We’re excited to share the latest project we have been working on to bring new investment opportunities to our investors. We have launched Real Estate Securities (RE Securities) – a new investment offering on our platform that allows investments in short-term rental properties and enables our investors to diversify their investment portfolios with equity-based securities.

Investment in rental property is the acquisition of a property that is or will be rented out, with the aim of generating rental income, and capitalizing on the appreciation of the property’s value in the long term.

TWINO is the first company in Latvia that offers this type of investment. The main difference between our product and real estate investment products already on the market is that the investor does not lend money for the development of property (debt investment) but acquires ownership rights to the specific asset (equity investment). As with company shares issued on the stock exchange, profit is made in the form of dividends, not interest payments.

With RE Securities, we offer the closest experience possible to owning a rental property and make one of the most popular investment types in Europe more accessible. The first RE Securities are already available for subscription on our platform with a minimum investment of 100 euros.

About Real Estate Securities

By investing in RE securities, investors are purchasing preference shares of TWINO subsidiary AS TWINO Properties (TWINO Properties) – a company whose primary business is the acquisition of real estate for the purpose of generating rental income and profit from the increase in real estate value over time, and which will own the property asset.

RE Securities let you further diversify your existing investment portfolio by investing in equity-based securities with an expected annual return of 6-8% p.a. but in a positive market environment even up to 10% p.a. To celebrate the launch, we are offering a 5% Cashback bonus on top of that. This brings the overall return to double digits, which is a very attractive investment opportunity considering the relatively low risk of real estate as an asset class compared to others.

While real estate has proven to be one of the best long-term investments, most people who want to invest in real estate aren’t able to do it due to high initial investment and various operational requirements of acquiring and managing a property. With TWINO now anyone can invest in income-producing real estate starting at just 100 euros. We will take care of all the real estate acquisition and management operations so you can experience a truly passive investment experience, collect net rental income, and benefit from property appreciation over time.

How it works?

1. Browse the property – get acquainted with available properties on TWINO platform including the appreciation and income potential

The projects we offer on our platform undergo a strict due diligence process to ensure that the property meets the investment criteria and maximizes returns for our investors. We consider acquiring only premium real estate situated in prime neighborhoods that have a strong return profile and would offer stable cash dividends and superior appreciation potential. The properties are fully equipped with all necessary amenities and design furniture of the highest standards and quality providing a top-notch experience for the guests.

2. Choose the investment amount – determine how much money you want to invest

The minimum investment amount in one property is €100, and it is just as easy to invest €100 as €100,000. On the TWINO platform, you have the opportunity to quickly and easily purchase preference shares (RE Securities) of TWINO Properties – the company established to facilitate the purchase of rental property. Each property will be linked to a specific category of shares (Assets). The preference shares shall have the right to receive dividends but do not have any voting rights.

3. Confirm investment – review the applicable legal documents and fund the investment

After you have confirmed the investment, your specified investment amount is instantly reserved on your TWINO account. Once the funds required for the purchase of the property are fully subscribed on TWINO platform, TWINO Properties issue the corresponding RE Securities and acquires the underlying real estate.  Consequently, you become a preferred shareholder entitled to receive dividend income based on the performance of the underlying property. If the funds required for the acquisition of the specific property aren’t subscribed in full within the defined time period, the RE Securities are not issued, the reserved funds are returned to your TWINO profile and become available for investments in other products available on the platform.

4. Earn income – collect your share of net rental income and benefit from the property value appreciation over time

The return on your investment is directly linked to the performance of the underlying real estate and consists of rental income and property appreciation over time. You will receive the net rental income in the form of dividends. The dividends shall be paid out at least annually. The dividend amount will differ based on the rental income of each category of shares (Assets) that you have invested in. An appraisal of the real estate will be performed on an annual basis to ascertain the current market value of the property and the value that could potentially be achieved in the event of a future sale of the property.

TWINO Properties handles all aspects of property management while you sit back and enjoy a passive investment experience.

First Real Estate Securities

The first RE Securities will be short-term rental apartments in two new residential projects in Riga – the upscale riverside project Hoffman Rezidence in Klīversala, where exclusive apartments with stunning views of the river Daugava and Old Riga are already available for rent, and the largest new residential project in the historic center of Riga – Dainas.

The first offering of Hoffman Rezidence is already listed on the platform and available for investment. The project development was previously funded on the TWINO platform in record time, and we are excited to now offer to invest in the project within this new product, in fully furnished and equipped apartments that already generate income.

Apartments of Dainas, which will be offered on the TWINO platform, are currently being set up for rent and will soon be available for investment.

Before making an investment, please familiarize yourself with the legal documents related to RE Securities – Terms and Conditions, Shareholders’ Agreement, and the Prospectus. All these documents are available on our website.  

Please share your feedback at any point as that will be the key to making this the perfect investment product for all of you. In the meantime, if there are any questions do not hesitate to contact us.

Q&A

Who legally has ownership of the real estate property?

When you make an investment in a particular apartment on TWINO platform, you are purchasing shares of TWINO Properties – a company whose primary business is the acquisition of real estate for the purpose of generating rental income and profit from the increase in real estate value over time and which will own the property asset. For example, if you purchase 1% of the shares in a single property offering, you would then be entitled to 1% of the economic interests of the asset over time, which may include income from rent and property value appreciation.

How does TWINO choose which real estate properties to acquire?

The projects we offer on our platform undergo a strict due diligence process to ensure that each property meets the investment criteria and maximizes potential returns for our investors. We consider acquiring only premium properties situated in prime neighborhoods that have a strong return profile and would offer stable cash dividends and superior appreciation potential.

The following criteria are considered when selecting properties for acquisition:

• Market conditions – TWINO evaluates the current real estate market conditions, such as supply and demand dynamics, rental prices in the area, vacancy rates of similar properties, and other market factors that may affect the performance of real estate.
• Location – only properties in prime locations are considered. Those are areas with high demand, close to or in the center, and with a growth potential including any upcoming development of the surroundings.
• State of the property – the characteristics of the property, such as size, age, and condition. TWINO considers acquiring properties that are well maintained and have the necessary modern amenities to ensure sufficient demand for renting out the property, as well as the potential future sale.

What returns can I expect, and how often are rental payments distributed to investors?

Investing in RE Securities can deliver returns to investors in two different ways:

1. Rental income. TWINO investors will receive annual net cash dividends from rental payments. The rental income you receive will be proportional to your investment in the particular asset class.
2. Property value growth. Any potential property value appreciation would result in an increased sales price of the property and would be paid out as a dividend after the sale.

Each property is expected to generate a return in the range of 6-8% per annum. The projected return is based on financial models, which consider various scenarios of macroeconomic developments. The expected return range is influenced by factors such as the demand and supply in the rental market, the overall economic environment, inflation, and the historical performance of rental properties.

All apartments offered on the TWINO platform are already being rented out through short-term rental platforms like Airbnb & Booking and are generating rental income. The average occupancy rate across the various properties in July was already between 70-80%. In time we expect to increase it even higher during the high season.

How the profit generated by the property is determined?

The profit that is distributed to the investors through dividends is calculated by subtracting all the applicable expenses of the property from the income generated by renting the underlying real estate. Dividends are not distributed in case the property has not generated net income during the operational year.  

Financial models with assumptions and forecasts of each property will be made available on the TWINO platform once the property is listed for subscription on the platform. 

Short-term rental income may vary based on the performance of the property. For example, some short-term rentals may have higher income during the busy season (May to September) and lower income during the less popular times to visit (October to April).

What are the applicable fees for investors?

TWINO does not charge any fees from investors for investments in RE Securities. Any costs, such as property management fees and TWINO commission, are subtracted from the rental income that each property generates. As such, investors receive net rental income proportional to their investment in the form of dividends.

Who pays for ongoing property expenses like repairs, taxes, and insurance?

After the acquisition of a certain real estate is fully funded, TWINO Properties acquires it and, thus, becomes the owner of the particular real estate. It generates the rental income and covers all the expenses associated with it – property management fees, taxes, insurance, repairs, maintenance, etc. These operating costs are covered out of the rental income generated by the property.

When can I expect the first dividends?

Dividends will be paid annually (around April-May) and will be distributed to your TWINO account proportionally to your investment in a specific property.

What is the estimated holding period for RE Securities?

RE Securities are equity shares (stocks) in the capital of TWINO Properties, as a result, there is no maturity date for these securities because they are an equity-based instrument, not debt. Real estate is an asset that has no end date and as such RE Securities shall exist as long as the underlying real estate property is owned by TWINO Properties. In theory, this could be infinite, however, in practice we anticipate that the optimal holding period could be around 5-7 years (up to 10 years). That being said we will monitor the market constantly and in case favorable sales opportunities arise earlier the properties will be sold correspondingly.

 It is also worth noting that contrary to yearly dividend payments that reflect the rental income (which is just one of the two components contributing to the overall return), the value appreciation of the property over time (which is the other component) shall be realized only at the end of the holding period. As mentioned above, at the moment there is no exact timeline for selling the properties. TWINO considers this to be a long-term investment where the property appreciation in value over time might reach the best conditions in 5-7 years (up to 10 years) time.

How can I exit my investment?

We are currently working on a secondary transaction solution that will allow investors to place orders to buy and sell RE Securities to other TWINO investors. In case the investor wishes to exit the investment, he/she will be able to place a sell order for a partial or full amount of his/her investment on the TWINO platform.

Once a year an independent valuation will be performed for each property to determine the fair market value of one security. The valuation will guide investors in determining the optimal price for placing orders.

More information on the functionality of the secondary transactions will be provided before it is launched.

Who manages rental property and how do they assist in ensuring the success of the rental property?

The running of day-to-day operations of the rental apartments will be done by a separate dedicated legal entity within TWINO Group. It will be responsible for setting up the listings on the rental platforms and maximizing the rental revenue as much as possible, as well as the cleaning, and maintenance of the apartments. The goal is to deliver outstanding management services, resulting in optimal rental income, smart asset decisions, and reduced costs that help our investors to maximize returns.

The property management fee is between 15-30% of the monthly rental revenue depending on the exact property and is specified for each property listed on the platform separately in the prospectus or other accompanying documentation of the corresponding RE Securities.

Who can invest in RE Securities?

Any investor registered on the TWINO platform and eligible to invest in the financial instruments can invest in the RE securities.

What is the minimum initial investment?

This product is designed to make investing in real estate accessible to everyone, therefore, the minimum investment is €100 per property.

Can I invest in RE Securities using Auto-Invest?

To invest in RE Securities using Auto-Invest, you will have to create a new portfolio and select “Real estate securities” as a product type. You can allocate all available funds to be invested or adjust the maximum amount for each Auto-Invest portfolio.

Please note that the availability of Auto-Invest depends on the results of your Suitability & Appropriateness assessment.

What are my tax obligations and what documents will TWINO provide me?

You are required to report any income you receive from TWINO on your tax return to your local tax authority. Similarly, as before, TWINO will prepare your individual income statements that can be downloaded at any time on your TWINO account under the section My Profile -> Reports. The income statement will provide a breakdown of income received when investing in RE Securities. 

TWINO does not provide tax-related advice and recommends you to consult with your local tax authority as to how to declare your tax income. Though Please do take into account that the type of income for the RE Securities will be dividends, not interest. As a result, tax treatment might differ compared to Loan Securities.

Why are RE Securities designed as a long-term investment?

Real estate returns are maximized when treated as long-term investment over multiple years, therefore, the new product is designed as a long-term, lower-risk investment that helps you to build wealth over the long term. This product is not suited for investors that wish to hold their investment for days, weeks, or even months.

RE Securities are designed as long-term, open-end investment due to three primary reasons:

1. Consistent growth and price appreciation. Real estate has proven to be one of the most stable asset classes over the long run. While that can increase the odds of achieving consistent returns, that also means that it is less feasible to obtain high returns in a short period of time like it’s possible with higher volatility assets, such as high-risk stocks, cryptocurrencies, or Loan Securities. To maximize wealth-building, investors also need time for the investment to accumulate property value appreciation. Time can often be the biggest advantage for a real estate investor.
2. Transaction costs. Real estate is an asset class that has certain transaction costs associated with buying and selling a property, such as valuation costs prior to the purchase,  stamp duties for the registration of the ownership, etc. If held for a short period of time, these costs might have a significant effect on the overall return. While over the long term, they spread out over the years and the effect on the overall returns becomes less significant.
3. Liquidity considerations. Real estate is generally considered less liquid compared to other investment options. By encouraging long-term investments, RE Securities minimize the pressure to sell properties quickly, allowing for a more measured and strategic approach to asset management.

How long does it take for apartments to be ready for rent/bookings?

All properties that are available for subscription on the TWINO platform are fully furnished and already rented out. As such, each property is already income-generating at the time of the purchase of the property.

What happens if there is negative cash flow due to a loss of renter or unplanned expenses?

It is very unlikely that there will be a negative cash flow. Most of the costs are structured as a percentage of the rental revenue or the pre-dividend income. As a result, there are relatively few fixed costs (e.g. the utilities, RE tax, etc). Any unexpected costs arising from damage to the property should be covered by insurance.

Our estimates indicate that even in bad market conditions the chosen properties will generate enough rental income to have positive returns. It is, however, possible that the property can have negative cash flow in which case there would be no dividend payout in the particular year and the accrued losses would be covered by the next year’s income or proceeds from the sale.

As an investor am I liable if any lawsuit/ accidents occur at the property?

No. Each property is owned through a joint stock company structure to protect shareholders form personal liability.