EstateGuru Review

What is EstateGuru?

EstateGuru is an Estonian crowdlending platform that offers investments in mortgage-backed loans. The platform offers attractive yield, however, due to its aggressive expansion strategy, the advertised return isn't realistic for broadly diversified portfolios. As of September 2024 over 50% of the platform's outstanding portfolio is defaulted. Learn more about EstateGuru in our EstateGuru review.

Requirements

To sign up on EstateGuru and invest in property-backed loans, you need to pass the following new user requirements:

No EUR bank account? No problem

• 💳 Open a free N26 bank account
• 💳 Open a free Wise bank account

You can invest on EstateGuru even if you reside outside of Europe as long as you have a European Bank account which is required to deposit funds to your new Lemonway bank account offered by EstateGuru. This increases the safety of your uninvested funds on the platform.

EstateGuru offers significantly higher returns than most P2P lending platforms from the UK or the U.S., which makes it an attractive alternative.

Risk & Return

Are you wondering whether investing on EstateGuru is safe? Let's have a look at the securities.

Secured Investments

The most significant advantage of investing on EstateGuru is that a mortgage secures your investments.

This protection scheme is, in theory, much more valuable than any buyback guarantee on Mintos, Esketit, or Lendermarket.

While a first-rank mortgage often backs your investments, there is no 100% guarantee that you won't experience a loss at some point. Investing in high-yielding loans is unlike putting your money in your savings account.

During every due diligence process, EstateGuru's risk team evaluates the profitability of the real estate deal. The platform analyzes the borrower's "exit plan" and considers whether the borrower can repay the loan with the accrued interest.

Most borrowers on EstateGuru are experienced developers who buy or build properties and sell them with a hefty profit. During our talk with the co-founder and head of risk and innovation, we learned that it's common to earn a 30% profit annually by investing in real estate deals. Of course, this is subject to market conditions.

Most of the borrowers lend only about 50% of the required funds, which means that with a 10% interest rate, the funding cost for the borrower is only around 5% per year. The potential profit of the renovated or constructed property can easily cover the funding cost on EstateGuru.

Assess the Risk Yourself

If you are cautious about money, you want to invest on EstateGuru and inspect every project before investing manually. It's not required, but it's good practice for those ready to become serious about investing on EstateGuru.

Risk Management

EstateGuru aims to become the most professional crowdfunding platform in Europe. The platform follows the following risk management process for every listed project.

Every project listed on EstateGuru comes with a valuation report from certified real estate valuators. Multiple team members review all the collected documents before the credit risk committee approves the loan.

Keep in mind that even this process isn't bulletproof. There are still some risks that could materialize and impact your return.

Inactivity Fee

Effective immediately, an inactive account fee will be applied to accounts with no new investments within 12 months. Here's what you need to know:

This policy encourages investors to stay active or withdraw their funds. EstateGuru provides the means to do this free of charge.

Is EstateGuru Safe?

Are you wondering who's behind the platform and whether the terms and conditions are legitimate? We have done the homework for you. Check out our results.

Watch our on-site visit at EstateGuru's headquarters in Tallinn:

Note that this video has been recorded prior to EstateGuru's portfolio performance issues.

Who runs the company?

EstateGuru is founded by Marek Pärtel and Kaspar Kaljuvee. Mr. Pärtel is currently the board chairman, and Mr. Kaljuve is leading the department of Risk Innovations and Risk projects.

EstateGuru’s CEO is Mihkel Stamm, who has been with the company since its inception.

Who is the company’s legal owner?

CEO and Co-founder Marek is joined by Mr. Kristjan-Thor Vähi, who currently acts as a passive co-founder within the platform.

Other partners and co-founders also include Mr. Marko Arro (responsible for the financial side) and Mr. Kaspar Kaljuvee (who takes care of the risk side).

Are there any suspicious terms and conditions?

Are you ready to read through 25 pages of fine print? No? We thought you’d say that, so we’ve done it for you, and here’s what we found.

Clause 12 - Debt Collection Explained

During our investment journey on EstateGuru, we talked to various management people, including Andres Luts, the Chief Risk Manager at EstateGuru. If you want to learn more about debt collection, you can watch our interview here.

It’s good to see that this process is also mentioned in EstateGuru’s terms and conditions.

Here is one of the funded projects we have had the chance to visit during our on-site due diligence in Tallinn.

Clause 4.5 - Storage of Funds

EstateGuru currently stores your funds in EstateGuru's bank account, which is separated from other companies' business accounts.

EstateGuru confirmed that it's currently working to introduce dedicated IBAN accounts in partnership with its partner Lemon Way. Most investors have already received a new IBAN account, which increases the safety of uninvested funds.

Clause 15.1 - Amendments

EstateGuru can amend the terms and conditions without prior notice.

This is one of the few things we dislike about EstateGuru.

Fortunately, EstateGuru listened to our suggestions, and from now on, you will be notified about any changes when logging into your account.

While EstateGuru won't notify you in advance, it's certainly a good step towards being even more transparent with you.

Do Investors Have Access to Individual Loan Agreements?

Investors on EstateGuru do have access to individual loan agreements. You can view them in the Documents section of your investor’s account.

When completing our due diligence of EstateGuru, we did not find anything extraordinary or suspicious about EstateGuru's team members.

Curious about what else we look at when conducting our research?

Usability

Regardless of whether you are starting out or already investing on other platforms.

Investing on EstateGuru is simple and intuitive.

You can invest manually or set up your Automated Strategy and let the tool do the work.

Automated Investment Strategies

EstateGuru has recently upgraded its Auto Invest and introduced a new way to diversify your portfolio with Automated Investment Strategies.

You can choose between three strategies:

Conservative Strategy

The pre-defined conservative strategy will diversify your portfolio across loans with the following characteristics:

• LTV up to 67.5%
• Only Bullet (incl. Annuity) Loans
• No Stage Loans
• Only bridge loans, business loans and development loans
• Only Loans from Estonia, Germany, Finland, Lithuania, Latvia
• Max. exposure per loan can be customized
• Only first-rank mortgages
• Up to 18 months

Balanced Strategy

The balanced strategy suits investors who prioritize higher returns and lower cash drag. It comes with the following pre-defined settings:

• LTV up to 75%
• Stage Loans are included
• All Countries are included
• Max. exposure per loan can be customized
• Any loan securities are accepted
• Up to 60 months

Custom Strategy

The custom strategy is the improved Auto Invest with new settings that let you define the exposure to a single project and individual borrowers.

The most significant benefit of all strategies is that you can use them with minimum exposure to a loan from €50.

Investing On EstateGuru Manually

EstateGuru’s basic Auto Invest won’t let you control your investments if you invest lower investment amounts. Here are some points to consider when choosing your own loans on EstateGuru.

All eight factors will help you determine whether a particular real estate investment fits our investment strategy on EstateGuru.

Evaluation Methodology

Interest Rate

The interest rate is not a significant factor on EstateGuru as most projects offer annual yields between 10% and 12%. 

Loan-to-Value

What's more important is the LTV (loan-to-value). The lower the LTV, the lower the risk of default. According to EstateGuru, the real estate market would need to drop by 50% to 60% for the investors to lose their investments. 

Project Stage

Construction companies in the real estate development industry expect to take loans in stages as they don’t need the entire loan amount at once. If an investor had already invested in the same project but in a different stage, one should analyze the borrower's payment more before increasing the exposre.

You can look up your late loans in your portfolio.

It doesn't matter which exact stage you invest in. If the loan defaults, all the stages will likely default, and after the collateral is sold, investors will be repaid proportionally rather than chronologically.

Loan Period

The longer the loan term, the harder it will be to exit your investment before the end of the loan period. The loan period has a direct impact on the liquidity of your portfolio.

Mortgage Rank

It's recommended to always look at the collateral value and the mortgage rank. The higher the mortgage-rank, the better.

Valuator

The risk of your real estate investment is always reflected by the valuation of the property, which is why you should look into the company evaluating the collateral and the date of the evaluation. The older the evaluation report, the higher the chance that the value of the collateral has changed.

In this case, the evaluation was done by Inreal, a licensed real estate company from Lithuania. Do a quick Google search about the validator to ensure it’s a legitimate and licensed company.

Licensed real estate agencies mostly evaluate collateral (securities). Those documents, together with the borrower information and the business plan, are double-checked by the EstateGuru risk team (Credit Committee), which also sets the loan terms.

Location

Location is often the most critical value-adding factor. Properties close to cities tend not to lose as much value during an economic downturn as in the countryside.

You should research the property's address, which serves as a mortgage, and verify whether there is a good connection to the city.

More experienced investors might also consider excluding certain countries with historically higher default rates. Depending on your risk tolerance, Finland or Germany could be two countries to exclude.

We recommend analyzing EstateGuru's loan book to understand the performance of the platform's loans. 

Borrower’s History

Would you like to borrow money from a company that had difficulties paying back in the past? Let's hope not. Look at the borrower's history to see whether you can spot any delays or defaults.

Unfortunately, if you haven’t invested in previously funded projects by the same borrower, you won’t be able to see the loan details. What you can see, however, is the status icon. If it’s blue, it means there are no delays. If the icon has an orange part, the loan is delayed. The red icon represents a defaulted status.

It might appear like a hassle to evaluate real estate projects, but you can do your evaluation in less than ten minutes as soon as you get the hang of it.

This process will significantly increase the control over your investments compared to using the Auto Invest.

The downside of not using Auto Invest is that you might limit your diversification.

You might also encounter cash drag if you end up with uninvested funds in your account. To compensate for this, you can increase the minimum investment amount to €300 or €500, depending on your total portfolio amount.

If you can spend ten minutes per week evaluating your real estate investments, we suggest doing so.

Investing On The Secondary Market

The strategy mentioned above applies to manual investments on the primary market, meaning you invest directly in newly originated loans.

EstateGuru has a dedicated secondary market, which you can use if you have uninvested funds in your EstateGuru account.

A secondary market is where you can sell or buy investments before the end of the investment period.

You can use filters to sort offers based on your preferences (your investment strategy). You can also sort the columns as you wish.

You will get additional information about real estate investment if you click on the small shopping cart icon.

You can only buy the entire investment on the secondary market and not a part of it. If someone sells an investment for €1,740, you must the entire selling price.

You should also look at the “seller expected earnings” and “buyer expected earnings” and match this with the loan updates.

Investing in the secondary market certainly takes more time. If you spot a good deal where the likelihood that the borrower will repay the loan in time is very high, you can use the secondary market to increase your yields.

The secondary market could also be helpful if there aren’t enough loans available on the primary market. EstateGuru has also a feature that allows you to buy bulk investments on the secondary market.

The secondary market has no Auto Invest feature, so manually investing can be time-consuming. 

Liquidity

Now it’s time to look at how fast you can withdraw money from EstateGuru.

Do you think about liquidity when choosing their P2P lending platforms?

No? You should, though!

With EstateGuru, you usually commit your money for at least 12 months. You have, however, the option to use the secondary market and cash out before the end of your investment period.

Note that if your default rate is high, the liquidity of your investment is limited. The more defaulted loans in your portfolio, the lower the liquidity of your assets.

Selling on the Secondary Market

You can sell your investments for a premium or discounted price. Sellers and buyers should know that this isn’t a trading platform and that you will be charged a 3% fee if you sell your investments.

Buyers also cannot sell their claim within 30 days after purchase.

To sell your claims on the secondary market, you must go to your portfolio and click on the shopping cart next to your investment claim.

Next, you can use a slider to adjust your discount or premium. Your investment will be listed on the secondary market by clicking Sell My Claim.

Note that your offer on the secondary market is only valid for 14 days. EstateGuru also applies a selling fee of 3%. In our case, it would be €0.73 if we decide to sell our investment and reinvest the capital into new loans.

A 3% fee won't break the bank if you need to withdraw your investments fast.

You should also remember that you might fail if you plan to sell defaulted loans. Investors have little appetite to buy off defaulted loans, so you might need to wait until the loan is recovered. 

Support

When we contacted EstateGuru to verify information or explain specific features in more depth, EstateGuru was able to provide answers to all of our questions.

The team responded within 24 hours but was also keen to meet us during our trip to Tallinn to show us some of the projects they were working on.

EstateGuru's CEO is always open to joining us for an interview and answering critical questions. 

There aren’t many P2P platforms in Europe that are as supportive when it comes to resolve account-related questions.

EstateGuru Alternatives

In 2024 EstateGuru is experiencing many defaulted loans, so investors often look for alternative platforms that provide a better return on investment. Here are three EstateGuru alternatives worth considering.

LANDE

While EstateGuru offers investments in real estate loans, LANDE offers up to 12% on agricultural loans. Investing in agricultural loans funds European farmers who produce essential crops for the food industry. LANDE's loan portfolio performance has been excellent, which is why it's also one of the highest-rated platforms on P2P Empire. Learn more about how to earn passive income in our LANDE review.

Crowdpear

If you like investing in real estate loans but prefer to earn interest on a platform that takes a more conservative approach on risk assessment, Crowdpear might be a good fit for you. This regulated crowdfunding platform from Lithuania offers investments in real estate loans in and around Vilnius. Learn more about how to earn up to 11% interest in our Crowdpear review.

Fintown

If you don't want to bear the borrower risk you must consider when investing in real estate loans, then Fintown might be worth considering. This newly launched Prague-based platform offers investments in rental properties with high occupancy.

Your funds will fund short-term rental units in Prague's city center. You don't bear any risk that the borrower won't repay the loan, as the income is generated directly from the rental yield. Learn how to make 12% on Fintown in our Fintown review.