CrowdEstate review : real-estate crowdfunding at its finest

Overview of CrowdEstate

CrowdEstate is a real estate crowdfunding marketplace. It provides an impressive amount of investing opportunities with great returns. Contrary to what the company’s name seems to imply, their offer isn’t restricted to real estate.

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.

One example of CrowdEstate secured loans

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

Unsecured 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 :

CrowdEstate SWOT matrix

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 :

CrowEstate forcasted returns

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. 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.

Auto-invest feature

I was surprised to see that CrowEstate offers an auto-invest feature. CrowdEstate introduced it in November 2017; it’s nice to see that useful features are regularly added to the website.

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.

CrowdEstate auto-invest feature

For each investment kind, more detailed filters can be set.

CrowdEstate auto-invest

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 below), 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 and they’re working on another way to allocate auto-investors’ funds.

Buyback

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

Secondary market

Since April 2018, CrowdEstate has 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.

CrowdEstate's secondary market

Website 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.

Reporting

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

CrowdEstate graphical portfolio overview

One missing feature would be a cash-flow forecast; however as I only have three investments right now I can live without it 🙂

Actual performance

My CrowdEstate portfolio is very new so it’s way too early for me to display any performance. These are rather long-term investments : my shortest investment has a 7 months duration, while the longest is 38 months.

Only one project I invested in pays interests monthly. It’s a rather classical financing deal instead of a real-estate investment, so it’s not representative of most CrowdEstate’s projects. Until now, apart from a slightly late payment, there’s been nothing to report.

Misc considerations

Crowdestate recently introduced an optional 2-step identifications using Google Authenticator. If activated, 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 !

Conclusion : my opinion about CrowdEstate

Remember how much I enjoyed investing through BulkEstate ? Well, I happen to appreciate CrowdEstate even more.

The investment opportunities are more numerous and incredibly detailed, and the returns seem to be rather high.

The only drawback I see is that real estate may be subject to brutal valuation changes, so I will limit my investment size as it may be volatile.

Interest rateThe interest rates are great but the loans are not guaranteed
Loans availabilityOpportunities are added regularly, sometimes with huge amount
BuybackNo buyback is available for now
Website ergonomicsThe website is pleasant to use
Reporting It’s rather basic
Global ratingCrowdEstate is a really impressive platform, and I’m planning to gradually invest a large amount as opportunities arise; ; i

Main competitors

BulkEstate, CrowdEstate and Crowdestor all operate in the same area. BulkEstate has by far the largest number of projects, and the greatest expected returns. Crowdestor is very new, so it currently features only one investment opportunity (which looks great). BulkEstate’s expected returns are lower, but still very interesting; it’s a nice complement to CrowdEstate.

(last update : April 13th, 2018)

 

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?

    1. 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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