CrowdEstate review : real-estate crowdfunding at its finest

CrowdEstate review : real-estate crowdfunding at its finest

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 11%-12% yearly. On the other hand, the long-term business loans are still somehow speculative and offer 16% returns.

My opinion on CrowdEstate

While in the first half of 2018 CrowdEstate was somehow victim of their success, the situation has improved a lot. Indeed, the loans supply and demand are now much more balanced, and the auto-invest process has been improved in order to allow time for manual investments as well.

Although the real-estate loans became less speculative, they still offer excellent investment opportunities. In addition, the excellent ergonomics of the platform and the great level of details provided for investments make it a great choice for user who want to transition to non-guaranteed loans.

Detailed ratings

Performance

The interest rates are great but the loans are not guaranteed. Although Envestio, Crowdestor and Kuetzal list projects with even higher interests rate, the amounts are usually smaller than at CrowdEstate.

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.

Buyback guarantee

Buyback guarantee is not available.

Website ergonomics

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

CrowdEstate’s pros & cons

Pros

  • Many large projects available with great returns
  • The platform features a long list of successfully exited projects
  • A secondary market is available
  • Very well-thought automatic investment process which gives time to manual investors

Cons

  • CrowdEstate‘s main drawback is the lack of a buyback guarantee

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

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.

CrowdEstate's recent loans
CrowdEstate's recent loans

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.

For a few projects, the interest rate is actually variable. For example, the interest rate may be increased, as in the following example :

Bonus interest rate at CrowdEstate
Bonus interest rate at CrowdEstate

The minimum investment per project is € 100, which is rather marge; moreover, the invested amount has to be an amount of € 100, which makes it hard to reinvest interests.

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 unfortunately doesn’t provide a buyback guarantee.

Platform’s features

Early exit

Early exit available

Investing methods

Auto-invest

Manual investing

Secondary market

Since April 2018, CrowdEstate features a secondary market, called simply Marketplace. 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 ! While it’s still the case in early 2019, this speculation has no more consequence on the primary market, as the loans supply and demand are now rather balanced (I’ll go back to this in the next section).

CrowdEstate's secondary market
CrowdEstate's secondary market

Manual investing

All projects are introduced in a very detailed way, following the same outline. A large part of the description focuses on the SWOT assessment, which stands for Strengths / Weaknesses / Opportunities / Threats. Here’s what it looks like for a small project :

As you can see it’s really complete !

Once an investment opportunity is published, investors can ask questions about the investment before the investing period starts. 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.

With the last iteration of the auto-invest feature, there’s a 24-hours pre-booking period which allows manual investors to invest. Indeed, contrary to the standard auto-invest mechanism where the investments are allocated to auto-investors as soon as the opportunity appears, the final allocation only is computed at the end of this period.

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.

CrowdEstate auto-invest feature
CrowdEstate auto-invest feature

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

CrowdEstate auto-invest (detailed parameters)
CrowdEstate auto-invest (detailed parameters)

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 Envestio, Crowdestor or Kuetzal, 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.

Website’s ease of use

Languages

English, Estonian, Russian, German, Italian

Funding methods

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.

CrowdEstate's portfolio overview
CrowdEstate's portfolio overview

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.

Support

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

Communication from the platform​

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 !

Actual performance of my CrowdEstate portfolio

5,51%

At the end of July 2019, the XIRR for my CrowdEstate portfolio was 5,51%.

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, so I didn't get any income from them, which explains the current low performance.

However, most business projects I invested in pay interests monthly. My return for them is 15.56%, according to the platform. Until now, apart from a slightly late payment, there’s been nothing to report. Several of them were successfully exited; one even had a higher return than expected.

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

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

34,908

Loans amount financed

€ 74,856,510

Historical return

17.94%

As of August 2019

Who can invest at CrowdEstate

CrowdEstate is open to all investors all around the world, provided that they have a way to make an international bank transfer to their virtual investment account previously created on our platform.

P2P-Banking interview with CrowdEstate’s CEO

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.

6 thoughts on “CrowdEstate review : real-estate crowdfunding at its finest”

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

    • 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 !

  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.

    • 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

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