In Depth P2P Lending Review
Unlike other peer-to-peer lending sites, Profitus is less popular, and there are limited reviews on it. However, it still provides a viable investment opportunity for investors, and that’s why we bring you this review. To help you understand what Profitus is all about, how it operates, its investment portfolio, and a chance to sign up among other things. Read on.
What is Profitus?
Profitus was founded in December 2017 by Viktorija Vanagė, from Lithuania. It is a crowdfunding operator that serves the real estate sector. It provides a platform where developers can get resources to finance the development of residential and commercial projects.
It is important to note that Profitus does not only offer loans to real estate development projects. It also provides loans to businesses that have real estate property as security.
How does Profitus Operate?
Profitus operates by creating a space where real estate developers can connect with investors. The project developer submits a project to the Profitus platform, and the project is analyzed for risks before it’s published. If it is a viable project, then it is published on the site. Investors can then invest in the project with any amount starting from 50 euros. Once the project is completed, the investors receive their share of the profit with a 10% interest rate.
Profitus officially started its operations in 2018 under the supervision of the central bank of Lithuania. Profitus is not a big player in the peer-to-peer lending industry yet. Still, it has been able to attract more than 800 investors in the period it has been operational, with around 8 116 075€ invested into various projects. It is also important to note that funding for different loans does not take much time despite the low number of investors on the platform. On average, each project has been able to receive 73 investors crowdfunding it.
Characteristics of Profitus
- Interest on returns
Profitus has a 12% per annum on the investments listed.
It is free to open an account with Profitus. However, certain fees are charged like the mortgage administration and custody fees.
Key features missing in Profitus
- Auto invest
Auto-investing is a common element in most of the peer-to-peer lending sites. However, it is not present on the Profitus platform. This means that investors have to manage the diversification and decisions of their investments fully. This is something that Profitus should look into adding if at all, it is to compete with competitors like EstateGuru.
- Buyback guarantees
The buyback guarantee gives confidence to investors. The investments listed on Profitus lack a buyback guarantee and are only backed by a mortgage. As an investor on the Profitus platform, you should think of diversifying your investments on different projects. This would avert the chances of suffering a total loss if a single project failed. It is important to note that Profitus is not in any way liable for any loss that you will incur if a project invested in fails.
Is it safe to invest in Profitus?
Profitus having been in operations for a short period, it is not possible to definitively state if it is safe to invest in Profitus or not. It all comes down to a personal choice after having considered certain factors, including the possible risks in the investments.
Just like any other P2P lending site, there are certain risks associated with crowdfunding. The following are some of the common risks you should expect as you invest in Profitus.
- Overall investment risk
Just like any other investment, the value of your investment can either go up or drop depending on the prevailing economic time. The project’s value can also fluctuate because of market forces like supply and demand, cost of renting the property, and property value at a given time. To avoid this type of risk, investors are advised to invest long-term so that economic fluctuations have no impact on their investments.
- A decrease in the return on the lease
The anticipated demand can be lower than the supply. This reduces the profits that the project owner gets from rent, and consequentially affects the return that the investors will get. Profitus has no power to avert this risk, but it continually studies the market and updates the investors on possible future changes. With the study, Profitus is also able to update its project evaluation algorithm so that it does not fund a project that will outdo its demand in the future.
- Liquidity risk
Very investment bears this risk as the property may lose its liquidity, which forces it to be sold at lower market value.
- Project timeline risks
In some cases, the project may take more time to complete than anticipated. This can result in overdue payments to investors. Additionally, if a project exceeds the time it was supposed to be completed, that can lead to higher costs incurred. The higher costs will thus lower the profits obtained and the returns expected.
Pros & Cons of Profitus
Profitus is a relatively new peer-to-peer lending site, but that does not mean it is not good enough to invest in. It is important to note that the real estate market in Lithuania is considered safe because of its resistance to inflation and the rapid growth rate it has been experiencing. With that in mind, one can easily conclude that the site is destined to grow even more with the growth of the real estate industry. Invest today by signing up with the link below.