Crowdestate Review

Introduction

Crowdestate is the leading real estate crowdlending platform in Europe. The platform allows investing mainly in real estate loans split into 2 categories:

• Rental projects: Invest in projects with available cash flow from rents
• Development projects: Invest in the construction and the sale of the building

They also have few opportunities in business investments that they call “Corporate Finance” (e.g. financing a sea-food shop, a construction company equipment, a wood factory).

Investments are available across three countries: Estonia, Latvia, Finland and Italy.

The minimum amount is of € 100 for any single investment and investments can be made with € 100 intervals (e.g. 100, 200, 300, etc…).

The average investment size is of  € 300-350 in 2019 (see image below). It as reduced considerably over the years.

The platform

Crowdestate is growing steadily since 2015. The progression of the number of registered users is displayed in the image below, which can prove its popularity.

The platform is based in Estonia and the company has opened offices in Estonia, Latvia, Italy, Georgia and Romania over the years 2014 to 2019.

How it works

• Borrowers (real estate companies and developer) submit their real estate project to the platforms with all the needed documentation.
• Crowdestate evaluates the investment risks, formalized the loan agreement with the borrower and issues the loans. The platform acts as a loan originator.
• The open investment projects are displayed on the platform marketplace with a big amount of information.
• Investors (lender) choose the project and the sum they want to invest in. They then receive monthly interests and will also usually get back part of their invested money periodically (e.g. every 3 months).
• Crowdestate ensures takes care of its members’ investments until they are exited.

Performance

This p2p lending platform provides loans generating an average of 16% ROI and proposes investments with a term from 4 months to 36 months.

Risks

The platform is not supervised by the Financial Supervisory Authority since they weren’t required to do so by the authorities.

The different types of investments and their related risks that you will find on the platform:

• Equity is the capital placed in the company by its owners. The owners are paid the last, after all liabilities have been paid (e.g. loans, interests)
• Mezzanine has a lower risk than equity – mezzanine financing is repaid before equity, but after all bank obligations have been fulfilled. In addition to the usual interest, bonuses that depend on the profitability of the project may be added to the mezzanine capital.
• Unsecured loan is riskier than secured loans, but also more profitable. Unsecured loans are repaid to the owner of the capital after all secured debts have been repaid.
• Secured loan is the safest and thus the least profitable type of capital. The loan is secured against a collateral, which is usually a mortgage on the assets of the company or some other type of collateral. Secured loans are always repaid in the first priority.

A great point is that a lot of information are provided for each investment to understand it and evaluate risks such as:

• investment details (borrowing company, ROI, repayment plan, location)
• the competitor’s analysis
• the investment SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
• Crowdestate risk rating

For each investment, you will even have the possibility to write your questions to the borrower and read other investors questions in a public discussion feed.

By investing €1’000 using Crowdestate for 15 years you might end up with €9’266 (€6’869 more than with the stock market).