CrowdEstate review

CrowdEstate’s overview

CrowdEstate is a leading platform for real-estate and business loans. The real-estate projects became more conservative in 2018, and now yield around 10%-12% yearly. On the other hand, the long-term business loans are still somehow speculative and offer 16% returns.

My opinion on CrowdEstate

Although I still appreciate the large supply of loans available at CrowdEstate, I have to admit that my portfolio’s performance is deceiving. The actual returns for speculative loans are far from the expected ones !

Overall, I’m much more impressed by EstateGuru, both in terms of transparency and performance.

Detailed ratings

Actual performance

My current portfolio performance is rather low, because most loans don’t pay interests monthly. Moreover, several business loans on my portfolio are in default.

Loans liquidity

Opportunities are added regularly, sometimes with huge amount. However, the large number of investors on the platform means that even these amounts will fill up rather quickly !

Reporting

Reporting has improved and now shows many useful statistics.

Transparency & reliability

Compared to EstateGuru, CrowdEstate’s due diligence process process is weaker, and their recovery process seems to be much less reliable.

Website ergonomics

The website is very well designed and extremely pleasant to use.

CrowdEstate’s pros & cons

Pros

  • Large volume of available projects
  • Secondary market availability
  • Very well-thought investment process which gives time to manual investors
  • Interesting geographical diversification, especially in Italy

Cons

  • Poor management of defaulted projects
  • Due-diligence on projects and recovery process aren’t up to par with EstateGuru
  • Many loans are only secured by equity, making them less safer than property-backed loans

Loans characteristics

Loans duration

Long-term : more than one year

Loans kinds

Business

Real-estate

Minimal investment

€ 100

Buyback guarantee

Buyback guarantee NOT AVAILABLE

Currencies

EUR – Euro

Overview of CrowdEstate’s loans

All loans are in Euro. Expected returns for real-estate loans are commonly in the 11% – 12% range, with durations up to two years. Business loans are more speculative, and usually yield 16% annually for loans lasting one year or less.

Most recent opportunities where located in Estonia. However, the platform also lists many loans in Italy. In terms of geographical diversification, it makes CrowdEstate a great complement to EstateGuru and BulkEstate, as these two competitors don’t offer loans from this country. In addition, a few projects from Latvia and Romania are available.

The investment structure varies from one opportunity to another. Business loans usually yield interest monthly, while the interests for real-estate projects are reimbursed at the same time as the capital. Reimbursement may also follow another repayment schedule, for example quarterly.

The minimum investment per project is € 100, which is rather large. It will make it more difficult for investors with a small portfolio to diversify it, which may increase the risks. In addition, the invested amount has to be an amount of € 100, which makes it hard to reinvest interests.

When investing in CrowdEstate’s loans, it’s essential to pay attention to capital kind. Many real-estate development projects on the platform are equity-backed, which makes them much less secure than property-backed loans. Indeed, as there’s no collateral provided, investors are likely to suffer losses in case the borrower defaults !

Loans volume

The loans amounts are usually of several hundred thousand euros, sometimes even reaching one million euros. There’s at least a new investment opportunity each week, often more.

Buyback guarantee

CrowdEstate doesn’t provide a buyback guarantee.

Platform’s transparency and reliability

In terms of reliability and transparency, there are both bad and good things to say about CrowdEstate.

On a positive note, I appreciate the detailed projects description as well as the availability of public statistics.

On the other hand, the platform’s due diligence process seems flowed. Indeed, several projects have defaulted, and few of them even proved to be frauds !

Overall, CrowdEstate has a long way to go in order to reach EstateGuru‘s level of transparency and reliability.

CrowdEstate’s background and team

CrowdEstate was founded in 2014. The platform’s main offices are located in Tallinn, Estonia. In addition, they also have one satellite office in Latvia, Italy, Romania as well as in Czech Republic.

The team is introduced on the website. It unfortunately doesn’t provide employees’ background, even for top management. However, direct links to their LinkedIn profiles are available.

The platform provides financial statements. Paradoxically, although CrowdEstate recommends investors to use check whether platforms provide audited financial statements, their own reports didn’t get audited ! They plan to do so starting next year, however.

The financial reports show that CrowdEstate has generated a profit, both in 2018 and 2019.

CrowdEstate’s publicly available statistics show that the total loans volume financed through the platform is close to one hundred million euros.

Loans descriptions

All projects are introduced in a very detailed way, following the same outline. First comes an overview which sums all important figures.

A large part of the description focuses on the SWOT assessment, which stands for Strengths / Weaknesses / Opportunities / Threats. Note the huge typo in the following screenshot, which fortunately is a rare occurrence.

Investors can also evaluate the project’s risk thanks to the rating computed by the platform. It ranges from A1 for projects deemed extremely safe, to C5 for high-risk loans. Here’s what it looks like for a rather low-risk project :

Finally, a graphical overview of the repayment schedule is provided. It allows to visualize the future cash-flow easily.

Overall, the level of detail provided for each project is one of the platform’s strengths.

I also appreciate the fact that once a project is funded, the full loan description is still available even for investors who didn’t invest. Indeed, most competitors such as EstateGuru or Crowdestor restrict access by displaying only the overview.

Reporting & statistics availability

The whole loan book is available for download. It’s also possible to download a list of overdue projects. However, I regret that information regarding late or defaulted loans isn’t available in a more readable form. EstateGuru‘s communication regarding their problematic loans is overall much better.

Track record

As of late August 2020, 265 projects were funded, out of which 145 were exited.

However, although many projects were successfully reimbursed, CrowdEstate’s track record isn’t so bright. Indeed, many investors pointed out a lack of due diligence – especially for recent projects -. Expected returns turned out to be grossly overestimated, and several some cases the risks were extremely under-evaluated. Even worse, several projects proved to be downright frauds. CrowdEstate’s financial report for 2019 doesn’t sugar-coat it :

Needless to say that it sometimes leads to rather extreme differences between the expected and the actual return.

In addition, compared to EstateGuru, the delays for defaults recovery at CrowdEstate seems much longer. This seems to be especially true for the business loans, which are usually more risky.

Communication & support

CrowdEstate will notify investors of new projects availability; transactions such as reimbursements are also notified. In addition, investors also receive a rather insightful monthly newsletter.

One very appreciable aspect is that after investing, the platform often sends update about the development process. Were the required permits applied for and obtained ? Did the plans change ? These regular notifications are very useful for these long-term investments; it’s nice not to be left in the dark during two years !

It’s possible to get in touch with CrowdEstate by phone, e-mail, or through the platform’s Facebook page.

Platform’s features

Early exit

Early exit available

Investing methods

Auto-invest

Manual investing

Manual investing at CrowdEstate

It is extremely comfortable to invest manually at CrowdEstate, thanks to a carefully designed investing mechanism. Indeed, as we will shortly see, it has two main strengths:

  • it gives manual investors enough time to study the loan description and even ask questions about the project
  • the available amount is spread between as many investors as possible.

In contrast, during summer 2020, most new loans at EstateGuru were bought by auto-invest as soon as they were available. This left nothing for investors who wished to select loans manually.

Let’s have a detailed look at the pre-booking system, which was unveiled in June 2018.

First, once an investment opportunity is available on the platform, investors will be notified by e-mail. From this point, there’s a 24-hours pre-booking period which allows manual investors to place their orders. However, at this point, no actual investment is made. Indeed, the system merely record investment requests.

Investors can take advantage of the pre-booking period to ask questions about the investment. One weakness of this process is that the questions and answers written in Estonian (the majority of them) aren’t translated in English, and vice-versa, so some information gets lost. Also, not all questions get answered.

At the end of the pre-booking period, if accumulated orders reach or exceed the loan amount, it will be allocated between them. However, the allocated amount may be smaller than the requested one. Indeed, in order to spread the loan amount as evenly as possible, the system may cut amount to € 100, which is the minimal amount.

Finally, if at that point there aren’t enough orders to fill the amount, it will be available for investing until it gets filled – or the deadline is reached -. The platform will usually send a reminder, which I personally find slightly annoying.

Auto-invest

CrowdEstate added the auto-invest feature in November 2017. It’s rather easy to configure it : the parameters are the investment amount, the expected rate of return and investment length, as well as the kind of opportunities to invest in.

For each investment kind, it’s possible to more detailed filters.

I have mixed feeling regarding using the auto-invest on CrowdEstate, though. Indeed, the investment opportunities are sometimes rather complex, and may require some due diligence on your part. For corporate finance deals or mortgage loans, the structure is more standard and activating auto-invest should be harmless.

During the first half of 2018, there were not enough loans on the platform to meet the demand – especially after the introduction of the secondary market -. As a result, use of auto-invest was basically mandatory.

However, the situation has improved a lot. Indeed, the loans supply has been greatly expanded, with the addition of new countries; while this unfortunately had the consequence of decreasing interest rates, I overall regard it as a positive move. Also, several incremental changes were made to the way booked projects are allocated between investors in order to make it more fair. Finally, with the increased competition from rivals such as EstateGuru or Crowdestor, investors now have more choice than ever, and spread their funds between more platforms.

All these factors helped to balance the loans supply and demand, and as of 2019 it’s not necessary anymore to use auto-invest for investors who don’t want to.

Secondary market

Since April 2018, CrowdEstate features a secondary market, originally called simply Marketplace (it has now been renamed to Secondary market). Several people worried that this new feature would lead to speculation, with auto-invest allowing to buy most of the available investments, which would be sold immediately for a profit on secondary market for a quick profit. And indeed, right after its creation, the investments on sale there were more expensive than their original price ! In early 2020, the situation is now back to normal – probably thanks to the smart auto-invest mechanism which allows all investors to get a share of new investments -.

Using the secondary market used to be free. However, in Spring 2020, following a similar move by P2P marketplace Mintos, the platform introduced a 2% transaction fee for sellers.

Website’s ease of use

Languages

English, Estonian, Russian, German, Italian, Spanish, Romanian

Funding methods

CrowdEstate’s registration process

Signing up at CrowdEstate is easy. Even the KYC KYC (Know Your Customer) checks are procedures used by financial businesses
in order to verify the identity of their clients. Most Crowdlending platforms will require
a copy of an identification document (identity card, passport, driving licence); an utility bill
or bank statement may be necessary as well.
process is relatively painless, as the platform uses Veriff..

Account funding and funds withdrawal

Website’s design and ergonomics

CrowdEstate‘s website works very well and is pleasant to use. In spite of their length, the investment descriptions are very readable. Even on a mobile phone, the website stays very user-friendly.

The website allows for 2-steps identification using Google Authenticator. If you activate it, it will be used for sign-in, as well as to digitally sign loan agreements. I find this extra layer of security extremely welcome and hope more financial institutions will integrate it !

Available languages & translations quality

CrowdEstate‘s English translations are spotless.

Reporting

CrowdEstate displays a basic overview of your portfolio, as well as handy charts showing how diversified it is.

In addition to these, one very useful feature is the cash-flow forecast. It was initially missing, but got added as the website evolved.

Documentation

The FAQ (Frequently Asked Questions) is extremely complete. In addition, the platform’s blog often features interesting articles.

Actual performance of my CrowdEstate portfolio

5,87%

At the end of August 2020, the XIRR for my CrowdEstate portfolio was 5,87%.

As most loans in my CrowdEstate portfolio are real-estate loans, they don't yield interests monthly; moreover, they didn't reach their maturity date yet. This explains part of the current low performance. Moreover, several business loans in my portfolio defaulted, so I have to wait for the outcome of the recovery process.

Don't hesitate to read my most recent crowdlending portfolio review for detailed platforms performance comparison as well as historical performance.

Portfolio creation date

I created my CrowdEstate portfolio in September 2017.

CrowdEstate's main competitors

For a detailed comparison of the different real-estate and business crowdlending platforms, check out this article.

CrowdEstate's facts & figures

Location

Tallinn, Estonia

Founded in

2014

Number of investors

49,503

Loans amount financed

€ 94,742,151

Historical return

16.22%

As of August 2020

Who can invest at CrowdEstate

In order to streamline our KYC procedures and/or to avoid extensive reporting requirements, we don't offer our services to the residents of the following countries: Afghanistan, American Samoa, Bosnia and Herzegovina, Guam, Guyana, Iraq, Laos RDV, Syria, Uganda, Vanuatu, Iran, Democratic People's Republic of Korea (DPRK), The Bahamas, Botswana, Ethiopia, Ghana, Pakistan, Samoa, Serbia, Sri Lanka, Trinidad and Tobago, Tunisia, Yemen, Belarus, Burundi, Central African Republic, China, Democratic Republic of Congo, Egypt, Eritrea, Guinea, Guinea-Bissau, Haiti, Lebanon, Libya, Maldives, Mali, Moldova, Montenegro, Myanmar (Burma), Russia, Somalia, South Sudan, Sudan, Ukraine, Venezuela, Zimbabwe, US Virgin Islands and USA.

CrowdEstate FAQ

In conclusion...

Part of my disappointment towards CrowdEstate stems from the poor performance of my rather speculative portfolio. Paradoxically, investing in more conservative loans will probably yield better returns.

All things considered, I have a strong preference for EstateGuru - both in terms of projects selection, recovery process and communication. In addition, I tend to favor BulkEstate for slightly more risk investments. However, CrowdEstate is still a worthy addition to a real-estate loans portfolio. It will for example allow to get some geographical diversification, as this platform lists many projects in Italy, where their competitors are absent.

Disclosure

Please note that this review may contain affiliate links. It means that I will earn a commission if you decide to invest after clicking through the link – at no additional cost to you, of course -. Please understand that I have experienced all of these companies, and I recommend them because they are helpful and useful, not because of the commissions I make if you decide to invest through my links.

8 thoughts on “CrowdEstate review”

  1. Hi I want to ask what happens to your capital and whether or not crowdestates protects the amount you invest in each investment?

    Reply
    • Hi Christopher,

      The only loans that are guaranteed (in the same way as loans with buyback elsewhere) are explicitly called “secured” on CrowdEstate’s website.

      For loans related to real-estate, if the borrower fails to repay, CrowdEstate has the right to sell the collateral, which will repay part of the investment.
      How well it will work for the investor is hard to say, as there’s been no such event for now (a good thing 🙂 ).

      However if I remember well, P2Phero mentioned a default on one of EstateGuru’s loans and it was apparently very well handled, leading to no loss for the investors. One can only hope that in the event of a default at CrowdEstate, thing will go just as smoothly !

      Reply
  2. How/where can I learn about the steps required for reporting interest generated by international crowd-funded real estate investments on my US taxes? Do these groups provide IRS-recognized year-end paperwork?

    Thanks in advance for your reply.

    Reply
    • Hi Fred,

      Most platform provide income reports for tax-purposes. I can’t tell whether they’re IRS-approved or not; what I know for sure though is that filling my taxes in France is quite a hell, so I unfortunately don’t expect the situation in the USA to be much better !

      Jérôme

      Reply
  3. Beware. Crowdestate is heavily moderating inquisitive comments on their Blog, they are not transparent and they are trying to withhold “bad” information from investors. If this is not a red flag, I don’t know what is. My post highlighting an issue with one of their projects where delay on repayment was more than 100 days already yet the loan was not marked as “red” and no information to investors was provided on actions being taken, was not approved. I wonder why. https://ibb.co/vYykKCn

    Reply
  4. Yea I agree with John – CrowdEstate is not very transparent about bad projects which brings into question the ethics behind the company itself.
    Bad Customer Support, Unclear responses and bad project management.
    I have been making investments in CrowdEstate for a few years now but have finally decided to try and close out my accounts. If you are good at self serving and figuring out the details yourself it might still be usable as a general consensus between a few of my friends and I.
    One of their projects “Tammelehe project” has been overdue for 5 months – luckily one of the smallest investments I made. At no point did Crowdestate send a proactive email out to let me know the project had problems or what the next steps are. I have had to contact them since then to ask for resolution and still waiting for it.
    They just put a news article on their website which by the way is not often and unless you are checking their website everyday you arent sure what is happening with your investment that is in jeopardy.

    Reply

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