CrowdEstate review

Table of contents

Visual for "Klaose tn. 12" project

CrowdEstate's overview

CrowdEstate is a leading platform for real-estate. Interest rates currently stand around 10% – 12% yearly, a level similar to EstateGuru. Most recent loans are secured by a 1st-rank mortgage, which makes them safer than loans offered earlier on the platform.

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 durations

Medium-term : one month to one year

Long-term : more than one year

Loans kinds

Real-estate

Minimal investment

€100

Buyback guarantee

Buyback guarantee NOT AVAILABLE

Currencies

EUR – Euro

Overview of CrowdEstate's loans

All loans are in Euro. Interest rates for real-estate loans are commonly in the 11% – 12% range. Their durations usually stand around one year.

The platform used to offer both business and real-estate loans. However, in Spring 2021, they announced their decision to focus solely on real-estate loans.

CrowdEstate funds projects in a large number of countries :

  • Estonia
  • Finland
  • Italy
  • Latvia
  • Portugal
  • Romania
  • Slovakia

The overwhelming majority of loans on the platform comes from Estonia. Italy and Latvia come next, followed by Romania. Finnish loans are a very rare occurrence. Finally, Portugal and Slovakia were added in April 2021. In consequence, no loan was funded in these countries yet.

In terms of geographical diversification, CrowdEstate is a great complement to EstateGuru and BulkEstate. Indeed, these two competitors don’t offer loans from Italy, Romania, Portugal or Slovakia.

In most cases, loans on the platform are “full bullet”. 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. Reimbursements may also follow another repayment schedule, for example quarterly.

The minimum investment per project is €100. This amount is larger than for most competitors. Indeed, both BulkEstate and EstateGuru set the bar at €50.

It will thus be more difficult for investors with a small portfolio to achieve a large diversification. This may in turn increase the risks.

One additional constraint is that the invested amount has to be an amount of €100. It will prevent most investors to reinvest interests, thus resulting in idle funds.

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.

Loans security

As we will shortly see, the failure of several past projects at CrowdEstate has caused large losses for investors. This is probably the reason why the platform has decided to stop listing business loans.

Recent real-estate loans seem to be much safer, though. For a start, most are now secured by a 1st-rank mortgage. In addition, the LTV The LTV (Loan-To-Value ratio) is simply the ratio between the loan amount and the collateral value, expressed as a percent. Smaller values indicate safer loans, where the collateral value greatly exceeds the borrowed amount. LTV values around 50% – 60% are usually regarded as safe. stands at reasonable levels – around 50% or 60% -.

As a consequence, should a borrower default, the recovered amount is expected to exceed the invested capital.

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 flawed. Indeed, several projects have defaulted, and few of them even proved to be frauds ! Moreover, several investments on the platform incurred large losses for investors when the borrower defaulted.

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 in both 2018 and 2019.

CrowdEstate’s publicly available statistics show that the total loans volume financed through the platform is slightly above one hundred million euros. In comparison, EstateGuru‘s figure stands around three hundred and fifty million euros, a much larger amount.

Loans descriptions

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

However, the LTV isn’t displayed there, but only appears in the textual description. I’m a bit puzzled by this lack of emphasis on this essential figure !

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 :

As already noted, most loans use a “full bullet” repayment schedule. For other schedules, a graphical overview 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, competitors such as EstateGuru or Crowdestor restrict access by displaying only the overview.

Track record

As of late April 2021, 329 projects were funded, out of which 207 were exited.

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 business 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.

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.

Similarly, updates regarding the loans aren’t always communicated timely. This holds especially true for delayed or defaulted loans

Platform's features

Early exit

Early exit available

Investing methods

Auto-invest

Manual investing

Secondary market

Since April 2018, CrowdEstate features a secondary market, originally called simply Marketplace (it has since 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 !

Thanks to a lower demand from investors, the situation later went back to normal. The smart auto-invest mechanism – which allows all investors to get a share of new investments – probably also helped.

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.

Auto-invest

CrowdEstate added the auto-invest feature in November 2017. It’s rather easy to configure it, as few parameters are required :

  • investment amount
  • expected rate of return
  • investment length
  • 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 real-estate loans, though. Indeed, the investment opportunities are sometimes rather complex, and may require some due diligence on your part.

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, BulkEstate 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. As a result it’s not necessary anymore to use auto-invest for investors who don’t want to.

Manual investing

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 competitor 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.

Website’s ease of use

Languages

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

Funding methods

Available languages & translations quality

CrowdEstate‘s English translations are spotless.

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

It’s only possible to fund your account via a SEPA transfer. Funds usually take 2 business days to reach your account.

Withdrawals are free. The platforms processes withdrawal requests very quickly, and even sends the funds via instant transfer if your bank account supports it !

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 !

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 A FAQ is simply a compilation of Frequently Asked Questions is extremely complete. In addition, the platform’s blog often features interesting articles.

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.

Official CrowdEstate pages on social networks

Support

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

Actual performance of my CrowdEstate portfolio

3,40%

At the end of June 2021, the XIRR for my CrowdEstate portfolio was 3,40%.

Needless to say that this performance is very bad. I'm partially to blame for it : I was too greedy and invested mostly in speculative loans. As a result, I took large losses on several defaulted projects.

In addition, many real-estate loans are "full bullet", so they didn't yield any interest yet. This drove the returns even lower.

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

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

Portfolio creation date

I created my CrowdEstate portfolio in September 2017

CrowdEstate's main competitors

CrowdEstate's facts & figures

Location

Tallinn, Estonia

Founding year

2014

Number of investors

58,127

Loans amount financed

€105,569,151

Historical return

14.98%

As of July 2021

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 may still be 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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