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
Although I still appreciate the large supply of loans available at CrowdEstate, I have to admit that my portfolio’s performance is deceiving. Moreover, the platform’s relative lack of transparency and poor communication on defaulted loans show a lack of professionalism. I’m much more impressed by EstateGuru, both in terms of transparency and performance !
CrowdEstate’s pros & cons
- Many large projects available with great expected 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
- Poor management of defaulted projects
- Lack of transparency and communication
- Optimistic expected returns on several projects
- Many loans are only secured by equity, making them less safer than property-backed loans
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.
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 :
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.
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 !
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.
CrowdEstate unfortunately doesn’t provide a buyback guarantee.
While 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 -. Several examples are listed in an excellent article at Money is your friend.
In addition, compared to EstateGuru, the delays for defaults recovery at CrowdEstate seems much longer.
Platform’s transparency and reliability
In terms of reliability and transparency, there are both bad and good things to say about CrowdEstate. Let’s start with the positive aspects : the team behind the platform is introduced on the website and key people have extensive experience in finance or real-estate. Also, the platform has been there for a long time – it was founded in 2014 -. Unfortunately, there is also a strong lack of transparency and communication after the projects get funded. Several examples are provided in the article linked above; many investors also complained about censorship when they asked questions regarding delayed repayments.
In addition, several investors questioned the expected returns for certain projects; they were considered as unrealistically high.
Overall, while CrowdEstate seems to be a reliable platform, the communication and transparency regarding defaulted projects have to be much improved.
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 -.
Manual investing at CrowdEstate
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.
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.
Website’s ease of use
Account funding and funds withdrawal
it’s only possible to fund your account via a SEPA transfer; they usually take 2 2 business days to reach your account.
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.
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.
The FAQ (Frequently Asked Questions) is extremely complete. In addition, the platform’s blog often features interesting articles.
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
At the end of February 2020, the XIRR for my CrowdEstate portfolio was 5,78%.
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
Number of investors
Loans amount financed
As of March 2020
Who can invest at CrowdEstate
P2P-Banking interview with CrowdEstate’s CEO
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.
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.