BitOfProperty is an Estonian real estate crowdfunding platform that gives investors the opportunity to buy shares in an apartment building and earn a passive income from the generated monthly rent. The minimum investment amount is only €50 and investors earn on average 6.4% per year for a duration of three years. Find out more about this innovative crowdfunding platform in this BitOfProperty review.
- 27/05/2020 - Currently there are only three available projects to invest in.
BitOfProperty in Numbers
When reviewing any type of crowdfunding platform, we’d always recommend that investors have a look at the company’s performance and track record. Even though past performance does not guarantee future outcomes, doing this helps investors build a calculated opinion about a company.
|Investor's earnings:||+ €20,000|
|Total loan value:||+ €303,250|
|Number of investors:||+ 500|
|Loss of investors' money:||0%|
|Average portfolio size:||€2,492|
|Latest financial report:|
When we first created this BitofProperty review at the end of 2019, the platform did not have a dedicated statistics page. This has changed and as of April 2020 you are able to retrieve the latest numbers about BitOfProperty’s latest performance directly from the platform.
The total amount of funded projects, as well as the amount of active investors, is still quite small compared to larger platforms.
If you are interested in more data apart from what you can find in our BitofProperty review or on the BitofProperty website, you can get in touch with Karl Vään, the CEO of the platform and he will be able to provide you with additional information.
It’s important to mention that BitOfProperty is a start-up. The official founding year is 2017, but the idea of building an innovative real estate crowdfunding platform was born in 2015. More about this later.
Number of Investors
The platform currently has more than 500 registered investors with an average portfolio size of around €2,500. Unfortunately, we were unable to find an important stat: how many of these registered investors actually invest on BitOfProperty.
So far the investors have earned more than €22,000 passive income and not a single one has lost any money. Pretty impressive, right?
So, How Does BifOfPropery Rank on the P2P Market?
If you compared BifOfPropery’s statistics to other platforms, you would probably conclude that the platform has a very short investment history and a much smaller investor base, which makes investing here riskier.
We suggest, however, to keep reading our BitOfProperty review as the platform offers something unique to their platform.
BitOfProperty Promo Code
If you’re looking for a promo code that will give you some extra cash when investing with BitOfProperty, we must disappoint you. At present, the real estate crowdfunding platform does not offer a sign-up bonus or cashback to new investors.
The platform does, however, offer regular promo campaigns to active investors.
Currently BitOfProperty does not run any active cashback campaigns.
We’ve heard rumors that, in the future, BitOfProperty might offer a referral bonus of €10 to new investors. If rumour becomes reality, we will update our BitOfProperty review accordingly, to make sure you get your bonus.
Either way, a sign-up bonus is just that: a bonus. The average investor on BitOfProperty invests long-term, which should be also your goal when joining the platform.
Happy to go ahead without a bonus?
BitOfProperty’s New User Requirements
You can create an account on BitOfProperty from anywhere, however, you need to pass the Know Your Customer (KYC) requirements.
The sign-up process is easy, however, verifying new users requires more time as the platform gathers information about you, including your citizenship, bank details and a digital copy of your ID.
As soon as your profile is verified, you’ll be able to deposit funds to the platform.
Risk and Return
We know what you’re thinking: how much will I earn with BitOfProperty and is investing here worth the risk?
Before we get to the risk evaluation, it’s important to understand how BitOfPropertyworks, as it’s very different to other real estate P2P lending platforms like Bulkestate, Crowdestate and EstateGuru.
How Does BitOfProperty Work?
Most P2P real estate investors are familiar with platforms that help fund the construction of development projects, be it BitOfProperty or competitor platforms like Bulkestate, EstateGuru or Crowdestate.
BitOfProperty operates differently to the others, so let’s look into its workings and then briefly compare it to the other P2P lending platforms…
About the platform
With BitOfProperty, investors buy shares of an apartment building or individual apartments. This is similar to buying shares of a company on the stock market. BitOfProperty investors earn a passive income from their tenants’ rent.
Meanwhile, Bulkestate gives its investors the opportunity to purchase property with a group buying discount. In this scenario, investors buy finished real estate.
Finally, EstateGuru and Crowdestate allow investors to make returns during the construction phase.
By investing on EstateGuru you can earn a 0.5% cashback bonus when using our EstateGuru referral code.
How Do I Acquire Shares with BitOfProperty?
There are two ways investors can buy shares of an apartment building managed by BitOfProperty.
1. You purchase your shares during the initial offering
When a property owner decides to sell some of their apartments, BitOfProperty does the due diligence, technical check and lists the real estate on the platform.
Investors can acquire shares of the property, starting from €50 a share. The property is listed on the platform until one of the following two criteria is met:
- Funding target is reached
- Time for the funding target expired
Note, you only start earning monthly rental income if the property is tenanted. Usually this is the case after one month of the property acquisition.
2. Purchase your shares on the market place
The average investment term is three years long. If you wish to exit the investment, you can list your shares on the marketplace. Other investors will buy your shares and you will receive your funds back to your wallet.
In this option, you decide whether to offer your shares at a discounted or premium price. It works similarly to many secondary markets on various P2P lending platforms.
How Risky is My Investment on BitOfProperty?
Buying shares on BitOfProperty comes with a variety of risks. BitOfProperty does not guarantee any minimum returns, and, as with every P2P lending platform, you might lose all your investments.
Here are two risks that will most likely affect your returns:
- Properties are not tenanted: If this happens, you won’t receive any monthly rental income
- Market prices drop: In this scenario, it’s likely the yearly return, and the exit price of the property, will be affected. In which case, the value of your shares will drop.
How Much Does it Cost to Invest on BitOfProperty?
While investors don’t have to pay any fees to invest on most P2P lending platforms, this is not the case with BitOfProperty. All potential investors should be aware of the following fee structure:
- Arrangement Fee: 2-4% of the acquisition amount
- Security Arrangement Fee: €300
- Administration Fee: 10% from the monthly rent (no fee during vacancy periods)
- Success Fee: 15% of the investment capital gain
According to the latest information from BitOfProperty, the company is changing the fee structure. We’ll update our BitOfProperty to keep the data accurate, however, as an added precaution, make sure you check their terms and conditions before you sign up.
How is My Investment Secured?
BitOfProperty collaborates with LMP Security Agent (a third party law firm) that manages the collateral for the benefit of BitOfProperty investors.
This means that investors’ money is secured by a mortgage. The law firm also makes sure that all the legal contracts are made according to the national and European regulations. In the unlikely event that BitOfProperty goes out of business, the law firm has all the transcripts about the investor’s shares which ensures they will be able to recover their funds.
Additional Security Layer with Smart Contracts
BitOfProperty has implemented the blockchain technology, also known as ethereum, which helps make the entire process decentralized and more transparent. This technology is totally unique to this platform, and use of it helps boost security of investors’ money.
All investments are recorded on the blockchain (ethereum). The property is tokenized, which essentially means all BitOfProperty investments are recorded on an anonymous public ledger. Users have access to this ledger and the data showing how much money investors invest, however, the anonymity of the database means all investors’ identities are withheld.
Here is a link to one of our properties in a tokenized form: Etherscan.io
The smart contract (or, token) includes: the size of the investment, the property code, and (in the future it will also include) the investment agreement. The token you receive is a legal binding document approved by Estonian authorities.
The contracts are essentially publicly available (in the above encrypted format) so that, if anything happens to the platform, investors can still claim their asset.
As the tokenization isn’t a primary function of the website, BitOfProperty hasn’t put too much effort into making it more user friendly. Also, many investors don’t understand how it works.
We thought it would be valuable to mention it, as this improves the transparency and security of your investment.
If such technology was in place for investments on Kuetzal or Envestio, many investors would have been able to retrieve their money back.
Is BitOfProperty Safe?
As BitOfProperty is a rather new P2P platform, we have completed extensive due diligence about their business model and people leading the company. Note that there is no guarantee about the accuracy of information we have found, however, we believe, it will help you shape an opinion about BitOfProperty.
Here’s what we found when completing our background check:
Who Leads the Team?
CEO and Co-Founder is the 26-year-old Karl Vään. According to his LinkedIn profile, he started working with the company in July 2017. Before BifOfProperty, Karl worked for two years as a back-office administrator for Tarcona (Gunvor Services), which is active in the shipping and logistics industry.
There are two interviews we found with Karl, where he is talking about how he founded the company:
The second co-founder is Taavi Pettai who has been working with the company since July 2016. He previously worked as a project manager for CKT OÖ, which we have not found any information about. Taavi is also Karl’s brother-in-law.
There was another co-founder - Timo Kaus - who was Taavi’s university colleague, but he’s no longer involved with this project. Karl confirmed that Timo has left the project to pursue different opportunities.
Alongside the founders, we found further team members on BitofProperty’s website:
- Majid Iashgarian who helped build the website’s backend, which is the application that runs in the background.
- Abid Qureshi who helped with the development of the frontend of the application, which is what you see in your browser.
- Wanderson Jackson, who helped build the user experience.
From an investor’s perspective, we would expect more people working with the company as there’s no mention of people responsible for the operations side of the business, such as the risk assessment or property management.
We asked BitOfProperty whether they outsource the property management and risk assessment and they told us that the second co-founder is in charge of the property management and due diligence. Taavi has more than 10 years of experience in real estate and he studied Civil Engineering at the Tallinn Technology University.
Who Owns the Company?
BitofProperty was founded back in 2015 with only €2,500 of capital. Initially founded under the name Unreal Estate OÜ, the company was later renamed as BitOfProperty OÜ.
BitofProperty is backed by an investment firm from Japan, as well as LIFULL Co., Ltd., and a startup incubator based in Singapore called Spaze Ventures. There are, however, a few more angel investors involved with BitOfProperty.
There is no public information about the number of shares of each investor available.
According to the information we found on the website. The company should be located on Narva mnt 7b, room 515 Tallinn, Estonia, which is a shopping centre and office building in the center of Tallinn. Unfortunately, we could not confirm this data, as the Google street view did not show any logo of the company in front of the entrance.
According to the Estonian business registry, the company is registered at a different address - Harjumaa, Tallinn, Küti 1/1, 10415 - which is an apartment building in the suburbs of Tallinn.
After watching the video interview with Karl in the Is BitOfProperty Safe? section of this review, we found out that the company’s headquarters are actually in Singapore and that they only have a subsidiary company in Estonia.
We asked Karl for further clarification.
Karl told us that at present the Singaporian company, BitOfProperty Pte Ltd (201718544E), is a holding company and there is no activity going on there. BitOfProperty does not have a representative office in Asia.
The company’s address in Tallinn has recently been changed, however, the data on their website has not been updated. Karl confirmed that the correct address is Küti 1/1, Tallinn, 10415, Estonia.
Terms & Conditions - Anything Worth Noting?
Currently, BitOfProperty does not have an individual investment agreement. All the terms and conditions are listed under terms and conditions on BitOfProperty’ website.
As mentioned earlier, there are certain fees that you should definitely bear in mind when buying shares on BitOfProperty. Even though those fees will change soon, we could not find anything about the costs in the FAQ section of the website.
Investors should be aware that in the case where the security agent needs to sell the mortgage to pay back the investors, fees of up to €10,000 will be deducted from the total liquidation amount.
Other than this, we haven’t found any suspicious clauses. Do be aware, however, that the terms and conditions might change in the future. But, while we are very experienced when it comes to sifting through P2P platforms’ contracts, we are not providing legal services. So, we still advise that every investor reads and accepts the terms and conditions of any platform before investing funds.
Do Investors have Access to Individual Investment Agreements?
Currently, the investment agreement is part of the terms and conditions. There are no individual agreements that investors can view at the moment.
To What Extent can the Platform Cover the Early Withdrawals?
As you might have noticed, BitOfProperty does not purchase back any claims. You need to offer your share on the marketplace and another investor needs to buy it if you want to exit your investments on BitOfProperty. There is no guarantee that you will find a buyer, or that you will sell the share for the price you bought it
BitOfProperty has not provided any financial reports for 2019 yet. As soon as we receive this information, we will share it with you in this BitOfProperty review.
Usability of BitOfProperty
Note, that although BitOfProperty uses blockchain technology, you still need to deposit money in euros.
There are no cryptocurrencies involved with BitOfProperty. Investors simply deposit money to the platform’s Estonian bank account and the platform then adds money to the investor’s profile.
Currently, a bank transfer is the only option for transferring funds to BitOfProperty, although we have been reassured that in the future, it will also be possible to deposit funds via debit card.
Buying shares with BitOfProperty is very intuitive. You only need to top up your wallet so you can actually pay for your shares.
Similar to other real estate platforms, on BitOfProperty you can view all of the properties as well as individual projects.
As we write this review there are only four investment projects available. Each project comes with a detailed project description. You can see all the necessary information as well as the finances concerning that individual project.
Each project has a section with shares available to buy. As you can see, there aren’t many investors selling their shares for discounted or premium prices.
You can simply click on the buy shares button, type in the amount of shares and price per share and complete the transaction.
For this to work, you need to be a verified investor with enough funds in your wallet.
Apart from the option to buy shares, you can also sell them on the market place. From your dashboard you can also manage your buy and sell orders.
BitOfProperty also gives you the option to view all of your transactions.
Apart from that, there aren’t any other features. BitOfProperty offers you the very basic function that you can use to buy and share real estate shares. It’s worth noting, however, that the platform is still very young and further features will probably be developed as the demand from investors increases.
Potential Red Flags
Currently we have no knowledge about potential red flags.
As mentioned above, there are two ways to withdraw your investment:
1. You wait until the property is sold to another owner. The average investment term is around three years. If a property is sold with some capital gain, your shares will increase in value as well.
2. You can sell your shares on the secondary market. Other investors have the option to buy them and you will be able to withdraw your money.
There is no other way to access your investments, which means that BitOfProperty is more attractive for long-term investors, rather than investors with short-term investment strategies and high liquidity needs.
If you are looking for high liquidity, have a look at Bondora’s Go and Grow or Mintos’ Invest and Access. You can also utilize platforms such as Robocash or PeerBerry which allow you to invest in short-term loans.
BitOfProperty’s Customer Support Service
We have tested BitOfProperty’s customer support twice and so far we have always received answers to our queries within one to three business days. BitOfProperty offers you the choice to leave them a message via their live chat or simply sending them an email to Karl at email@example.com.
Karl is also the CEO, so he knows the business inside and out. His answers are always on point we’ve never had to follow up for further clarification.
BitOfProperty Review Summary
BitOfProperty is a rather small real estate platform that currently offers investments in only three rental properties. The average annual yield of 6.5% is rather small in comparison to other real estate backed projects. If your goal is to invest in REITs and lower your risk BitOfProperty is a suitable option.
Main takeaways from our BitOfProperty review:
- Invest in Estonian rental properties
- Easy-to-use platform
- Short track record
- Limited diversification
If you are just starting out with P2P lending, we suggest you first gain some experience on more established P2P platforms, before putting your money in BitOfProperty. For advanced P2P investors, this could be a good way to diversify the passive income streams.
Keen to do a BitOfProperty investing?
Who is BitOfProperty for?
BitOfProperty is for real estate investors who want to receive monthly passive income from rental payments without the huge risk, time investment and money investment that’s connected to purchasing the entire property.
How is my investment secured on BitOfProperty?
Your investment is secured by a mortgage held by a security agent. Furthermore, with the help of the blockchain technology, your transactions are stored in a public ledger (or decentralized system). You will always be able to access your assets even if BitOfProperty goes out of business.
Can I access my investment any time?
You can sell your shares on the marketplace and withdraw your investment at any time. There is, however, no guarantee that investors will buy your shares. This essentially comes down to the market conditions and supply and demand.
What’s the minimum investment amount?
The minimum investment amount on BitOfProperty is currently €50 per share.
|Address:||Küti 1-1, Tallinn, Harjumaa, Estonia, 10415|
|Phone:||+372 50 201 15|
|Opening Hours:||Weekdays from 9AM to 5PM|
|Social Media:||, , ,|