Last updated on 24 March 2021 by Reza
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In terms of loan volume, EstateGuru is one of the 5 largest P2P platforms in Europe and among real estate platforms EstateGuru is even the market leader (January 2021). EstateGuru brokers loans from users to real estate companies, which realize real estate projects with the loans.
The platform brokers senior and junior real estate loans. In particular, the offer of first-ranking real estate loans is exciting for investors, as comparable platforms usually only broker subordinated loans.
Introduction of EstateGuru as a P2P platform
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The platform EstateGuru(EstateGuru OÜ) exists since 2014 and was founded by Marek Pärtel in Estonia. As of today, the platform is not supervised by the Estonian Financial Market Authority (FCA ). However, it has an official license in countries where that is required, for example, Germany.
EstateGuru OÜ at a glance
- More than 60,000 registered investors
- Approx. 300 million euros in loans granted
- Average expected return of 12% p.a.
- Lending mainly in Estonia, Latvia, Lithuania, Finland and opportunistically in Germany, Sweden, Spain and Portugal
- Auto Invest feature allows investors to invest fully automatically
- You can invest in loans from an amount of 50 euros
- Secondary market is offered
- A tax certificate is offered
Who can invest on EstateGuru?
As a private investor, you must be at least 18 years old and have a bank account in a member state of the European Economic Area or Switzerland to invest on EstateGuru. In addition, the platform performs a money laundering protection check.
Companies can also invest on EstateGuru. To do this, you must first register with your name and select at the end of the registration that it is a company account. The full name of your company, the correct company registry code and a valid government identification document are required.
Mediation of P2P loans on EstateGuru
The EstateGuru platform brokers the loans directly on the platform.
At EstateGuru, users invest exclusively in real estate projects. Loans are granted in the Baltic States and occasionally in other European countries, such as Germany.
Loan-To-Value (LTV) ratios on EstateGuru
EstateGuru evaluates the creditworthiness of each project through the Loan-To-Value ratio . This is not a peculiarity of the platform, but a typical ratio in the real estate business.
With the Loan-To-Value ratio, the lower the Loan-To-Value ratio, the lower the risk.
Because this is so important, let's illustrate this with an example: a real estate loan of €300,000 with a property value of €400,000 results in an LTV ratio of 75%. With a loan of 200,000 the LTV drops to 50% and with a loan of €400,000 it rises to a value of 100%.
The LTV ratio is such an important figure in the real estate industry because investors quickly determine how high the "buffer" is should something go wrong and a foreclosure occur.
Since real estate is an illiquid investment and no daily price can be determined, you cannot assume that an LTV of 100% will fully protect you in the event of a loan default.
Collateralization of loans on EstateGuru
All loans on EstateGuru are secured.
Some loans are secured on a first priority basis and other loans are secured on a second priority basis.
First priority loans are safer than second priority loans because the lenders of first priority loans get paid first if there is a default. Secondary borrowers then only get something if there is anything left over.
Different types of loans on EstateGuru
EstateGuru offers three different loan types:
- Development loan
- Bridging loan
- Business loan
Generally, development loans are riskier because the valuation of the underlying property values can fluctuate greatly and has not yet been determined. A newly built or restructured property has yet to prove that it can generate the returns that are expected.
You should not underestimate this risk. It can sometimes come to very nasty surprises.
EstateGuru is the largest European P2P platform for real estate loans and has been on the market since 2014. Among other things, it was able to become the market leader for P2P real estate loans because it does a lot right.
There arevery detailed reports on the individual real estate projects. There is extensive information on the LTV ratio, collateral and type of real estate loan.
There have been no known problems with the platform since 2014. There are no negative press reports and investors have had no negative experiences with the platform to date. Major defaults did not occur either.
How did EstateGuru perform during the Corona crisis?
The EstateGuru platform has performed well to very well during the financial crisis.
Although the volume of loans decreased at the beginning of the Corona crisis (March 2020), there were no significant defaults on the platform.
However, we would like to restrictively mention that the real estate sector was one of the big winners of the Corona crisis. Contrary to what many expected, the Corona crisis actually increased the demand for real estate worldwideonce again.
How crisis-proof the platform is in the end, it can only prove in a real estate crisis, as we have experienced for example with the American subprime crisis in 2008/2009.
Advantages and disadvantages of EstateGuru
- On EstateGuru you can invest in P2P loans very easily. Either you invest automatically or select the projects manually.
- For investors, the platform is almost free. The platform charges its investors a service fee of €1 for withdrawals. For inactive accounts you have to pay 2,5 € per month.
- You can get your money quickly through the secondary market if you need it in the short term.
- At times, only a few projects are offered.
- Should the platform declare insolvency, this can lead to the total loss of your investments.
Registration as an investor at EstateGuru
The registration as an investor on EstateGuru is completely digitalized . You can registervery quickly and easily.
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1. register as a user on EstateGuru
Registering as a user on EstateGuru starts by visiting the website and clicking on the "CREATE ACCOUNT" button in the top right menu.
After that you click on "Investor". In the next step you enter your e-mail address and password and click on the button "REGISTER".
2. activate your e-mail address
EstateGuru sends you an email with which you can verify your email address.
Click on the link "here" to verify your email address.
3. verify your bank account and yourself
In the next step you can register as a private person or as a company.
After you have made your choice you have to fill in some personal information.
Itis important that you enter your cell phone number correctly, because EstateGuru will send you an SMS with which you also have to verify your cell phone number.
After that, you have to prove your identity in person, for this you only need your identification documents. The whole process is done digitally on your computer or smartphone, just follow the instructions.
After that, you only need to verify your bank account. The verification is done with the first transfer to your account at EstateGuru.
Deposit and withdrawal on EstateGuru
Payments on EstateGuru are made centrally via an account to which you have to transfer money.
Through the purpose of the transfer, EstateGuru can clearly allocate the funds to the investors.
If you want to deposit money, click after you have logged in on deposit / withdrawal left in the menu.
When you transfer money, you must specify the purpose of the transfer, which EstateGuru will show you under "Details". Only then the money can be assigned to your account.
If you enter wrong information, EstateGuru can not assign the money directly to your account. Then it comes to annoying delays.
The deposit can take 1-3 days. If on the 4th day the money is still not on your account, contact the support.
You can easily withdraw your money from EstateGuru.
You click on "Withdraw" in the menu on the left, then you select "Withdraw" in the main screen and enter your desired amount. For security your password is required.
After you click on Payout, your money should be in your account in 1-3 days.
Invest in P2P loans on EstateGuru
On EstateGuru it is up to you whether you want to invest manually or automatically.
Unlike other platforms, EstateGuru does not offer you several preset automatic investment features.
The automatic investment function Auto Invest is proposed to you with a few parameters that you can either simply accept or adjust.
On EstateGuru you must invest at least 50 € per loan. Otherwise, it is up to you which setting you want to use, for example, for the term and the LTV ratio.
You can also make advanced settings in Auto Invest, for example, you can exclude countries or invest only in senior loans.
Remember that the more you narrow down the settings, the smaller the number of loans you will be eligible for. This may result in Auto Invest not investing at all or investing very slowly.
On EstateGuru you can select every single loan.
However, we would advise you not to do this, as you should spread your investments in P2P loans as much as possible.
If you would invest for example 1.000 € on EstateGuru, you would have to select and evaluate 20 loans individually. Over time, this would take a lot of time.
Secondary market on EstateGuru
On EstateGuru there is a secondary market where you can sell your investments very quickly. In the same way, you can also possibly make some bargains.
What returns can be achieved on EstateGuru?
On EstateGuru you can expect an average return of 12% per year.
What costs and fees does EstateGuru charge investors?
There are virtually no fees charged to investors.
Only for withdrawals EstateGuru charges a fee of 1 €. Inactive accounts are charged €2.5 per month.
Can I automatically invest in P2P loans on EstateGuru?
Yes, EstateGuru offers you an Auto Invest feature that allows you to invest fully automated.
Can I select individual loans on EstateGuru?
Yes, you can choose any individual project you want to invest in.
Risk of investing on EstateGuru
Investing on EstateGuru is associated with risks. It arranges loans for real estate financing, which may default.
You can limit the default risk of loans on EstateGuru by investing in senior loans with low LTV ratio .
How reputable is EstateGuru?
EstateGuru has established itself as the largest real estate platform on the market and was hardly hit by the Corona crisis.
The EstateGuru platform can be classified as reputable.
There is no supervision by the Estonian Financial Market Authority. However, the platform has a license in some countries where it operates. We think that the platform and investors would benefit from regulation by the Estonian Financial Market Authority.
In Germany, for example, the platform works with Bank Varengold to meet regulatory requirements.
What are the default rates on EstateGuru?
EstateGuru does not publish default rates. Comparable platforms have default rates that range from 5% to 10%.
Is a buyback guarantee offered on EstateGuru?
Loans on EstateGuru are offered without a buyback guarantee. However, individual loans are secured by real estate or land.
Are the loans on EstateGuru protected by the deposit insurance?
No, the loans on EstateGuru are not protected by the deposit insurance.
Taxes: Tax income from P2P loans on EstateGuru
EstateGuru makes it easy for you as an investor to prepare your tax return.
Prepare your tax return on EstateGuru
You click on the link "Account balance overview" in the menu on the left. After that you only have to enter the start date and end date in the "Reports" window. Then click on the button "DOWNLOAD PDF" to download the tax report, which contains all the information you need for your tax return.
Become an investor on EstateGuru now
Whether a P2P platform suits you in the end, you can only find out yourself. EstateGuru has been able to establish itself as a successful P2P platform on the market for several reasons.
If you want to try the platform, register with our exclusive referral code to get 0.5% cashback on your investments within the first 3 months.