Crowdestate is a real estate crowdfunding platform based in Estonia. You can either finance or get funding for a real estate development project.
The minimum investment is 100 EUR and currently, there are more than 25.000 investors on the platform with an investment return of over 20%. You can find more statistics about Crowdestate on their website.
You can invest in the real estate market through credit loans or invest in business loans and mortgage-backed loans.
All real estate development projects offered on the platform are ended with the sale of the property. Some of the projects might close earlier than the expected term, if specific conditions are met, like “a 30% increase in the value of the property”.
- Launched: July 2014
- Headquarters: Estonia
- Loan types: Real Estate Development Loans, Business Loans
- Loans from: Estonia, Finland, Italy, Latvia, Romania
- Loan terms: up to 5 years
- Interest rates: 10% – 16%
- Loans funded: 87 million EUR
- Investors: 42000
- Fees: no fees
- Minimum investment: 100 EUR
- Currency: EUR
- Secondary market: yes
- Auto-invest: yes
- Buyback guarantee: no
- Accepts investor countries: all countries, except the US
- Last update: January 2020
- Started Investing: December 12th, 2018
- Current value: 950 EUR
- Profit: 95 EUR
- Average interest rate: 13.16%
- XIRR: 10.36%
I still have 4 projects that are either late with their payments or very close to default, so it’s not all well with Crowdestate.
Opening an account on Crowdestate
You can register from anywhere in the world (as long as you’re not a US citizen). You can register with your email address, or with your Facebook/ Google account.
After registration, you can add money to your account by bank transfer. The account currency is in EUR, so if your bank account uses a different currency and you want to save up on currency conversion fees, you can try Transferwise or Revolut. If you don’t have a Transferwise account, you can open one here (I might get some commission if the referral link is not expired).
I personally use Revolut, because it offers slightly better rates than Transferwise. On the other hand, Transferwise gets a lot less bad publicity than Revolut.
Why invest in Crowdestate
Low barrier to enter the real estate market
You can invest in a real estate development project with only 100 EUR. Then you earn money either from the property price appreciation or from the rental income of that property.
Easy exit from your investment
While there’s no buyback policy offered by Crowdestate, there is a secondary market where you can sell your investment to other platform investors.
One nice feature Crowdestate has and it’s missing on other crowd investing platforms is 2-factor authentication.
It adds a layer of security by asking you, besides something you know (your password), something you have (a code generated on your phone at the time of login).
This is an important feature that brings more protection to your funds. If your password gets stolen, the attacker still won’t be able to access your account because they’ll also need your phone to be able to do so.
Investing in Crowdestate
There are 3 different types of investments offered: real estate development projects, business loans and mortgage loans.
Investing in real estate opportunities
You can finance residential and commercial development projects in Estonia. The projects usually have a fixed interest paid to investors from the sale of the built properties or at fixed terms specified by the developer.
Investing in business loans
You can finance companies that need loans for construction of biomethane or natural gas plants, company acquisitions or working capital. Each investment will typically have a monthly interest paid with the principal paid at the end of the loan period.
These projects are also interesting and have a good return rate. Some companies are looking for mortgage loans, for example, to renovate a purchased property and then sell it on the market.
You can find some good deals on the marketplace or you can free up your capital if you need to. There’s no fee when selling your investment to other users.
Unfortunately, lately, all good projects on the primary market are bought in the first hours after they’re made public and then immediately sold at a premium on the secondary market. This beats the purpose of the secondary market and makes all the loans available unattractive. When a loan is offered at 16% interest rate instead of 12%, it’s because of the higher risk it presents. If instead of the 16% rate, you get only 14% from the secondary market on the same loan, it’s not worth the risk anymore.
For now, I keep waiting for these speculators to finish their funds and then buy in the new projects they don’t have funds anymore to invest in.
The auto-invest tool is a great feature of the website if you don’t want to do your own extensive research. It has enough filters to spread your investments enough that the risks are minimized.
Conclusions on Crowdestate
Crowdestate offers a very easy way to access the real estate development market with only 100 EUR.
The project opportunities available are well diversified. Depending on your risk profile you can choose to invest either in development projects, corporate loans or mortgage loans.
The auto-invest feature is a nice addon to the website, but I’m not prepared to use it yet. I’d rather do my own research for a while and see how my manual investments progress.
The two-factor authentication shows that Crowdestate cares about security and also that their platform keeps up with the latest web standards.
There’s no buyback guaranteed policy so the risk is a bit high. In case of borrower default, it will take a while until you recover your funds.
You do have a secondary market to sell your investment before the end of the loan, but if there’s no buyer you won’t be in a good place.