If you are here, it means you want to know something about Crowdestate crowdfunding platform. Having invested on Mintos i have plenty of exposure to payday and short-term loans. However, i am looking into more business/real state types of P2P lending. Therefore i want to investigate Crowdestate through a review of the platform.
Furthermore, i want to get into real estate investing, however i do not have the funds to invest as a single person. Furthermore, i will avoid dealing with tenants calling in the middle of the night, plumbing jobs, etc.
The Crowdestate review is 100% unbiased and based on my personal experience and findings. In the Crowdestate review i will give my personal opinion of their service. I will include the subjective aspects which i personally like, and the objective facts – like statistics.
Crowdestate is a big European real estate development lending platform. Crowdestate offers three types of loan deals with interest rates from 11%-18%. Through the auto-invest tool you have a lot of customization. The minimum investment per loan is €100.
Key Features From Crowdestate Review
- Loan types: Real Estate, business loans and mortgage loans
- Loan terms: 0-42 months
- Average interest rate: 11%-18%
- Auto-invest: Yes, a simple and advanced option
- Buyback guarantee: No
- Fees and costs: In short: No. However, Success fee might be charged if the investment performance exceeds the agreed hurdle rate. It is calculated into the expected yield, therefore accorded for.
- Minimum investment: €100
- Currencies: EUR
- Secondary market: Yes, called “Marketplace”
- Sign-up link: www.Crowdestate.eu
What Is Crowdestate Crowdfunding Platform?
Crowdestate was founded back in 2014. Currently, Crowdestate has over 35.000 investors worldwide, with investment opportunities in Estonia, Italy and Latvia with the majority of the loans originating from Estonia.
Crowdestate has raised more than €75.000.000 in over 180 projects.
Crowdestate is a real estate crowdfunding platform. Their goal is to reshape the way people use to invest in real estate. Therefore, Crowdestate has developed a marketplace to crowdfund real estate. Whereas the traditional way only bigger institutional investors/real estate developers made a single investment to the one property. Crowdestate collects investments from thousands of investors to fund projects. For you as an investor, that means you can now participate in real estate investing with the minimum investment of only €100.
Crowdestate provides real estate investors (you and me) with access to pre-examined real estate opportunities with very thorough and relevant background information.
Furthermore, Crowdestate takes care of everything, ensuring smooth investment and fundraising processes. More so, they take care of the investors funds until they are exited.
Getting Started On Crowdestate
Signing up is very easy, you can even chose to register with either Facebook, Google or your email.
The signup is a 5 step process. First is creating a profile, second is verifying your Email, third is adding a sign in method, fourth is identity verification and fifth and last is entering your bank details.
The process is very simple and takes about 10 minutes to complete. When the process is completed you can deposit funds to your Crowdestate account and start investing.
How To Invest On Crowdestate
You can chose to invest in 3 different types of loans. Each of the loan types has their different aspect.
- Real estate loans
- Development loans
- Rental loans
- Speculative loans
- Mortgage loans
- Corporate loans
There is the real estate loans which have 3 categories. Theses categories are rental, development and speculative real estate.
The real estate loans typically only pay interest when the loan term end. Meaning both the money invested (called principal) plus the interest is returned upon due date of the loan.
Mortgage and cooperate loans typically pays both interest and and principal each month.
No matter the type of loan you invest in, there are a number of materials which you can read before investing:
- Executive summary
- Project description
- Physical location
- SWOT analysis
- Crowdestate rating
- Repayment schedule
- Relevant documents to the loan
The essential information is provided in the top of each project page. When scrolling further down each page, there are the above listed materials at your disposal.
If you like me want to build a stable cash-flow, you want to look at the repayment schedule. This will tell you when and how the loans are repaid.
Crowdestate Auto Invest
Crowdestate has one of the most extensive auto invest tools. The auto invest is very simple to use, whether you chose a highly customized portfolio or just make the simple auto invest.
The simple auto invest options simply covers the investment loans, expected returns, loan terms and other essential information. This is a nice and clean way to keep the investments automated, while investing on your own terms.
However, if you seek to maximize the customization, you can do so by expanding the options. By expanding the options you will keep the same essential and basic information. However, you gain a lot of customizable options within each loan category.
The picture above show the additional options you gain with the extra customization to your auto invest.
The customization allow you as an investor to make sure that you invest in only what you want. This means that you can adjust your own risks. Investing in loans with unsecured debt is not as safe as going with loans which has secured loans. Thereby, enabling you to increase your level of investment safety.
Secondary Market On Crowdestate
The secondary market on Crowdestate is called “Marketplace”. The marketplace is where you sell your loans. You can both purchase and sell loans as an investor.
Crowdestates Team And Organization
The key people on Crowdestate is some of the most prominent i have seen on any other Crowdfunding/P2P lending platform to date.
The founder and CEO Loit Linnupõld has been head of deposit and savings products, head of banking products, CEO of Swedbank investment funds and is now the CEO of Crowdestate.eu. If that does not make him one of the most qualified for running an investment platform, i do not know who is.
Furthermore, his team has been in some high positions within the financial and informational industries. Furthermore, they have business partners in Latvia, Italy, Georgia and Romania.
Furthermore, only 5% of the applicants are approved for the loans.
On Trustpilot Crowdestate has a 3/5 rating and a trustpilot score of 6,9/10.
However, the scores are based on 3 reviews. Two of the reviews are satisfied with the platform, and one has experienced late payments and therefore has made a bad review.
With 3 reviews there are no telling if the late payments are a general thing, or just something he has experienced.
Crowdestate Financial Statement
While Crowdestate is one of the platforms which actually provides a financial statement it is Estonia. You can find it in the link here. The financial statement covers the fiscal year of 2017.
However, with my trusted Google translate i managed to translate the most essential numbers. Their revenue for 2017 was €654.225. Furthermore, they made a profit of €181.582. That is an impressive 27% profit margin.
Risks On Crowdestate
P2P lending and Crowdfund will inevitably expose you to risks. However, stocks, bonds, real estate and so on will also carry risks.
The specific risk connected to Crowdestate is the following:
- Liquidity risk
- Currency risk
- Legal risks
- Vacancy risks
- Tenant risk
- Location risk
While it seems like an overwhelming lists, it is not to be afraid of. These risks are carried out in many other types of investments. The liquidity risk is one of the biggest risk associated with Crowdestate. You cannot terminate your loans, and there is no buyback guarantee if the loan is not repaid. However, Crowdestate has the marketplace where you can sell your loans if you should need your money before loan repayment.
The risks with vacancy and tenants are what can alter your expected returns in relation to mortgage and real estate investments.
If regulators implement new legislation, it can also alter the expected returns. This could be based on a number of different factors.
How Crowdestate Mitigate Risks
Crowdestate has different ways to mitigate the risks for the investors. First of all, Crowdestate at times owns X% of the sponsors company. Furthermore, they get personal guarantees.
Your money are kept at different accounts than Crowdestate’s accounts. Meaning if they go bankrupt your money are safe. In case of a market collapse Crowdestate will seek to prolong any investments till the real estate market has recovered. Whereas the alternative is to sell the investments to another party at a much lower price, hurting the investors and Crowdestate themselves.
Furthermore, Crowdestate has made a “Crowdestate rating” to display their due diligence risk assessment.
Crowdestate Risk Rating
The risk assessment are based on a total of 8 factors:
- Capital senior to Crowdestate
- The amount of money that is going to be repaid before the crowdfunding loan
- Capital equal or junior to Crowdestate
- That amount of money that is going to be repaid together or after the crowdfunding loan
- Location in relation to infrastructure. For example: rental properties in rural areas will have poor ratings, compared to rental properties in capital cities.
- Cash flow
- Is the investment already creating a cash flow?
- Development phase
- How long into development is the project (starting vs. ending phase)
- Team track record
- Are the project team well known, and have they proven a success before?
- Personal guarantees
- Has the project owners provided any personal guarantees?
- Has the properties already a mortgage?
Based on the 8 meantioned risks, Crowdestate makes a full risk assessment giving a grade between A1 and C5. Where A1 is the best and C5 the worst.
The risk assessment made by Crowdestate is to subjectively review the investment opportunities total risk level. Furthermore, Crowdestate mentions that this risk assessment should not replace any due diligence made by the investor.
Specifically how the risk score is calculated is not provided.
Loan Originators (Sponsors) On Crowdestate
There are no loan originators on Crowdestate, as Crowdestate and the investors are acting as loan originators. The term sponsor means borrower. Why, i don’t know.
There are many different sponsors on Crowdestate. More or less 1 for every investment opportunity.
The sponsor is typically a real estate development team or a company seeking capital. Some sponsors have been provided several loans through Crowdestate. Typically, such followup loans are names with roman letters in the project title. E.g. “Marguse Spordibaas, Nüpli, Otepää (III)” meaning that this is the third time this sponsor get a loan for this project.
Statistics From Crowdestate
Crowdestate has over 35.000 investors on their platform. Furthermore, a total of €75.000.000 have been raised in loans. The €75.000.000 are distributed across more than 180 projects, with an average return of 17,77%.
The average investment made on their platform is about €350 and has been decreasing with the amount of investors registered.
Crowdestate has paid a total of €6.667.112 in interest and €103.749 in late fees. Furthermore, €42.584.026 has been returned in principle.
Since 2014 Crowdestate has exited a total of 79 loans. In addition, Crowdestate has in 2019 provided between 4 to 11 new projects per month.
Fees And Costs Of Using Crowdestate
For the investors a success fee can be paid. However, this is only paid if the investment performance exceed the agree hurdle rate. The success fee is about 20% over the 8% per annul hurdle rate. Furthermore, Crowdestate calculates the fee into the expected yield, meaning there is no deduction from the interest payments made to the investor.
First Impressions of Crowdestate
Crowdestate seems like a very professional platform. Furthermore, the founder and CEO has previously been in big investment management positions. Crowdestate has nothing which standout or seems odd. Furthermore, they have a very long FAQ for any questions you could imagine asking.
The website is very easy to understand and navigate. Furthermore, they provide a lot of information to each and every investment opportunity. This gives a huge transparency when investing, and a good way for me (and you) to mitigate the risk. In addition, most projects come with high returns. The average return is 17,77% which must be considered in the high-end of other crowdfunding and P2P lending platforms.
However, Crowdestate does not use loan originators. This means that all bad payers are deducted from Crowdestates own accounts, instead of the loan originators accounts. A good example are the Mintos platform. Mintos has the loan originators repurchase the loans if the borrowers are not able to pay the loan in due time. This will be a burden of Crowdestate.
I like how Crowdestate helps the investor to mitigate the risks by providing a lot of thoroughly descriptive material.
What I Would Like To Change
The Crowdestate review has unveiled a lot of information to digest.
After i conducted this thorough review of Crowdestate i was left behind with some small needs that i would like to see improve:
- A way to see how the risk rating is actually calculated
- Monthly repayment, no matter loan type
- Buyback guarantee or alike
- Lower entry barrier (currently €100)
While these can be difficult or outright impossible, it it something that would help me as an investor to start put money on the platform. Not being able to know how the risk rating is measured makes the risk rating useless. We need to have the number range to understand how to rating works.
While this is not an issue, it is something that i trying to increase – monthly cash flow. If the principle and interest is paid at the end of the loan term, with investments that can be up to 42 months, i would not see cash flow for the whole 42 months.
A lower barrier of entry would help one like me to invest more diversified. The platform is very suitable for my needs, however, with my disposable income, i cannot just put €10.000 to diversify across 100 loans. I would more realistically be able to put €300 (monthly, but i want to use other platforms as well), meaning i could diversify across 3 loans.
- High returns
- Auto invest
- Secondary market
- Transparency through information
- Not a lot of projects to invest in
- Not all investments are with monthly repayments
- Minimum investment of €100
Crowdestates main competitors are listed below. Crowdestate has some competition in the real estate, coporate finance and mortgage loans. Both Estateguru and Bulkestate are platforms which focuses on real estate. Envestio, Crowdestor and Grupeer offers both some development and corporate loans, alike what Crowdestate does.
The Crowdestate review has provided an very thorough walk through of the crowdfunding platform. Crowdestate has many very good aspects. Like an annual interest rate of 17,77%, three different loan types, regulated in Europe and Estonia, has a very customizable autoinvest, secondary market, detailed project information and much more. However, these benefits comes at the costs of the minimum investment on €100 per loan.
Crowdestate is a very likeable platform with lots of risk mitigation through good information provided by Crowdestate.
Crowdestate has many very good aspects. Like an annual interest rate of 17,77%, three different loan types, regulated in Europe and Estonia, has a very customizable autoinvest, secondary market, detailed project information and much more. However, these benefits comes at the costs of the minimum investment on €100 per loan.