Crowdestate: Autoinvest and secondary market explained

There are a lot of new features at Crowdestate during the last few weeks. After I did an update not long ago, secondary market has been released. Nice thing to offer a possibility to liquidate to the investors. Firstly I want to tell you some things about the autoinvest feature, as you have only slight chances to invest manually on the primary market, despite the recent increase of new projects.

Autoinvest

Projects yielding about 10 percent or more with a volume below 1 million Euro it is hard to bid manually, as all is sucked up by autoinvest settings nearly instantly. This means that sometimes not all investors using an autoinvest get their bit of the project if the demand is too big (which happened to me before). As per Crowdestate’s statement older (date of inception) are prefered to newer autoinvests. So I suggest you set up an autoinvest immediately after sign up. I set my autoinvest very wide barriers. All types of projects which yield at least 12 percent and have a duration of less then 24 months are allowed to invest. Maybe I will increase the duration as I got a secondary market at disposition. As new projects are announced 24 hours prior the first capped bids can be made, I still have a chance to pause my ai for that project if I dislike it (I am not sure if this would change my ai’s inception date though, but I don’t think so). Given there is only one project added at the time being. As per mentionned reasons I relinquish to fine tune my autoinvestment settings. But you can set it really subtle if you like to.

Secondary market is (still) lucrative

This week I discovered the secondary market randomly, I do not remeber having received a message about the implementation by Crowdestate. For the fun of it I put my project up for sale which I invested in a week earlier, with a premium of 2 Euro, which is 2 percent on my 100 Euro investment. I did not check if it has sold, and did not receive a confirmation. About 2 hours later I have received a message that my bid to the new project which went open for capped bids in the meantime was confirmed. In the background my sale went through within minutes and my autoinvest hit again with the money I just received form the sale. With a holding period of one week and an investment of 100 Euro I made 2 Euro, annualised the return would be over 100 percent. It is senseless though, as 2 Euro remain 2 Euro, annualised or not ;). As I had now another project in my portfolio I waited until it was sellable and tried to repeat. And voila, it sold this time for a premium of EUR 2.50 in less then a day. I pulled that one again, but with a premium of EUR 3.50. Of course it is not worth the hassle, but my play instinct awoke. I really hope this market situation does not last long as it prefers older investors over newer ones which is unfair. As I told you now about this possibilty I guess it will be over shortly anyway. As more people try this strategy, the lower prices should get, which would be fair.

Seling and purchasing is free at the moment, hopefully it stays like this. To be able to sell a project it needs the status as settled, then you can set the price by clicking sell. You need to confirm the sale by a code which you get delivered on your mobile phone.

Conclusion

I like Crowdestate more and more. I do hope that the supply of new loans increases, and of course we do not see big defaults. Follow me to Crowdestate’s registration.

Crowdestate: Update after more than a year

After more then one year after my first investment with Crowdestate I can finally give an update. My first investment was repaid earlier than expected (after about 14 months). Yesterday I got noticed that I received my principal back plus interest. I received 17.04 Euro of interest on my 100 Euro investment which accounts for a great XIRR yield of 15.22%. It seems as the appartements from my development project sold better than anticipated. I am completely satisfied how this one went. They put together nice project material and gave periodic updates, as I expect it to be. The coming weeks and months will show how my other projects perform. Here you can read my first post on Crowdestate from a year ago. To date, my expectations have been met by the marketplace.

Who is allowed to invest?

The marketplace is open to investors from all over the world, you just need to make a wirement to the platform’s Estonian Bank account. If you can’t do an EUR wirement (or if it is ridiciously expensive) you can use Transferwise or Currencyfair (you get 40 Euro Bonus until first of April, no joke, if you transfer at least EUR 1’000.- or its equivalent in any other currency). Only restriction is that you need to be at least 18 years old, or be mature in your jurisdiction.

Now with autoinvest – which is necessary

As I started to invest with Crowdestate there was no need for an ai. You had first 24 hours time to study the project and invest a capped amount. After 24 hours the cap was deleted and you were able to invest as much as you wanted.

The last projects which I saw were sold out within minutes after publication. This had to be done with an autoinvest. You can set the amount, duration and interest rate you would like to invest in. If you prefer you can further refine the settings and have different levels to choose from. In my opinion the settings are self explanatory. I will only set the top levels.

According to the platform there will be an increase of listings in the coming weeks (in my opinion the listings increased already during the last weeks)

Conclusion

I really like the marketplace, although you cannot underestimate the risks involved (you see that on the high interest rates for example). There are always a lot of things that can go south with development- and/or financing projects. As per the available documentation, it seems that the platform deeply checks all projects which builds trust for me. You can check out all the old projects to get a better understanding. In the end you are merely a shareholder than a creditor with most of the marketplace’s projects. Keep that in mind before investing. Follow me to Crowdestate.

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Property investments with p2p (part 1)

With my last post I mentionned some strategies to counter a cash drag. I shed some light on minor platforms where you could put your money to work. Intentionally I excluded real estate investment platforms. Why?  Because these platforms work differently and we have a physical security in place and do not rely solely to the financial power of the platform or loan originator. Firstly I will take a look at Baltic (but not exclusively) platforms. In my next article I will cover the UK platforms.

In contrast to buyback platforms where an investor buys securitized loans, with property investments there is always a physical security in place (property, land etc). The LTV (loan to value ratio) shows us the ratio between mortgage and value of the security. Example: Property value 100k, mortgage value 60k equals and ltv of 60% (60/100).  Looks quite secure, doesn’t it? The problem here is that the property value is an estimation, which could be too favorable.  So we should treat the LTV’s  with caution. Even if the estimated value is in line with the actual market value we are not safe. There always needs to be a buyer in place willing to buy at that price right now. Maybe there is a buyer, but only in some months time. Just keep that in mind, real estate investments are not risk free, but they offer substance.

Let’s take a look now at the platforms:

Estateguru

With soon 200 projects funded (and lots of them already repaid) Estateguru (get 0.5% cashback on your first 3 months investments with that link) is in the club of the more established platforms in the property sector. We now know how the platform reacts to delayed payments. An interesting case is this one. The borrower was not able to pay on time so the property was transferred into an entity controlled by Estateguru. The

Estateguru Project

borrower has no time until end of October to buy back the property. If not, the property will be sold. If this will happen we are going to know how good the LTV estimation was. There are other loans which are overdue, but none of them was sold until today. Most of the loans are redeemed more or less on time, sometimes premature. If not, there are indemnity charges. It has happened that a loan was funded but the funds could not be transferred to the borrower as they failed to provided the needed documentation. In such cases Estateguru paid the interest for the funding period out of their own pocket. It happened twice to me. I like this attitude as they would not be required to do that. According to the stats there are no loans in default, which means the payment is missing for more then 45 days. This is not really true as abovementionned case shows. In the end I like Estateguru, where I invest now for nearly two years without any default. The number of available loans was a problem back in the days, but this has changed now, there are several loans coming every week, which helps me to invest. I try to get into a good mix of different project types. I prefer loans with a monthly (interest) installement. This for a simple reason: if there is a delay we find it out quicker. If I see nice projects which redeem at the end, I invest regardless. Estonian projects are preferred as well, but I don’t close my eyes from others. My goal is to have at least 50 percent of Estonian projects in my portfolio.

Bulkestate

Bulkestate started in Latvia but moved to Estonia as the regulation there is more supportive to crowdfunding platforms. Since then there were some projects with really nice returns. During the next few days two big projects should be added on the platform.  One is a bulkdeal where investors can buy a hotel complex in Burgas, Bulgaria. The other project is a multistage real estate development project in Riga.

Bulkestate Project

I have a positiv attitude towards the platform, even if they can’t provide a track record as only one project has redeemed to date. All projects are set to be redeemed at the end so far which makes an evaluation hard at the moment. Technically and optically the platform seems to be nice. There is no investors account at the moment so you can’t store your money there. You have to bid project by project and then pay your bid by bank transfer.

I already have spoken to the guys in charge and they seem to know what they are doing (from their RE experience). As there are not a lot of projects at the moment I suggest you create a  free account, so that you get informed when new projects were added on the marketplace.

Crowdestate

Live for an extended period of time is Crowdestate, although we do not hear and read a lot about the platform. An overview of the functionality is available here. For some weeks they offer now business loans secured with properties.

Most of the projects pay their first installement after 12 months or at maturity, so an assessment is quite difficult, although we have a little track record here. Nice is that as an investor you get a quarterly update about your projects with lots of information.

They make a professional impression on me and I think it can’t hurt if you check out the platform.

Housers

Some weeks ago I joined  Housers (get 50 Euro cashback when using this link and invest in a project) as an investor. I liked the idea of investing in a different region (although I was and remain sceptical to a certain extent). I already have invested in some different projects and got my first monthly installements (10% of that remain with housers as commission). Some projects are buy to sells, so a property gets bought, renovated and sold (hopefully) with profit. There is a duration of 12 months with such projects and the profit relies on the sale price. If the estimations are realistic remains to be seen, but I like the mix of buy to sells, buy to let and interest bearing projects.

At the moment there is an attractive looking project available: A hostel in Valencia which is in funding phase. A big project which needs about 2 Mio Euro. There the investor participates from the revenues (monthly) and the increase in property prices (once sold).

You can join housers as an equity holder as they are offering some equity on

Housers Hostel

Crowdcube at the moment. In my opinion the valuation is high, so I join (if I join) with the minimal invstment amount. Access to the private round is provided by the above link. I can’t show any figures as all details of the pitch need to remain private.

That’s it for now, with my next post I will look at UK property platforms, and there are lots them 😉 If you prefer buyback platforms, check  this out when you are cash dragged.

Crowdestate – invest in real estate projects

Today I am going to talk about Crowdestate, a platform which is operating in Latvia and Estonia. Founded in 2014 Crowdestate has funded 33 projects with a total volume of more then 15 millions of Euros.  More then 14k (!) investors gather at the platform. Out of the 33 financed projects, 11 already exited and were paid back to the investors. Annual yields range from 12.25 to 48%. Realistically the yields should be around 12 to 15 percent (IRR, annualised). The 48% outlier must be from a project which paid back early but was contractually bound to pay a fixed number of interest installments, even when terminating early. Otherwise I have no explanation for this.

Process of  new projects

As you can see on the little number of projects, on average there is 1 project per month, but that project can be fairly large and have a volume of some hundred thousands. There are two loan types available: Real Estate financeing and Corporate financeing.

To date I have invested in one project only and was positively astonished about the process and the quality of the available information. But one after the other:

When there is a new project added to the platform the investors have 24 hours time to get familiar with it (read info, ask questions etc). In my opinion this is fair and helpful to investors, as all have a window in which they can get up to date. After 24 hours the projects opens for investments, but are capped with a maximum investment amount (usually some k), which is depending on the total value of the projects. The cap will be lifted 24 hours later and you can bid as much as you like (and is left, of course). This set of measures provide all investors with equal chances, so I like Crowdestates approach very much. By the way, the minimum investment is set at 100 Euro.

What kind of projects are available?

There are a lot of real estate projects aiming to build large complexes, but the purpose of the projects varies from project to project. For example I have invested in a real estate complex which consists of more then 50 appartements in the upper price segment. The project’s duration is 30 months and pays the first interest installement after 12 months and then quarterly. In the project description you can see a lot of stasts, analysis and an exitplan. It all looks elaborate and professional. Register yourself to get a feeling. My yield expecation for this project is by the way 15.33 percent (IRR, annualised).

Conclusion

Crowdestate is in my opinion a well-made and professional platform. I will invest in 2 to 3 projects more and check if the interest payments are on time. Afterwards (if all is good) I will invest more money.