EstateGuru – a happy review after 2 years
EstateGuru is a peer to peer lending / real estate investment platform that offers short-term property-backed loans from Estonia, Finland, Latvia, Lithuania and Spain.
It has more than 38.000 investors from 45 countries and a historical return for investors of 11.89%. (See more stats on EstateGuru here). You can start investing in EstateGuru with as little as 50 EUR.
EstateGuru doesn’t offer a buyback guarantee policy but so far it didn’t lose any investors funds. Out of more than 1000 issued loans, 43.1% have been already repaid and 3.7% are currently in default.
All loans are secured by real estate property. The average LTV (loan-to-value) ratio for the loans issued on the platform is at around 58%. In case of borrower default, it would take a while, but the invested funds would be recovered.
- Launched: 2014
- Headquarters: Estonia
- Accepts investors from: the entire world
- Loan types: Business Loans, Development Loans, Bridge Loans, Refinancing Loans
- Loan terms: up to 2 years (14.4 months average)
- Loans from: Estonia, Latvia, Lithuania, Finland, Spain and Portugal
- Loans funded: 197 million EUR
- Investors: 45000
- Interest rates: 8% – 12%
- Fees: no fees
- Minimum investment: 50 EUR
- Currency: EUR
- Secondary market: yes
- Auto-invest: yes
- Buyback guarantee: no (loans are secured by real estate property)
- Bonus: 0.5% cashback on all investments made in the first 3 months
How does EstateGuru work
Currently, EstateGuru offers loans to companies from Estonia, Latvia, Lithuania, Finland, Spain and Portugal. They allow investors from all over the world (even US residents).
As an investor, you can invest in a loan part starting with 50 EUR. The borrower will pay interest periodically (if it’s a bullet loan) or at the end of the loan term (if it’s a full bullet loan). The invested principal will only be paid back at the end of the loan term.
These are the types of loans available: development (to be used for the construction of a property), bridge (short-term loan before securing another one) or a generic business loan (used to finance day-to-day operations).
If the borrower is late with their payments, EstateGuru handles communication with the borrower. If they’re unable to repay their loan, EstateGuru uses a law firm to start the debt recovery procedures.
In case EstateGuru goes bankrupt, the investors’ funds are safe. They’re kept in a separate account and are protected. All loan contracts are between the investor and the borrowing company, so the borrower is still required to pay their loan. If you’re worried about EstateGuru’s financial health, you can check their annual financial reports here.
The investors pay no fees during the investment process. EstateGuru makes money by charging the borrower a fee of 3-4% out of the loan amount.
If investors want to sell their loans before the loan matures, they can use the secondary market in order to do so. There’s a fee of 2% paid by the seller. I think it’s because EstateGuru wants to discourage investors from using the secondary market for trading purposes, buying big chunks of high-interest loans from the primary market, and then selling them with a premium on the secondary one.
Becoming an EstateGuru investor
You’ll need an EEA or Switzerland 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 or Revolut.
I’ve been using so far only Revolut to fund my account. It usually takes around 1-2 days to fund my account, and I can leave with that.
Alternatively, you can use Trustly to fund your account faster, although this comes with a fee (1% or 2-9 EUR, whichever is smaller).
You can read more about opening an account on EstateGuru in this guide from their blog.
All of the loans available on the platform are short to medium term property-backed loans. The average loan term is at around 14 months.
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.
Important things to look at are LTV ratio, payment frequency (monthly, at the end of the loan term), interest rate, loan term, first rank or second rank mortgage.
The loans also have an appraisal report attached. The reports are not in English, but I can use any online translator (like this one) to convert the document to English.
You can see your investment portfolio displayed beautifully based on multiple criteria, such as country, loan type or collateral type.
If you plan to invest more than 250 EUR in a single loan, the auto-invest tool is very useful. You can set the security charge (first or second rank), LTV ratio, minimum interest rate and lots of other parameters.
If you only want to invest 50 EUR in each loan through auto-invest, you can only choose the loan term and repayment schedule.
Since my portfolio is too small to invest 250 EUR in a loan, I can’t really use the auto-invest for now.
EstateGuru promised a secondary market a long time ago, and it’s finally available. The seller needs to pay a 2% fee when the sale is complete. While not ideal, it’s good to have liquidity in case of an emergency.
Once you put a loan for sale, it will stay on the market for 14 days, unless you cancel the sale or the loan is bought by another investor.
The good thing for the buyers is that they can find some good deals available for sale for various reasons: delayed payments, emergency needs, etc.
Some of the rules in place prevent investors from abusing the secondary market. For example, you can’t resell an investment for 30 days after you purchased it from the secondary market. If you want to learn more about how to use the secondary market, you can read this extensive guide.
- Last update: March 2020
- Started Investing: August 7th, 2018
- Current value: 2770 EUR
- Profit: 239 EUR
- Net annual return: 10.91%
I’ve added constantly small amounts to my EstateGuru portfolio since I started my account. In recent months, I’ve moved funds from other platforms to EstateGuru, in order to balance the risks of my p2p investments.
Conclusions on EstateGuru
EstateGuru is a peer to peer lending platform easy to use. They had their website redesigned in October 2018, and the user experience it offers now is really great.
The loans available here have decent return rates at around 10% – 12%. The default rate is very low, and all loans are property-backed and come with decent LTV ratios.
The auto-invest feature is helpful and I might use it in the future when my portfolio is bigger.
With the addition of the secondary market, EstateGuru is now a complete p2p lending platform.
EstateGuru is maybe the safest property lending platform in the Baltics. It has lots of features that make me like it:
- the platform owners are transparent with their operations, making public their financials
- all available loans have all the details needed to decide if I want to invest in a loan or not
- the returns are far from the ones offered by the likes of Crowdestor, but the loans come with much better securities and investing here is a lot safer
- there’s a decent amount of loans available, and I can diversify my portfolio here and reduce risk
- it has a secondary market, so I can exit my investments if I need to before the loans mature
- EstateGuru has a good track record, with less than 1% defaults and all funds recovered
- not last, it uses 2-factor authentication to secure any important operation done on the platform
Risk and returns summary
- Transparency: 5/5
- Loan security: 4/5
- Liquidity: 4/5
- Account security: 5/5
- Track record: 5/5
- Returns: 3/5
Final score: 4.3
EstateGuru is one of the safest European platforms to invest in. The returns are not the highest available, but at 10% -12%, they’re pretty good.