EstateGuru P2P Lending Platform Review
EstateGuru is a peer to peer lending / real estate investment platform that offers short-term property-backed loans from Estonia, Finland, Latvia, Lithuania, Spain and UK.
It has more than 16.000 investors from 45 countries and a historical return for investors of 12.25%. You can start investing in EstateGuru with as little as 50 EUR. For more statistics about EstateGuru, you can check out their website.
All the loans are secured with collateral from the company requesting a loan. EstateGuru doesn’t offer a buyback guarantee policy, as other real estate crowdlending platforms offer, but the historical default rate on the platform is very low, around 0.5%.
You can further adjust your level of risk taken based on the loan to value amount. If a property is worth 500.000 EUR and it’s asking for a loan of 250.000 EUR, then the loan to value amount is 50%. If the company goes bust, that loan is secured with the property. Even during an economic downturn, there are slim chances that value of the property will drop so much that it won’t cover the loan anymore.
- all loans are secured by real estate property
- the minimum investment is 50 EUR
- no buyback guarantee
- nice auto invest tool
- interest rates between 8% and 12%
- loan terms up to 2 years
My portfolio on EstateGuru (as of January 2019)
Started investing: August 7th, 2018
Deposits: 1210 EUR
Withdrawals: 32.52 EUR
Current value: 1210 EUR
My EstateGuru portfolio is another one that ran only on autopilot. I’ve added some funds a few months back and since then I’ve only been withdrawing the profits.
Some of the loans I’ve been investing in only pay at the end of the loan period, so the short term returns don’t look too great.
Also, one of the loan is late with their payments, but on the EstateGuru platform the latest update is that the property they are developing was sold and they wait for the papers to be finalized before they pay the full loan earlier. EstateGuru will also add some penalty fees because of the late payment, I’m curious to see what is the amount.
Opening an account on EstateGuru
You’ll need an EEA or UK bank account in order to open an account with EstateGuru. If your bank account’s primary currency is not EUR, you can cut some currency conversion fees by using Transferwise. If you don’t have a Transferwise account, you can create one here.
EstateGuru offers multiple types of loans backed by property. Below are the loan types I’ve been investing in.
A bridge loan is a type of short-term loan backed by property. The loan is usually issued in 5-14 days, which is a lot faster than other types of loans. As a downside, they’re more expensive than traditional mortgages. Typically, companies choose a bridge loan when they need cash quickly, for example when buying a property at an auction or buying something under the current market value.
Most of the times, bridge loans are offered for 1 to 18 months, and there are no repayments until the end of the loan term.
The business loans EstateGuru offers are for small businesses that need to increase their operating capital. These loans are also secured by real estate property on the platform, and the interest rate is paid back on a monthly schedule.
That’s an easy one. All loans used to develop real-estate property are development loans. The only development loan I’ve invested in has been so far late with the payments in 3 of the 4 months.
A refinancing loan is a loan made to pay off another loan. Companies (and individuals) do this in order to get a better loan deal: either lower interest rate, or lower payments, or to shorten the loan term, or just pay off a loan that was due at a specific date.
Investing in EstateGuru
Most of the loans available on the platform are short to medium term property loans. For all the loans, the property is used as a guarantee in case the borrower can’t pay back. You can invest in a variety of real estate opportunities, including loans for development, bridging, mezzanine, buy to let and property flipping.
You can see more details about each specific loan on the loan page and there you can decide if you want to invest or not.
After the loans are backed by mortgages, the mortgages are held by an entity separate from EstateGuru. If EstateGuru goes bankrupt, the investors’ money will be safe.
You can see your investment portfolio displayed beautifully based on multiple criteria, such as country, loan type or collateral type.
Some key statistics are also available, showing the state of your investments and your earnings for the last months.
On your Dashboard page, you can see an overview of your account balance and you can also generate an income statement needed for your tax declaration.
In case you don’t want to access your account daily and search for loans, the auto-invest feature comes in handy. You can set up the amount you’re willing to invest on a single loan, loan term interval, the interest rate you’d like, type of loans, loan-to-value ratio, and then let it run and pick up investments for you.
You’ll need at least 75 EUR in your account in order to create an auto-invest profile.
Conclusions on EstateGuru
EstateGuru is a peer to peer lending platform easy to use. They had their website redesigned this October, and the user experience it offers now is really great.
The auto-invest feature is helpful and I’ll definitely use it. On the downside, there’s no secondary market yet as on other platforms. So, you can’t sell your loans to other investors, but it is still a great platform.
The loans available here have decent return rates at around 12%. The default rate is very low, at less than 0.5%. All the loans are backed by property which makes the loans very secure to invest in.