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.

Estateguru strides along

It’s been a while since I last wrote something about Estateguru, but now there are exciting news available. The amount of loans funded increased drastically in 2017, they want to focus on the german speaking part, there is a recent update tab now available and the referral/loyalty program will be continued. I will go into more specifics with these features later.

Statistics and a potential default

As you can see in below picture, estateguru was able to increase their funded loans to more then EUR 23.5 milions. From these funds, EUR 9.4 milions are already repaid to investors and achieved a return of 12.5%. To date there are no defaults (= loan which is late for more then 45 days), but it looks like there could be a default looming (look at this loan, and check the „recent updates“ tab). We will see how this plays out, but at one point it had to come to such a scenario. In my opinion this is quite a good thing for investors, as we now can see how Estateguru is dealing with problematic loans, and if it really defaults, we will have a better understanding of how good the valuations and securities really are. Oh I digressed 😉 Back to the figures : There are 141 projects (with 23.5 millions in funds) funded by 7’040 investors from 39 countries.

Recent updates were overdue

If you read my blog frequently you will know that Estateguru jared on my nerves quite often with their lack of communication on overdue loans. They now provided a remedy by introducing the „recent updates“ tab. When you log in, you can see in the right above corner (left from your name and investor number) the available updates. This is really nice, because I would like now the status of overdue installments.

Focus on german speaking area

The website now has a German version (light at the moment, loan descriptions still are in Englisch). A Swiss guy (not me) joined their team as representative for the DACH area (Germany, Austria and Switzerland). I know, this might not be of interest for you non German speakers, but to me it shows their willingness to grow. As result we could have a platform backed by more investors, therefor able to fund more loans, getting profitable which equals a more secure platform for all of us. 😉

The refer a friend / referral scheme continues

As it seems, more then 7k investors are not enough for Estateguru 😉 and that’s one reason why the bonus program is continued. Remember: If you register through a estateguru link on this blog or manually type in my referral code (EGU36099) then you get 0.5% cashback on our investments during your first 3 months. If you see the code during registration, you are all set 😉 or type it in manually 😉

That’s it for today, I will report back, when I know more about the potential default.