Bondster: Update, no more fees, up to 13.5% interest and autoinvest

As you might know I joined Bondster during Q4 2018, actually a bit early for an update. The recent changes made me do one. There are lots of good news for investors which I want to share. Furthermore some Investors seem to have problems configuring the autoinvest. I had that trouble as well when I began using the marketplace. Let us start with the good news for investors:

No more fees on Euro Investments

Until Wednesday investments in Euro have been charged by an annual fee of one percent, so lowered the interest received. This fee began charging once the first three months were over. Since Thursday this fee is gone (but new investors still get 1% cashback, details at the end of this post), which already impacts our yields in a positive way. The fee is still applied on the Czech Krona investments. The second nice point for us is:

Loans with up to 13.5% interest rate and buyback

Bondster has proven themselves by adding new loan originators, matching their risk criteria. This must be a very tough due dilligence review, as Bondster promises to step in, should a loan originator default. This week Lime from Poland was added and already offers a huge number of loans. Furthermore Bulgarias Stikcredit offered 13.5% on a smaller lot of loans. If you like the ore conservative approach, there are more loans from originators which haven been in business for years now. Oh, by the way, Stik and Lime offer short term loans of up to one month.

Late and Penalty fees

A recently changed fact is, that if a loan is past due date, investors still get compensated for the overdue period. There is just a little difference with how much. If in the loan details there is written “no penalty fee” it means, that the loan interest just runs at the same rate. If a loan is yielding at 13.5 percent, this rate is appied until buyback kicks in. If in the details there is written “penalty fees yes”, the interest accrues until the due date as it is written and then afterwards the penalty fee applies. I guess it is at least the same as the interest or more, otherwise this distinction would not make any sense. I hope this explanation was clear.

Autoinvest feature – sometimes less is better

Yes, the autoinvestor played games with me as well, lol. I had several people reaching out to me about it. Therefor I decided to share some info about it. First, I really think Bondster wanted to create a sophisticated autoinvest tool for us, hence we got a lot of parameters to set. And there seems to be the problem, some settings might not work together or we simply do not understand how to set it right. In experience it is enough to select the originator (or leave it empty to select all), the minimal interest rate, maximal duration and include buyback (currently obsolete, but I want it future proof). Below you can see my settings:

My Bondster Autoinvest settings

Once you clicked save, you see the overview of your autoinvestor, and there is a really helpful detail: Found loans shows you how many loans match your criteria. My settings result in 292 loans. With this number, you can see if your settings are ok or not.

Conclusion

Beforementionned changes really make Bondster more attractive in my opinion. Short term loans with 13.5 percent yield, plus overdue covered, this is really competitive. Further I like the regional diversification with a platform outside the Baltics.

New investors get 1% Cashback on their investments, if you register (follow link) and put this number, 4985, in the promo code field. This is valid for the first three months after registry. Cashback is directly credited on your investment account on the 5th of every month, for the investments of the past month.

Short update: Bulkestate and Flender with additional cashback

For some weeks now we regularly see new projects on Bulkestate and they seem to get bigger. On Monday there will be one with 380k Euros. Nothing too special, but still a bit special ;). The yield starts at 17 percent for everyone, investors with more then 10k get 18% and the ones willing to invest more then 25k get 19%. There are some things I like to point out though. It is not a secured loan with a mortgage, you buy equity with this project, so you are a partial owner. This means if there are problems, investors get paid at last, but at least you own some bricks 😉 Of course I exagerate, but the high yield comes from somewhere. There is a new financial number which I did not know before: FLTV (future loan to value), it is 33% in this case. Looks relatively secure doesn’t it? Not really, I have my problems with this number. I checked the valuation report on the website and it says (if I can trust google translate, as my Latvian is not so good ;)) that the whole project is valued at 1.141 mio Euro after renovation. So 380k / 1.141m equals that 33% FLTV. My problem is, there is no loan, only equity holders. How can we talk about a loan to value ratio? Plus the value only holds if everything goes accoring the plan. I do not say this project is worse or better then others, but I think you should keep in mind these infos before investing. It is not the usual mortgage deal we are used to from Bulkestate and there will be more projects like this (actually it is the second equity investment). The project goes live on Monday, 16.00h. I expect it will be filled rather quickly. The interest rate is tempting and other comparable projects filled quickly. Check out the project and register as investor

Flender with special cashback for autoinvest usage

Yes, you read that correctly, you get extra cashback for using the autoinvest function until end of July. I expect this promotion will be extended a month or so. Autobids from 150 Euro get 5% cashback and bids from 300 Euro 10% cashback (unlimited amount). Additionally new investors which register through this link, get additional 5% cashback (unlimited). So at maximum you can get 15% cashback, on a bid of 300 Euro this is 45 Euro in cashback. Really exceptional. How can the platform afford that? CEO Kristjan Koik has his own approach in advertising. He believes (and I do as well) that it is better to use the word of mouth instead of paying lot of money to online advertising. With this approach you are sure that every Euro you pay, there was a benefit for the marketplace and its customers and investors. I am happy with my investment experience during more then one year. To date I did not have any delay or default. I read from another investor that there was a problem with one project which was in arrears. As it seems it is back up to the original payment plan. Ireland seems to be a very good place for p2p investors, the borrowers really are great payers as you also can see with linked finance and grid finance.Follow me to Flender

Flender has a clean slate and a special offer (50 Euro Bonus) up to December 17th

Flender started about 11 months ago. During this time the marketplace has evolved. Now we got a virtual account (huge plus, as it is tedious to make a wire for every investment) and an overview of repayments. These are only two of many improvements which really are helpful. You can read more about Flender here.

What about delayed payments?

As I wrote before one part of their credit check is that the borrower has enough liquidity for the next three installements. Is this requirement not met the credit inquiry gets dismissed. Until now the credit choice seems to be very good as there wasn’t a single late payment on any loan (according to CEO Kristjan Koik). A look on my payment overview confirms that statement. The whole thing has to be taken with a grain of salt, as only few loans have been funded to date. These results are not statistically significant, but anyway a very promising start. Below you see my overview of 2017.  The design won’t win any beauty contest, but is useful. That’s everything that counts in my opinion. We can only see the data in aggregated form, not on single loan basis.

Overview 2017 of my Flender investments

How does Flender perform credit checks?

First of all a director of the potential borrower has to sign up to the platform and give some details about the company. With this data a superficial affordability check is performed. If the result returns positiv, Flender gathers further information through Equifax. If positiv, more information is requested from the borrower. These documents are the currenct profit and loss statement plus balance sheet,  audited financial statements, bank statements from the last 6 months, an expected profit and loss statement for the next months, tax certificate plus a breakdown of all liabilities. Afterwards the loan purpose is rechecked, the age of the firm and the ownership structure as well.

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Out of all this data a credit report emerges, if this report is positive it will presented to the Flender Credit Commitee. The commitee has the final say and approves or declines the loan.

For me the taken steps guarantee a complete credit check. I think the check of the bank statements is essential and helps to get a lot of information and puts together a picture how the company really is doing.

What is not that positive at Flender?

The loan supply is good, but only because the loans take ages to get funde completely 😉 Jokes aside, this is something which jars on my nerves. At least nearly everytime a loan was funded another was added on the marketplace. So the supply is there, but the funding is the problem. During the funding period investors money does not bear any interest.

Flender with a special offer until December 17th

To get some loans funded Flender has made this special offer. If you invest at least 450 Euro into a loan, you will get EUR 50 cashback, which is more then 10 percent. To be eligible for the bonus you need to sign up through this link and invest at least 450 Euros (you are also eligible if you already signed up). Afterwards you can write to the support to get your 50 Euros. Currently there are 2 loans available to fund.

Happy investing, don’t be shy and post your questions.

Mintos with a new cashback offer of up to 5%

The last quarter of the year is mostly the best for invstors, as the marketplaces try to attract as much new money as possible to close to year on a nice run. Therefor they offer some really nice deals (cashback, bonus etc) to investors. Flender kicked it off earlier and Mintos goes much further. Plus, new investors can take advantage of the regular 1% cashback on top.

Mintos offers up to 5% cashback until 31st of December (applicable only primary market invstments). The cashback level is related to the duration of the investment. In below chart you can see for which duration you get what cashback. There are two requirement which must be met to participate: 1) You need a Mintos account (if you don’t already have one, use this link to register and get 1% additional cashback during your first 90 days with Mintos). 2) You need to enroll to the program, click on enroll in your Mintos account. That’s it, you will get your cashback within 6 working days after your investment. I checked the terms and conditions, you are free to sell your investment at any time. Even if your loan gets bought back the next day, the cashback belongs to you.

Um daran zu partizipieren, müsst ihr dem Programm beitreten

Why does Mintos offer such cashbacks?

I assume there are at least two reasons. The obvious: They would like to attract as much new money as possible by the year’s end. Second they try to convince investors into longer duration investments. I suspected that already when they decided to waive to secondary market fee back in November. At the moment you can get up to 14.7% payday loans from Mozipo with a duration which allows you to get additional 2 to 3 percent cashback on top. As the paydays naturally have high delayed quotas, I assume the bigger part will be bought back prematurely to their maturation date. Right now you can find about 23.5k loans matching these criterias: >24 months & buyback. Just invest as much as you are ready to bind longer as there is no guarantee for liquidity. There are always risks involved, even with buyback as the Eurocent case demonstrates. So be selective about your loan originators. If you haven’t an account yet, now is the time to get one and receive additional 1% cashback for your first 3 months of investing with Mintos.

Happy investing and gathering cashbacks

Mintos (Mogo) now offers GBP denominated loans

Frankly speaking, I was a bit surprised by Mintos’ accouncement that from now on non-bank car loan lender Mogo offers loans in Pound Sterling. The reason for my surprise is the timing for this move. On twino and on some other European p2p marketplaces GBP loans are already offered for some months now. Given the UK’s history with p2p and the general openness of its investors I had anticipated this move much sooner (or Mintos were reluctant because of Brexit or so)… Whatever, this presents an opportunity for UK investors (and all who like to invest in GBP equally) to invest in high yielding car loans, without currency risk.

What to expect?

Mogo offers Polish car loans with a duration of 6 to 48 months with yields from 8.5 to 13 percent. The loans are equipped with a buyback freature which means that if a loan is overdue for more then 60 days, the loan will be bought back and the investors will receive all outstanding capital plus accrued interest. I expect that once the demand is there other regions and loan originators will follow to issue loans in GBP.

How to add GBP?

Mintos has an UK bank account with own sort code and account number with transferwise. You can therefor just make a local ebanking wirement which should arrive in minutes. The other possibility is to exchange foreign funds directly at Mintos.

Who is Mogo?

Mogo is a profitable car loan lender from the baltics which operates now all over Europe. Their loans have a low default rate of about 2 percent (according to Mogo). One interesting fact is, that Mogo shares the same adress with Mintos in Riga, Latvia. They are not listed as a related party according to IAS 24, but I guess they are related to some extent. I have made this suggestion with my last post, and Mintos so far has not confirmed or objected ties.

If you want to join Mintos now, use this link for registration (link leads you to Mintos.com and then you register) as you will get 1% cashback on your average investment over the first 90 days. The bonus shall be paid every 30 days directly to your investment account. I have put together lots of post on Mintos during the last months, you can read them from here.

News from the p2p world

A lot of things happened during the last week, I would like to give you an overview.

Mintos waives secondary market fee

From November 1st on Mintos is no longer chargeing 1 percent comission on sales from vendors. All trading on the secondary market is free now. During the little more then 3 year long existence of Mintos the platform made about 60k through the secondary market. Why forgo this money? I guess this is a strategic move. Let me explain: The durations on the platform tend to get longer (paydays from 2 months to 3 years, car loans more then 5 years). I think they want to offer investors a early way out of the loans without costs (at least from their side). With this setup longer term loans get relatively more attractive. In my opinion investors should not care too much about the duration (at least for paydays and car loans), as these longer term loans won’t make it to maturity in a lot of cases. Buyback is activated earlier and further these loans come with installements which decreases the loan portfolio duration with every cent of capital which is paid back. But hey, I don’t care, less costs equals more yield for us.
For new investors Mintos offers a cashback scheme: Register through this site (switch to english in the right above corner) and you get 1% cashback on your average investment amount during the first 3 months (you get paid on day 30, 60 and 90). (To be transparent: I get the same payments, but it is absolutely free of charge for you).

Swaper ends the cash drag fulminantly

For some days now I barely see cash on my account, mostly it gets invested the same day, plus I see a lot of loans on the site from time to time. The reason is: Swaper (respectively its mother company Wandoo Finance) offers loans to Russians for some time now. These loans weren’t allowed to be added to the platform due to regulatory requirements in the first place. They were gathered and put together on the platform once Swaper got the permission to do so. This big volume in loans immideately absorbed all liquidity on the platform. Due to the Russian loans the loan supply increases every day, we will see how sustainable this is, but for now, it is really exciting.
There is a slight change to the VIP program. It used to be enough to fund your account with 5k to get 14 percent loans. Now 5k is still enough, but you need to have invested 5k on average for the last 3 months before you get admitted to the VIP. To register at Swaper, follow me.

Grupeer offers again 15 percent short-term buyback loans

For a short period no 15 percent Russian short-termers. Grupeer management first wanted to wait and see how high the on time payback rate is before they were going to increase the volume. My first loan redeemed last week and quickly after that a new loan was added to the marketplace. A lot more will follow in the coming weeks.Follow me to register with Grupeer (click on the right above corner).

Housers with 25 Euros cashback after the first investment

There are a lot of new projects at Housers. Therefor the marketplace needs more investors. To attract these, they offer a 25 Euro cashback after the first investment of 50 Euros. You get 25 Euros after your first investment, but you can’t withdraw this money until you have invested it in at least once project. When the project matures (or you sell on the secondary market) you will be eligible to withdraw that money. This means you have to invest at least 75 Euros. Register with this link and you’ll get 25 Euros after your first investment. Nice deal in my opinion.

Transferwise Borderless account offers personalised AUD accounts

This week transferwise announced that their borderless account now offers personalized accounts in Australian Dollars. I quickly tested that with some funds I have at Marketlend (Australian Marketplace) and received the funds the next day. I hope many more currencies will follow.

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Why Mintos is one of the best p2p marketplaces

Ok, the subject is not that accurate as Mintos is not a real p2p marketplace in the classic sense, as there already funded loans are securitized and sold to investors. I was a little upset with Mintos beginning this year aus the rules often changed (interest rates up/down, foreign curriencies etc).It is not that this situation would not persist to today, but it has its advantages.

Mintos offers the broadest loan supply

As other platforms like Viainvest, Swaper and Robocash serve (mostly) as financing platforms for their respective loan originators, Mintos is some steps ahead.. At Mintos there are several unrelated loan originators on bord which use the platform as funding source. This opens a lot of possibilities for investors to invest broadly. It is clear that at some point problems occur with a loan originator, as the eurocent case shows us. As I wrote before, I believe that this case is good for us (except for the investors who lose money though) and strengthens Mintos’ business model and helps the platform to further develop. It would be a misbelief that this is the only time a loan originator struggles. This is valid for all platforms, not only Mintos. So do not back everything on the wrong horse, diversify!

Mintos related loan originators (Mogo, Lendo etc)

Here you find an overview of Mintos Originators, for further information, click on their logo. Even though Mogo is not considered as a related party according to IAS 24 (which doesn’t mean it isn’t related, might be different under other accounting standards), I still think it is possible that it is somehow related to Mintos. Mintos and Mogo share the same physical adress with their headquarters for example. Lendo ist the Georgian subsidiary of Banknote, the Latvian payday loan originator (related to Mintos). Even if such structures have been critisized before, this doesn’t deter me. Free market economy has a lot of examples of related enterprises. The only disadvantage I see is that if one party has control over the other party a domino effect could take place in case of problems with one party (accounting tricks etc). This is just hypothetically thinking. If we hit a recession, then the whole economy is involved anyway and one firm pulls down the other (ok, in the case of related firms, this could of course be more drastic and take place quicker, but the principle is the same). From this point of view I have no problem with Mintos’ structure. I always believe that the entrepreneurs want to make profit and not to be involved in “criminal activities”. Of course a can’t exclude such motivation completely (but it should be clear to any investor that such high yields come with high risks). At least Mintos is operational for more than 1000 days, so I guess the business model is succesful. I do hope that Mintos has a deep insight knowledge about their related originators and tries to avoid a default there as this would hit the company double. 😉

There are nice yields available at the moment

Last week I invested in Lendo payday loans which yielded at 13.5% (Euro not Lari of course) and have a duration of 24 to 36 months which seems rather unusual. I can only remeber to have seen durations of up to 12 months before. I don’t care about the longer duration as I expect most loans not to reach maturity anyway. The buyback comes in play much earlier as down the road most loans will redeem early, amend the contract or just don’t pay up. In this case they are bought back prematurely. This leads to much shorter duration of these loans then at the point of issuance. I estimate that more then 90% of these loans won’t reach the set maturity. I cannot prove this number, it is only a estimate. How do I get to this number? When I check my buyback quotas of the shorter loans I see a buyback rate of about 50%, given the longer duration, I guesstimate that the buyback figure will be significantly higher.

Bargaining is getting tougher on the secondary market

Someday in the past I had nearly reached 20% yield (NAR not XIRR) with Mintos, due to nice transactions on the secondary market. Right now I have fallen back which comes from 2 reasons. Firstly I was not able to sell everything like I wanted and used to and secondly there is a lot more competition on the market. In the beginning I was able to manually grab some snaps, but that got a lot harder as since some weeks some IT guys created their bots to do the heavy lifting. Sadly I am not able to write a bot myself, so I have to rely on some luck. Consequently this means that my yield will be somewhere around 14 and 15 percent, which is still a great return. If you would like to start with Mintos, use this link to register and get 1% cashback on your average investments during the first 3 months.

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New cashback offers and investment opportunities

Due to the cash drag situation at some platforms I have shown you some possibilities to invest your funds.  Of course real estate platforms are a good choice as well.  Let me give you an overview of current opportunities and new cashback offers.

Up to 90 Euro cashback at Iuvo Group

Beginning of this year I have let my investments run out at Iuvo Group as my results were not really convincing (relative to other opportunities at that time). Some weeks ago I rejoined them as I received a cashback offer for old investors to rejoin.  Since then my yield is (per XIRR) about 10 percent, on the other hand the platform shows me 11. This is a far better result than last time. This time I did not invest in overdue loans, which seems to be the more fruitful strategy, but it could be just luck. My number of loans and my investment horizon are to small to draw a relevant conclusion. Now there is a cashback scheme for new investors if you invest at least 1000 EUR (or an equivalent in Bulgarian Currency), and get 30 Euro. If you top up your investments by at least 1500 Euro during your first 2 months on the platform (total 2500 EUR) you get additional 60 Euro as a bonus. Necessary steps to be eligible:

1. Get in touch with me via contact form, that I can send you an invitation
2. Register with the same email at Iuvo
3. Transfer and invest at least EUR 1’000.-.
4. You get your cashback credited within 2 business days

Still 1% Cashback at DoFinance

Still 1 percent cashback (with this link only) for new investors for their deposits within the thirst 30 days. I don’t know how long this offer will stay valid, it could be cancelled anyday. Look at DoFinance’s functionality..

Grupeer opened up for new originators

Grupeer started a new product some weeks ago with Russian shortterm loans of 2 to 3 months with a buyback protected yield of 15 percent.  This week there were no loans of this kind added to the platform. I believe they would like to see first a redemption of the first loans, which are due end of October. In the meantime they added more loan originators to the platform with some nice loans yielding 14 percent for up to 12 months. There is always something to invest at Grupeer.

Bulkestate with a new project and one in the pipe

Now the newest Bulkestate Project is online: Hotel appartements in Bulgaria which will be sold with a profit. The duration is 8 months and the yield is set at 13.8% which I consider attractive given the shorter then usual duration and low LTV of 35 percent. In some weeks we should see another (development) project in Riga with a nice yield. Check out Bulkestate  and open a free account. This makes sure that you get news of the platforms newest projects.

Bulkestate Hotel Complex

Just an info to the functionality. You can’t hold funds in your Bulkestate account at the moment. You place your bid and then get an email with payment instructions based on which you can make your transfer and pay for your bid. A little bit unconfortable I know, but a solution is in the making. So Investing should get easier down the road, but as always, these solutions take time to be developped and appear on the platform. It is never easy when money is involved as regulatory requirements have to be met for our own safety.

 

Housers offers 50 euro Cashback until October 31st

Invest 50 Euro and get additional 50 Euro to invest. Nice deal, isn’t it. Valid through October. Just use this link to register and you are entitled to receive your cashback once you made your first investment. Please note: when you

Housers Hostel

make your investment they ask you for a promotion code, this has nothing to do with the cashback offer. It is a special promo for investors to receive more interest when they invest more then amount X, as stated in the project description. You can leave this empty. At the moment there is such an offer, check out the image.

Flender offers 10 percent cashback in October

You just have to register through this link and invest 2500 Euro during october and you get at least 250 Euro cashback. Your bid date counts, it does not matter if the funding period goes into November. If you bid by end of October, you will be granted your bonus, even if the project would not complete funding at all.

Lendix p2p loans versus bond ETF (yield comparison)

Today I am trying to compare between ETF bond investments and an investment with Lendix. I do that to get an idea how p2p loans perform in comparison to high yield and corporate bonds. I’d hoped to get some clues if the ETF bond investments could be replaced by p2p loan investments. Beforehand, the comparison is not as fair as it should be as I had to guesstimate some datapoints, so a part of it is comapring apples and oranges. Following some factors which are not congruent and therefor make it hard to be compared. Nonetheless I am convinced the benchmark gives some insights.

What you should consider while reading this comparison

Lendix funded its first loan in March 2015, this means the loan portfolio started from scratch and could only been built over time, contrary to an ETF where you can invest once to hold. This increases the difficulty to match the yields, as I would need to time wheigh them, what I can’t given the data available. From a risk profil high yield bonds are the most comparable to Lendix loans, although they are not exactly the same segment. Most of the borrowers would not be able to emit a quoted bond. The regional distribution is different, as Lendix only offers French loans (I excluded Spanish and Italian loans from this comparison due to their youth which would dillute my results). The analysed ETF have a broader regional segmentation. France counts for about 15 and 20% of the ETF’s regional allocation. A sectoral comparison is hard due to the fact that the ETF provider allocate the sectors differently. In the ETF the banking sector accounts for about 1/5 of the total portfolio, whereas on the other side Banks are nearly not existant at Lendix. As the oldest Lendix loans only are running for 2.5 years I guess the default rate is a little to low at the moment. Further: Quoted bonds react on shifts of the yield curve. Is the curve shifting up the bond prices go down (interest goes up), as the yields adapt to the new interest rate environment. This results in an increase in yield to maturity. Contrary when the yield curve shifts down the bond prices soar and the yield to maturity gets smaller. This does not happen to Lendix loans as they are not quoted or tradeable at an exchange. This can be an advantage (decreasing interest rates) or a disadvantage in case of increasing rates. Only newly added loans are affected as they orient at the current interest rate level. Ok this is a little bit generalized, but it works like this more or less. Of course there are other parameters which influence the bond prices to a certain degree in yield shifts. There is , for example, the duration. Loans with longer durations tend to react more sensitive to shifts in the rates then shorter ones. Higher coupon bonds tend to be less sensitive. But now enough with the theoretical approach, I could write many blog posts about this only 😉

Und jetzt zum Vergleich…

According to Lendix’ stats the average yield is 6.44% (but I can’t copy this value one to one due to the reasons mentionned earlier). Firstly I have lessend the yield because of the defaults by number (3.07% of the loan number were in default), which brings me (ok, not 100% correct I know) to 6.44% x (100% – 3.07%) = 6.23% p.a yield after defaults.

Lendix compared to ETF, Sources: Bloomberg / own calculations

This per annum yield I have lessend in the first image with 2 percent for the first year and 1 percent for the second, after that I have used the 6.23 percent p.a yield. As I passed on calculating monthly yields the Lendix line is stepped with a yearly recalculation (=addition of the yield, yes, no multiplication here). I am aware that not everything is 100% correct, but as I said earlier…. We se now that only the high yield bond’s yields came close the Lendix loans. This is what I have expected.

In the following image I have put together the per annum yields (over a 2.5 year period) of the ETFs and Lendix. Logically the high yield bonds and Lendix are in front.

Comparison of p.a yields from ETFs and Lendix, Sources: Bloomberg / own calculations

Conclusion

Despite the different initial position I find that the comparison shows us somethings. We see that we would have been better of with Lendix loans then the ETFs (from a yield perspective). As the comparability is not really given I see p2p loans as addition to a multi asset portfolio and not as a replacement of standard bond products. The loans track record is too short and we have no liquidity option here which we have with the ETFs which can be sold nearly instantly. You should always watch out for liquidity if investing. What I will try further in a later article: compare the default probability of Lendix loans with high yield bonds.

ps: Register with this link and you will get 20 Euro cashback (= 10%) after you deposited at least 200 Euros.

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.