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, which means it’s not necessary anymore to use auto-invest; this gives investors more time to ponder their decisions. While 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

Interest rates

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 information.

Buyback guarantee

Buyback guarantee is not available. However, this is common a common situation for business and real-estate projects.

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

Cons

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

Loans characteristics

Interest rates

11% – 16.1%

Loans duration

1 month to 1 year

More than 1 year

Loans kind

Business

Real-estate

Minimal investment

€100

Buyback guarantee

NO buyback guarantee

Currencies

Euro

CrowdEstate’s Secured loans

This isn’t the core business of CrowdEstate, and actually there have been very few of them; I mainly mention them for completeness’ sake. They may provide nice diversification opportunities anyway. The most recent secured loan offered was provided through an interest auction, which is a novelty for CrowdEstate.

For this investment, the final loan interest was 12% for a 5 years duration, which is a bit low to my taste.

Unsecured business and real-estate loans : CrowdEstate’s strength

This is the area where I find CrowdEstate very impressive. You can invest in both real estate or corporate finance. 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 ! The investment structure varies from one opportunity to another. The most basic are simple loans, paid monthly / quarterly or annually. However you also have many more complex deals, where you receive the loan interest plus a variable part at the completion of the project. As a result, the expected return isn’t always known in advance. For example, the interest rate may be increased, as in the following example :

Description of variable returns at CrowdEstate

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.

The loans amounts are usually of several hundred thousand euros, sometimes even reaching one million euros. 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.

One very appreciable aspect is that after investing, CrowdEstate 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 !

Buyback guarantee

There’s no buyback for most loans, apart from the ones explicitly classified as “secured”.

Platform’s features

Secondary market

Secondary market available

Auto-invest

Auto-invest available

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 marketplace (secondary market)

Auto-invest feature

I was surprised to see that CrowdEstate offers an auto-invest feature. It appeared on their website in November 2017; it’s nice to see that useful features are regularly added.It’s rather easy to configure it : you can input the desired range for the investment amount, expected rate of return and investment length, as well as select the kind of opportunities to invest in.

For each investment kind, you can set 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 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.

Website’s ease of use

Languages

English, Estonian, Russian

Funding methods

Translations quality

CrowdEstate‘s English translations are spotless.

Website’s design and ergonomics

CrowdEstate‘s website works very well and is pleasant to use. The investment descriptions, although sometimes very long, 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 !

CrowdEstate’s reporting

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

Part of CrowdEstate’s statistics

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

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.

Actual performance of my CrowdEstate portfolio

Although my CrowdEstate portfolio is more than one year old, it’s still too early for me to display any performance. Indeed, most of the loans I invested in are real-estate projects, which reimburse interests at the same time as the capital. In addition, these are rather long-term investments : the longest has a 38 months duration.

However, several business projects I invested in pay interests monthly. My return for them is slightly above 16%, as expected. Until now, apart from a slightly late payment, there’s been nothing to report. One investment was exited successfully, and with a higher return than expected.

CrowdEstate’s main competitors

CrowdEstate, EstateGuru, Grupeer, BulkEstate, Crowdestor, Envestio and Kuetzal all operate in the same area.

EstateGuru is very similar to CrowdEstate in terms of returns and projects. While CrowdEstate’s business loans are more speculative, EstateGuru offers a better liquidity, with an even larger amount of projects.

Grupeer is a bit different, as its projects are more “standardized” and all come with a buyback guarantee. It actually feels more like a P2P lending website than a real-estate or business crowd-lending !

Crowdestor, Envestio and Kuetzal are very recent platforms; although they feature very interesting projects, they don’t have a large track record yet. Envestio’s would be my #1 choice as a more speculative complement to CrowdEstate, thanks to their dynamism and excellent expected returns.

BulkEstate’s expected returns are lower and the platform features less projects; however, interest rates for recent loans were higher than usual, so it may also appeal to more speculative investors.

CrowdEstate’s facts and figures

Location

Tallinn, Estonia

Founded in

2014

Number of investors

31 011

Loans amount financed

€ 64 784 810

Historical return

18.38%

As of May 2019

Who can invest

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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