EstateGuru Review

EstateGuru Review

EstateGuru is the most popular and reliable P2P real estate platform in Europe. Since 2014 the platform paid out €16.67 M in interest to over 54,000 investors. You can invest in property-backed loans with an average interest of 11.86%. How? Find out in our EstateGuru review after two years of investing.

EstateGuru in Numbers

Are you thinking about joining EstateGuru?

Great! But first have a look at EstateGuru's statistics.

So, what are some of the key points to draw from the above table?

It’s worth noting that this is rare within the real estate P2P lending industry.

The default rate on EstateGuru is around 5.8%. So far the platform has managed to recover more than 40% of the defaulted loans together with a 10% interest.

The average recovery period is currently around five months.

None of the investors ever lost money on EstateGuru.

Another positive aspect of EstateGuru is that their financial reports are audited by Ernst and Young.

There is only a handful of platforms that offer this additional trust factor. Many of the P2P lending sites do not provide audited financial reports.

Despite the fact that EstateGuru wasn’t profitable in 2019, the platform has expanded their staff to support the growth of the platform and increase the availability of investment opportunities. The recruitment and salary expenses has more than doubled in comparison to 2018. To learn more about EstateGuru’s finances, refer to the above mentioned financial report.

EstateGuru’s New User Requirements

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

That's it!

If you don’t have a bank account yet, we recommend N26. We use this bank ourselves when testing various P2P platforms. The transfer of funds usually takes no longer than one or two days.

No EUR bank account? No problem

• Open a free N26 bank account
• Open a free TransferWise borderless bank account

You can invest on EstateGuru even if you reside outside of Europe.

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

Keen to earn 12% interest per year?

Risk and Return

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

Secured Investments

The biggest benefit of investing on EstateGuru is that your investments are secured by a mortgage.

This is much more valuable than any buyback guarantee that you will find on Mintos, Fast Invest or Lendermarket.

Assess the Risk Yourself

If you are cautious about money, you want to invest on EstateGuru manually and inspect every single project prior to investing. It's not required but it's good practice.

Keep reading or just click here! We will show you how to do it.

Is EstateGuru Safe?

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.

Who Runs the Company?

EstateGuru is led by Co-Founder and CEO Marek Pärtel, who has been involved in real estate since 2002 and has been with the company since its inception in 2013. Marek is also an angel investor, speaker, and partner at several other Estonian real estate fintech companies.

Marek also invests with Startup Wise Guys, which is a popular B2B startup accelerator that also co-funded the real estate aggregator EvoEstate.

EstateGuru’s CEO is very active on professional social media networks like LinkedIn. He also gives talks on finance events like the Finanzmesse in Zurich, Switzerland and the World Real Estate Congress in Moscow, Russia.

Having a very active CEO is a good sign, as this builds trust with fellow investors.

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 (who’s responsible for the financial side) and Mr. Kaspar Kaljuvee (who takes care of the risk side).

👉 Conduct Your Own Due Diligence

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 visit to EstateGuru’s office in Tallinn, we have had a chance to talk to Eric Noormets, who is the company’s Debt Collection Manager. Eric described precisely how the debt collection process works and how EstateGuru managed to retrieve all investors’ funds when projects defaulted.

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 last summer.

Clause 4.5 - Storage of Funds

EstateGuru currently stores your funds at a EstateGuru's bank account which is separeted from other company's business accounts.

EstateGuru confirmed that it's currently working to introduce dedicated IBAN accounts in partnership with its partner Lemon Way.

Clause 15.1 - Amendments

EstateGuru can amend the terms and conditions without prior notice.

This is one of the few things we really 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 you won't be notified 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 in your investor’s account.

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

👉 Is Peer-to-Peer Lending Safe?

Usability

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

Investing on EstateGuru is simple and intuitive.

You can either invest manually (like we do) or set up your Auto Invest and let the tool do the work for you.

While the Auto Invest feature on EstateGuru can be used by anyone, advanced diversification options are only available to those who invest at least €250 into one single project.

Basic diversification options aren’t very useful as you can only define the loan amount, period and type.

Advanced diversification allows you to choose the preferred security, LTV, stage and interest.

Apart from the Auto Invest, every single project has a thorough description. When compared with platforms like Monethera or Crowdestor, EstateGuru’s project descriptions are always on point and include all of the data that EstateGuru has ever gathered about the borrower.

This is super useful when investing manually and evaluating individual projects.

This is how it looks like when you unlock all of EstateGuru’s auto invest features.

If you aim to invest less than €250 in one project, you are better off by investing manually. And that’s what we do as well.

Investing on EstateGuru Manually

Since EstateGuru’s Auto Invest won’t let us control our investments, we invest our funds on EstateGuru manually and these are the points we evaluate.

All of the eight factors will help us to determine whether the particular real estate investment is a good fit for our investment strategy on EstateGuru.

Our Evaluation Methodology

Interest Rate

While we also look at the interest rate, it isn’t such a big factor on EstateGuru as most of the projects offer annual yields between 12% and 14% anyway. There isn’t such a huge spread in interest as you might be used to from platforms like Mintos or Bondora.

Loan-to-Value

What we prioritize 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% in order for the investors to make a loss on their investments (in case the property would need to be liquidated, which is very unlikely). We aim to fund projects with a LTV of less than 70%.

Project Stage

In the next step we look at the stage of the project. It’s common that in the real estate development industry, construction companies take loans in stages as they don’t need the full loan amount at once. If we already invested in the same project but in a different stage, we only invest more into the same project if we haven’t spotted any delayed payments from the borrower in the past.

You can look up your late loans in your portfolio.

Loan Period

We aim to not commit our capital for too long which is why we only fund projects with a period of 12 months or less.

Mortgage Rank

Always look at the collateral value and the mortgage rank. We exclusively invest only in first-rank mortgages. We don't see a reason to invest in second-rank or third-rank mortgages.

Valuator

The risk of your investment in real estate is always reflected by the valuation of the property, which is why you better look into the company who is evaluating the collateral.

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

Note that the evaluation of the collateral (securities) is done by licenced real estate agencies. Those documents together with the borrower information and the business plan are double checked by the EstateGuru risk team (Credit Committee) who also sets the terms of the loan.

Location

The location is often the most important value-adding factor. Our strategy is to invest in metropolitan areas as the properties close to cities tend to not lose as much value during an economic downturn as compared to those in the countryside.

Google the address of the property which serves as a mortgage and check whether there is a good connection to the city.

Borrower’s History

Would you like to borrow money to a company who had dificulties paying back in the past? Let's hope not. Have a look at borrower's history whether you can spot any delayes or defaults.

Unfortunately if you haven’t invested in the 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, it means that the loan is delayed. Red icon represents a defaulted status.

It might appear like it’s a lot of hassle to evaluate real estate projects but as soon as you get the hang of it, you can do your own evaluation in less than five minutes. This process will significantly increase the control over your investments as compared to using the Auto Invest.

You want to know where you invest your money into right?

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

You might also encounter cash drag in case you end up with uninvest funds on your account. In order to compensate for this you can increase the minimum investment amount to €100 or €150, depending on your total portfolio amount.

If you have the time to spend ten minutes per week evaluating your real estate investments, we suggest doing so.

Investing on the Secondary Market

The above mentioned strategy applies for 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.

The secondary market is a place, 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.

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

On the secondary market you can only buy the full investment and not a part of it. In case someone sells an investment for €1,740 you need to buy the full amount.

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

In this scenario, the borrower isn’t able to repay the loan and EstateGuru is taking over the collateral.

While it seems like a good deal since the end of the loan term is within two weeks. The actual recovery of the loan principal can take months which makes the “buyer expected earnings” a very blurry estimate. It’s very likely that you won’t receive the loan principal at the end of the official loan period if you invest in this loan.

Investing on the secondary market certainly takes more time. If you manage to spot a good deal where the likelihood that the loan is going to be repaid in time is very high, you can use the secondary market to increase your yields.

The secondary market could also be useful in case there aren’t enough available loans on the primary market.

As there is currently no Auto Invest feature for the secondary market, manually investing is rather time consuming. The return on time spent doing your research might not be worth it.

How Fast Can You Cash Out?

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

Do you think about the 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.

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 if you sell your investments you will be charged a 2% fee.

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

In order to sell your claims on the secondary market you will need to go to your portfolio and click on the shopping cart next to your investment claim.

In the next step you will be able to use a slider to adjust your discount or premium. By clicking on Sell My Claim your investment will be listed on the secondary market.

Note that your offer on the secondary market is only valid for 14 days. EstateGuru also applies a selling fee of 2%. In our case it would be €0.73 in case we decide to sell our investment and reinvest the capital into new loans.

If you need to withdraw your investments fast a 2% fee won't break the bank.

EstateGuru’s Customer Support

EstateGuru's customer support is AMAZING.

When we reached out to EstateGuru to verify information or explain certain features in more depth, EstateGuru got right back to us.

Not only did the team respond within 24 hours but they were also keen to meet up with us during our trip to Tallinn to show us some of the projects they were working on.

There aren’t many P2P platforms in Europe that are as transparent with their investors as EstateGuru. We’re certain you won’t be disappointed with EstateGuru’s customer support.

EstateGuru Review Summary

EstateGuru is the right platform for you. It's one of the most transparent platforms with a long track record and an amazing performance. EstateGuru provides rewarding investments secured by a mortgage. The platform is very user-friendly and the support is exceptional which is why EstateGuru is one of our favorite P2P lending sites.

Main takeaways from our EstateGuru review:

• Legitimate platform
• Mortgage-backed investments
• Excellent risk assessment
• Professional debt collection

You still with us? Sign up on EstateGuru and get a 0.5% cashback bonus. It only takes 2 minutes.

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