Borrower case study: Renovation of an apartment building in Riga city centre

The borrower: SIA ZenInvest, which previously has taken loans to renovate single apartments but now wanted to take the company to the next level by renovating an entire building.

The development: renovation of 12 apartments and two commercial premises, with a total net development area of 847m2.

The request:

  1. The first stage comprised a 67.5% LTV loan used to purchase part of the building and start the renovation works in the apartments and common area.
  2. Very quick financing released in stages following the signed surveyor report of completed works and an updated valuation report to reflect the increase in value.
  3. The rest of the building was purchased in the next stage, and by doing it this way the borrower saved financing costs and can sell the apartments in different renovation stages.

The traditional lender who was initially approached for financing requested that the borrowing company needs to have been operational for at least two years and also has a positive balance sheet. Moreover, as the purchase of this building was agreed in stages, the financing structure would be difficult to agree with a traditional lender and the seller of the building wanted to sell the property fast.

The borrower previously worked only with his own equity until two years ago when, in order to increase operating capacity, organized financing through EstateGuru. As the apartments in question are small and located in the city centre, one of the target groups for the project was real estate investors. The borrower saw an opportunity to gain additional marketing by raising funds through crowdfunding as the investors could also be potential buyers. The priorities of the borrower were flexible payments and fast, hassle-free additional financing during the subsequent stages.

The solution:

The total financing and maximum LTV was agreed for the project. Also, the EstateGuru team offered to conduct additional marketing of the project, in order to help the borrower with getting the first sale reservations.

In the first stage, €503,820.00 was raised by 1251 investors in 6 days and 14 hours. During the financing stage, the loan manager helped the borrower to clarify all the AML and compliance questions asked by the bank in order to sign the escrow agreement and save time. Presently, one apartment has already been sold and a further five reserved. The total amount raised for the project is €890 500 in 5 stages.

What made you choose EstateGuru for funding this project over other options?

 “The real estate market in Riga is small and competitive, therefore financing speed is crucial, otherwise somebody else can purchase the property while you are waiting for finance. The EstateGuru team makes decisions very fast and can give an indicative offer before we send the valuation as they understand the market and the liquidity.” – Oskars, SIA ZenInvest

What was your experience of working with Dainis?

“Working with Dainis is very simple, mostly because he not only understands our business model and the demand for such properties in the market but is also ready to quickly find the most suitable solution for each situation.” – Oskars, SIA ZenInvest

EstateGuru Feedback

“Working with entrepreneurs who understand the needs of buyers and develop high-quality properties is always enjoyable. We have established a good professional relationship with ZenInvest and communication is always quick and easy. We are happy to look at entrepreneurs’ ideas for future projects because we see the excellent quality of work and sales activities in their completed projects.”- Dainis Rupainis, Business development manager – Latvia.