Create an Auto Invest Portfolio on Estateguru and set it up correctly
Last updated on 21 May 2021 by Reza
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If you invest in real estate loans on EstateGuru*, you should use the automatic investment function Auto Invest. The Auto Invest feature is convenient because it takes a lot of work off your hands. You only need to make a few settings at the beginning to invest in real estate loans on EstateGuru fully automatically. The Auto Invest feature comes in two variants, the advanced variant is open to investors who invest at least 250 € per loan.
In this post, we will show you how to properly set up the Auto Invest feature before activating it.
Auto Invest function
You can find the Auto Invest function in the menu on the left, click on the link " Auto Invest".
EstateGuru* will show you the Auto Invest function, for which EstateGuru has made some standard settings. Further up in the screen you will see that the Auto Invest function is currently disabled.
All investors can adjust the settings Amount for a loan, Term, Repayment type and LTV (Loan to Value ratio) .
The advanced settings can only be changed if you invest at least 250 € per loan. On the website EstateGuru justifies this as follows:
EstateGuru wants to prevent small investors from automatically investing in real estate loans with the highest interest rates without having looked at real estate loans first. Small investors should be forced to look at the loans before they invest.
Very handy about the Auto Invest feature at EstateGuru* is the forecast that is displayed. You are shown how many loans are expected to match your preferences in the next month and how much money would be invested each month. This way you can very quickly determine if your settings make sense.
Set EstateGuru Auto Invest correctly
Note: The content of this article is for general information purposes only and does not constitute investment advice or recommendation. The information is based on our own experience and financial knowledge. Every successful investor should do extensive research and make their own decisions based on their personal goals.
The default settings in the Auto Invest function hardly limit the offered loans in which would be invested. If you want to invest your money as soon as possible, this may make sense for you.
The default amount for a loan (maximum investment amount per loan) corresponds to the minimum amount you have to invest per loan. We consider the default setting of 50 € to be reasonable, if you want to invest your investment amount very quickly, you can also increase the value.
You should adjust the Auto Invest settings until they match your personal investment goals and there are still enough credits left over which you can spread your investment amount.
You can set the following default settings:
- Amount for one loan: maximum investment amount per loan
- Term: maximumterm of the loans
- Repayment type: how the loans are repaid, balloon, full balloon and all balloon types
- LTV: maximum loan-to-value (LTV) ratio
EstateGuru advanced settings:
You can only change the advanced settings if you have set Amount for a loan to at least €250.
- Collateral: Coll ateralization of the loans first-ranking or second-ranking
- Incremental loans: whether it is allowed to invest in incremental loans
- Refinancing loans: if it is allowed to invest in refinancing loans
- Interest rate:maximum interest rate of the loans
- Countries: Estonia, Finland, Germany, Latvia, Lithuania, Portugal, Spain and Sweden
- Invest all available funds: whether to invest in loans even below the maximum amount ( amount for one loan). For example, if you have 70 € left in the account and want to invest a maximum of 100 € per loan, the available 70 € would be fully invested with active setting.
EstateGuru Auto Invest set for conservative investors
Especially conservative investors, for whom reliable returns and quick availability of their money is important, should set the Auto Invest function correctly.
Loans on EstateGuru are not brokered with repurchase guarantees (repurchase obligations). Loans with delays remain in the investor\'s portfolio (holdings) and are not repaid until EstateGuru has been able to find a solution.
To minimize the number of loans in trouble, you should generally invest in loans with shorter terms and lower LTV ratios.
Interest rates also play a role, because with the highest interest rates you also have to expect the highest risks.
Amount for a loan
Compared to other P2P platforms, the minimum amount you need to invest per loan is already above average at €50. Since you should spread your investment in P2P loans as much as possible, it would make sense to use the default setting of 50 €. If you want to adjust the interest rate setting, you have to invest at least 250 € per loan.
However, we believe that you can sufficiently control the risk via the maturities and the loan-to-value ratio.
Most of the real estate loans on EstateGuru* have a maturity between 12 and 18 months. Although there is also a secondary market available for you to exit your loans in a timely manner, you will then have to find a buyer who will buy the loans from you. You should rely less on this and we think a maximum term of 12 months is reasonable.
The repayment types balloon and full balloon differ in whether the interest is paid regularly or at the end of the loan term. With a full balloon, interest is not paid until the end of the term.
In principle, we would therefore advise conservative investors to rather invest in balloon loans.
However, since you only invest in real estate loans with a maximum term of 12 months anyway, you could also invest in full balloon loans. The accrued interest at a maturity of 12 months should not increase the overall risk too much.
The Loan-To-Value ratio should not exceed 65% in order to tend to invest in loans that are not too highly leveraged relative to their collateral.
Collateral (Advanced Settings)
As a conservative investor, it makes sense to invest only in loans with senior collateral .
Summary for conservative investors
- Maximum investment amount per real estate loan 50 €
- Maximum term 12 months
- Repayment type only balloon (possibly also full balloon)
- LTV up to 65
- Only senior real estate loans
Auto Invest Portfolio Settings for Risk Averse Investors
If you\'re looking for double-digit returns, you\'ll find it on EstateGuru*. However, the interest rate setting, the most important setting for risk-taking investors, is only available if you invest at least 250 € per loan.
In our opinion, the Auto Invest feature only makes sense for risk-tolerant investors if they can achieve the same spread (diversification) of their investments as a conservative investor.
For example, if a conservative investor invests 500 €, he can invest his capital in 10 real estate loans (50 € per loan). To achieve the same degree of diversification, a risk-tolerant investor needs at least €2,500 (€250 per loan).
Amount for one loan
The advanced settings, which include the interest rate setting, are only available to investors who invest at least 250 € per loan. Therefore, you must specify 250 € in the Amount for one loan setting. We consider higher amounts to be less useful, as they contradict the principle of risk spreading.
Most real estate loans on EstateGuru run 12 to 18 months. For longer terms, you as an investor will receive higher interest rates, so you should preferably investin real estate loans with terms up to 18 months.
You can keep the default setting All types.
You have to choose between up to 70% and up to 75%. The experience in the lending business has shown that not the riskiest loans automatically lead to the highest returns. Therefore, up to 70% may make more sense.
Security (Advanced settings)
If you want higher interest rates, you have to accept higher risks. Therefore, you should invest in senior and subordinated loans.
Interest (Advanced settings)
Interest rate settings are where most mistakes are made. Many investors think that if they only invest in loans with the highest interest rates, they will then also achieve the highest returns.
As a consequence, they build a portfolio that consists to a very large extent of delayed or defaulted loans. That is why you should not only invest in the loans with the highest interest rates.
Real estate loans with an attractive return and risk ratio often have interest rates that are slightly above average. EstateGuru* shows 8%+, 9%+, 10%+ and 11%+ as possible interest rates. The average is 9%. For us, 9%+ seems to make sense as a setting; those who are particularly risk-averse can also select 10%+.
Summary for risk-averse investors
- Maximum investment amount per real estate loan 250 €
- Maximum term of 18 months
- Repayment type All types
- LTV either up to 70% or up to 75%.
- Senior and subordinated real estate loans
- 9%+, for very risk-averse investors 10%+.
EstateGuru Auto Invest control
After you have set and activated the Auto Invest feature, you should check your portfolio after 3-4 days on EstateGuru*. Especially on EstateGuru there are always bottlenecks in the loans offered and it is not uncommon that you have to wait a little longer until you are fully invested.
If it takes a little longer, that\'s still no reason to panic. Regardless of whether you follow a conservative or offensive strategy on EstateGuru, pretty much all loans run for at least 12 months. A few days is not important.
If you want to be invested very quickly, it can also make sense to use the secondary market on EstateGuru and then activate the Auto Invest function.
Auto Invest does not invest
Sometimes it can happen that the Auto Invest function does not invest. Often investors then assume that the function is not working properly. The real background is often that no loans were offered that matched the settings of the Auto Invest function.
For example, if you only want to invest in loans with an LTV of maximum 60%, but no loans with LTV ratios below 60% have been offered in the last two weeks, the Auto Invest function has correctly invested in no loans for you.
What do I do if there are no loans available on EstateGuru?
In this situation, you have no choice but to be patient on EstateGuru.
Alternatively, you may be able to buy loans on the secondary market, provided the loans offered match your investment strategy.
How often should I check my Auto Invest portfolio?
The loans on EstateGuru run on average for at least 12 months. If you are fully invested, it should be enough to check your loans once a month (or less often).
If you have a riskier investment strategy, it may make sense to check your investments more often.