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. They feature speculative long-term business loans offering 16% returns; their real-estate projects recently became more conservative, yielding around 12% yearly.

 

My overall opinion on CrowdEstate

CrowdEstate is an excellent choice for investors wishing to invest in real-estate and business loans. The investment opportunities are plentiful and incredibly detailed, and their returns are great. It’s also a very user-friendly platform. My only regret is that the platform’s success makes the use of auto-invest nearly mandatory, and encourages speculation. But don’t let this negative aspect refrain you from trying out CrowdEstate !

Detailed ratings

Interests rate

The interest rates are great but the loans are not guaranteed. Newcomers Envestio and Crowdestor list projects with higher interests rate, but amounts are usually smaller

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 get filled up quickly !

Reporting

Reporting is gradually improving, and now shows many useful informations

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 and 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 popularity means that loans get filled up very quickly; use of auto-invest feature is mandatory

Loans characteristics

Loans duration

1 month – 1 year

1 year or more

Loans kind

Business

Real-estate

Minimal investment

€100

Buyback guarantee

NO buyback guarantee available

 

Currencies

Euro

 

Secured loans

This isn’t the core business of CrowdEstate, but 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 :

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.

Note that the investment amount can be very large : the last one was around one million euros ! Expected returns are commonly in the 13% – 16% range, for an average duration of two years. Business loans are the most speculative, while real-estate projects are usually more conservative. The actual returns on recently exited opportunities were usually in the range from 12% to 20% – with a few impressive returns around 40% or more ! –

One very appreciable thing 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.

Buyback guarantee

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

Platform 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 ! We’ll see if this situation lasts.

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. On the other hand, they usually sell out quickly; in spite of the early notice by CrowdEstate, you may miss the opportunity to invest if you’re not fast enough. In this case, auto-invest may be a solution. For corporate finance deals or mortage loans, the structure is more standard and activating auto-invest should be harmless.

Note that with the introduction of a secondary market (see above), there’s an increased risk of speculation by investors with ample funds, which may prevent manual investing in the future. However, it looks like CrowdEstate is well aware of this; they regularly tweak the way booked projects are allocated between investors in order to make it more fair.

 

Website's ease of use

Languages

English, Estonian, Russian

Funding methods

English translations quality

Envestio‘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. On a mobile phone, the website stays very user-friendly.

They recently introduced an optional 2-step identifications 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.
One very useful feature is the cash-flow forecast. It was initially missing, but got added as the website evolved.

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. (Found on P2P-Banking interview with CrowdEstate’s CEO).

Actual performance of my Crowdestor portfolio

Although my CrowdEstate portfolio is nearly 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 competitors

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

Grupeer is a bit different, as its projects are more “standardized” and basically yield the same interest rate. It actually feels more like a P2P lending website than a real-estate or business crowdlending !

Crowdestor and Envestio 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 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.

 

2 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 !

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