EstateGuru – a happy review after 2 years

EstateGuru is a p2p lending/real estate investment platform that offers short-term property-backed loans from Estonia, Finland, Latvia, Lithuania, Spain and UK.

EstateGuru was one of the first platforms I’ve invested in, when I started investing in p2p lending 2 years ago.

It had a great management team, asset-backed loans and promised a decent 11% annual return for investors. Even more, the platform was steadily growing, and all reviews and opinions I could find were very positive.

I didn’t know much about investing in real estate backed loans, but the low number of defaults and the recovery rate on the defaulted loans convinced me to invest here.

In the past 2 years, I learned a bit more about property-backed loans and EstateGuru. I’ll share here my findings with you.

Platform highlights

  • Launched: 2014
  • Headquarters: Estonia
  • Accepted investors countries: 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: 206 million EUR
  • Investors: 49,000
  • Interest rates: 8% – 14%
  • Fees: secondary market fees
  • Minimum investment: 50 EUR
  • Currency: EUR
  • Secondary market: yes
  • Auto-invest: yes
  • Loan security: real estate property
  • Bonus: 0.5% cashback on all investments made in the first 3 months

It has more than 49.000 investors from over 100 countries and a historical return for investors of 11.87%. (See more stats on EstateGuru here).

EstateGuru is proud of the fact that through its careful loan selection and debt recovery procedures it didn’t lose any investors funds. Out of more than 1000 issued loans, 44.5% have been already repaid and 2.8% are currently in default.

How does EstateGuru work

Currently, EstateGuru offers loans to companies from Estonia, Latvia, Lithuania, Finland, Germany, 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.

Platform experience

As with all other Baltics p2p lending platforms, signing up was very easy. The KYC (know your customer) was automated, and my account became active in minutes.

I needed a European bank account, and my Revolut account worked just fine. It took around a day for my money to arrive in my account, and then I was ready to invest.

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.

estateguru loans

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.

estateguru portfolio

Auto-invest tool

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.

estateguru autoinvest

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.

Secondary market

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.

My portfolio

EstateGuru portfolio evolution between August 2018 and May 2020
My portfolio evolution since August 2018
  • Last update: May 2020
  • Started Investing: August 7th, 2018
  • Current value: 3102 EUR
  • Earnings: 271 EUR
  • Net annual return: 10.94%

While my returns are modest, around 11%, I like the constant performance of my portfolio and the way the EstateGuru management handles its operations.

This convinced me in the last 6 months to constantly increase my investments here, and make EstateGuru a more important part of my p2p portfolio.

I even invested in their recent crowdfunding campaign on Seedrs, and I’m confident they’ll do great things in the future.

Things that could go wrong

While I like EstateGuru and I trust them enough with my money, investing here still has some risks I need to be aware of.

Platform risks

EstateGuru is a fast-growing platform managed by a competent team and which I believe will be very successful in the future.

However, as all current-day startups, EstateGuru still has a few years until it becomes profitable. In case it goes bankrupt, how long would it take until I recover my invested funds?

Although EstateGuru is currently working on this, building a partnership with Lemonway, my funds are not yet kept in a wallet under my name, but into a generic company account along with all investors funds.

Performance risks

Investing in property-backed loans offers a safety-net, but not a foolproof one. Property prices go down during recessions, and even though the average loan-to-value ratio of EstateGuru’s loans is under 60%, I could still suffer a loss.

When a borrower bankrupts, some of the assets backing the loan might be hard to sell at all, even at lower prices. Unfinished constructions might be valued at a price, but if there are no buyers, they’re not worth much.

Conclusions on EstateGuru

EstateGuru is a peer to peer lending platform easy to use. 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 gets 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

If you think my EstateGuru review was useful, you might be interested in other p2p platforms I invest in, like Flender and Investly. They’re 2 of the p2p lending platforms in my portfolio I like the most.

In case you had any doubts, I’m no financial advisor and have no formal financial education. I’m only describing my experience and opinion on the platforms I invest in. Should you decide to invest in EstateGuru, be sure to do your own research and make an informed decision.