End of year analysis of my real estate crowdfunding portfolio
I haven’t written anything about my real estate crowdfunding portfolio since July. There were a few reasons for doing so, among which:
- buy-to-sell or buy-to-let properties don’t go through so many changes to justify monthly updates
- my portfolio is too small to be interesting
After 4 months since my last update, I feel enough changes happened in my portfolio so I can talk about them.
The current state of my portfolio
I’m still invested in the same platforms I was invested in July:
- Estonia: Reinvest24
- Spain: Housers and Brickstarter
- the UK: Property Partner, Brickowner, British Pearl and Yielders
Among these platforms, my portfolio did suffer some changes:
- in the past 4 months, I deposited 1136 EUR into my portfolio
- my portfolio reached 5150 EUR (from 3950 EUR in July)
- I’ve moved around half of my invested funds from Property Partner to British Pearl
- I’ve used Brickstarter instead of Housers for most of my investments in Spanish real estate
- my annual return is 3.42%, although it doesn’t fully represent my final returns after a few property sales
|Housers(EUR)||688 (+84)||14 (+9)||2.56%||Dec 2018|
|Brickstarter(EUR)||451 (+401)||1 (+1)||1.83%||Jul 2018|
|Reinvest24(EUR)||512 (+21)||14 (+21)||3.63%||Jan 2019|
|British Pearl(GBP)||1220 (+601)||20 (+1)||3.05%||Dec 2018|
|Property Partner(GBP)||686 (-530)||37 (+17)||4.29%||Dec 2018|
|Yielders(GBP)||609 (+409)||7 (+7)||5.15%||Jul 2019|
|Brickowner(GBP)||406 (+100)||9 (+3)||3.51%||Dec 2018|
|Total (EUR)||5150 (+1200)||115 (+60)||3.42%|
My dashboard says I’m invested in 16 projects, although that’s a bit misleading:
- the 2 buy-to-let properties were sold on the secondary market as the earnings weren’t great
- out of the 6 fixed interest (sell) properties, one was already finalized
Out of the 5 remaining buy-to-sell properties, 4 of them should be sold next year in January and February. The one that was already sold, advertised an expected return of 7.04%. Instead, my actual return was 4.56% (3.24% after taxes). It was a bit of a disappointment, but the property had a C risk rating, and risky it was indeed.
I’m still invested in 7 development loans, with interest rates between 8% and 9%. In addition, this month I’ve also invested in a 5% loan for the building of a solar power plant. My main drive for investing in the 5% loan was not the high-interest rate, but the idea of investing in green energy. Also, part of the invested funds came from referrals (thank you whoever you are), so I thought I can do something good with them.
So far, my annual return rate (after taxes) is 2.56%. This is mainly because half of my funds are still invested in buy to sell properties that only generate revenue after the sale. Long term, my annual return on Housers should be around 6% to 7% (after taxes). I still need to decide if I’m happy with these returns or if I should move to other platforms.
On the plus side, Housers provides extensive documentation on all projects, regular updates on project status, pictures from the location, etc. One thing you definitely can’t say about Housers is that it’s not doing its due diligence. Even with the low returns, I’m not really convinced I want to leave the platform.
Only 2 of the properties I’ve invested in pay rental dividends. The other 3 are still in the acquisition process. They do pay a 5% dividend from the day I invested in them, so I’m happy to wait until the properties are rented.
Brickstarter has an interesting business model: buy properties, make them better, put them up for sale and meanwhile rent them on Airbnb. I’m still new to the platform, and none of the properties I’m invested in are ready to be sold, so I’m not ready yet to make bigger commitments here.
I’ve computed my annual return by not including the 5% interest earnings I should receive on the properties that are still in acquisition, so my annual return so far is just 1.83%. According to Brickstarter, I should expect around 10% annual returns.
Reinvest24 is having a very slow start. They’ve already sold 6 properties, and there are no new properties to invest in, so investors money fly out.
I also invested a while ago in a property that after 2 months was dropped off the platform and funds returned (Pool of 3 apartments close to University of Riga). Properties take a long time to fund, and therefore returns are lower than advertised.
So far, 2 properties in my portfolio exited – with 17.76% and 12.13% annualized returns. The published returns on the website are 24% and 14%, but it seems they’re computing this based on when the projects were funded (obviously). Also, their computed annualized returns ignore the 2% fee paid for the investments. I’m computing my returns based on when I started investing in the projects, and since they took a long time to fund, my returns are lower.
I’m still invested in 3 projects:
- “Restaurant and wine boutique commercial space in Kadriorg” – invested in it in July and September, started to pay dividends in November; has a 5-year rental contract
- “Rental apartments in Tallinn’s tech hub” – bought in January, started paying dividends in July – annual rental yield 7.8%
- “Apartment development in Tallinn´s tech hub” – bought in January, supposed to last 9 months; construction finished in September, according to video update; waiting to be sold
Around 100 EUR sit idle in my account waiting to be invested.
I’m a bit surprised how solid the investment returns have been so far. Too bad projects get funded so slowly and therefore the number of properties available are low.
My annual return is just 3.63%, because of the cancelled investment, the long time to get funded and the extra cash I keep here doing nothing. With a constant flow of investments here, I’d increase my account in the following months.
Most of my new funds here come from Property Partner, as I don’t get taxed here a monthly fee for just investing with them.
British Pearl still has the same 8 properties for sale that they had at the beginning of the year. Platform growth is slow, as advertised returns are not that high. They do try to attract new investors by running campaigns like “win a free IPad” or by offering ISA accounts for UK residents.
Recently they closed a crowdfunding campaign on Seedrs, and they’re planning to use the new funds (~800k GBP) to buy new properties and expand to international markets.
Properties are pre-funded, so the risk is low, and investors get paid rental dividends from the first month. So far, my annual return is just 3.05%, but most of the returns should come from the sale of the properties, not from rent.
At the beginning of the year, Property Partner was my favourite platform to invest in. A solid and experienced team, a good deal of properties, transparent operations, decently liquid secondary market and periodic valuations of the properties. And most importantly, it let me invest small amounts until I built more trust in the platform and actually invest more funds.
Then CEO changed and strategy changed and they added fees that are not too big if your account is over 20k+, but too big for me. So I’ve started to sell my investments on the secondary market. I don’t want to sell them at a discount, as I’m in no hurry, and I can wait for their price to increase. My account is not too big anyway, so I’m not really losing anything.
Prices are really down on some of the properties I own due to the summer exodus on Property Partner after the extra fees were announced.
I’m not doing too bad, with a 4.29% annual return so far, due to the sales on the secondary market. I’m only receiving now 2 GBP in dividends each month, and I’m looking for a good opportunity to sell all my remaining investments here.
As a buy-to-let platform, Yielders is the most reliable and profitable platform in my portfolio. Rental income comes in time, yields as advertised. Properties are pre-funded and with existing rental contracts, so investors receive rental payments from month one.
They advertise themselves to Muslim investors, because they’re a Sharia-compliant platform, meaning they don’t issue loans with interest, but they rent properties, which is ok. It’s an interesting niche market to tap into. Anyway, the platform is also good for people that are just looking for getting rental income, so here I am.
So far, my annual returns are 5.15% and I’m planning to increase my portfolio here. The properties are supposed to be sold after around 5 years.
Brickowner also went to Seedrs for a new crowdfunding round a couple of months back. Maybe with the extra funds, they’ll manage to attract more investors. They did provide a facelift to the website, but I don’t see too much improvement from a functional point of view.
Funding here is very slow, and the usual projects need over 1 million GBP for funding, and there are not enough investors on the platform to cover for that.
I’ve tried out a few other platforms this year, but haven’t included them in my portfolio.
The first try was BitOfProperty, and it seemed like a very promising platform. Unfortunately, they failed to attract investors and after 3 months they returned my invested funds. I might return to them in the future if the platform takes off.
Another platform I’ve tried was Assetz Exchange, an offspring of Assetz Capital, focused on rental properties. They look really good, and they also offered me a 15 GBP bonus for signing up. Except that they asked me to get my KYC documents signed by a “professional person” – a doctor, professor, lawyer. It seems I don’t know any “professional person”, or at least I don’t have regular contact with this type of persons, so, for now, I can’t invest in Assetz Exchange. (Although I’m pretty sure I can deposit funds but I can’t get them out).
Enjoy your holidays and see you in the next post 🙂