into real estate can be very useful to help achieve material portfolio diversification. There are a couple of reasons for this. Firstly, real estate typically has a low correlation with other market classes such as stocks or bonds. This means that the value of real estate may not decline in the same way as other investments when the markets fluctuate. As a result of this low correlation, investing into real estate can help reduce overall portfolio risk. In addition, investing into property provides regular rental income that is often relatively stable.
Moreover, real estate investments unlike most “fixed income” (bond type) investments tend to be inflation-protected. This is because rental levels for many properties can be increased in line with inflation. Inflation also impacts on development costs which forces developers to demand higher pricing for new developments. Properties are therefore better placed than many investments to maintain their market value in such macro-environments.
Secure payments and transfer of funds
Purchasing shares on InvestBay works similarly to a standard e-shop. You will buy a share(s) by paying into a bank account after you place the order. Currently, the investments are available for purchase only in Czech crowns. Receipt of the investment is provided by “Payout” - a Slovak financial company regulated by the National Bank of Slovakia that provides payment gateways to innovative companies and operates on the Czech market on the basis of a European license. Your funds are held within Payout's account until 100% of the required funds for the investment target is collected (the investment is “fully funded”). At this point, the majority of the funds (intended for the property developer or “seller”) move directly into an escrow account and await InvestBay's registration as the owner in the land (cadastal) register. The remainder of the funds are paid into InvestBay's account and are used to furnish and other necessary actions to prepare the investment for the guests/tenants.
After registration in the land register, the funds are transferred to the account of the seller and at the same time the pledge agreement is registered in favour of the collateral agent (for the benefit of the investors).
Real estate investors face a number of challenges that need to be properly managed and require considerable time and expertise. When we look at property investment as a sequence of sequential steps, we can divide them into four phases - research, acquisition, operation and sale.
The operational element can be especially challenging for an individual, especially for short-term rental residences where for example, frequent guest turnovers (comprising check-ins, check-outs and associated cleaning), constant pro-active promotional activities and regular maintenance & supplies all need to be professionally managed.
The sales phase is also important and comprises the valuation, finding buyers, negotiations, legal transfer of the property, etc.). When such processes are managed professionally they can lead to a higher overall return on the investment.
And if you invest through InvestBay, you do not have to deal with the hassles associated with owning and operating the property at all.
One of the interesting innovations in the field of shared ownership is voting rights. This allows each investor to express their will in important areas in relation to their investment. Of course, such voting rights may vary from opportunity to opportunity. From a broad perspective however, the system remains the same. Everything in this respect is managed digitally and the investor will be made aware of the right to vote in advance of the actual vote. The voting structure itself is then set up in such a way that a responsible decision can be made for the benefit of the investors.