5 Min. Read

EstateGuru Review: Is it good? Don't invest before you read this! (11/2022)

EstateGuru

EstateGuru

Tartu mnt 10, 10145 Tallinn

Test result

3.16 of 5

1% Cashback on EstateGuru

Safety

info icon
2.50

Interest & Risks

info icon
3.90

Features

info icon
3.00

Advantages

  • Experienced platform

  • Invest free of charge

  • Automatic investment function

  • Secondary market

Disadvantages

  • Unregulated

  • Comparatively low Ø interest rates

  • No buyback guarantee

  • No app

How good is EstateGuru?

If that's what you want to know, then keep reading.

We took a close look at the platform and tell you whether it's worth it.

In this test, we show you:

What is EstateGuru?

Infographic: how does Estateguru work

EstateGuru is a P2P platform based in Tallinn, Estonia, founded in 2013.

The platform offers real estate loans that real estate developers use to finance their projects.

Since its inception, the platform has funded more than €600 million worth of loans, making it one of the mid-sized P2P platforms in Europe.

And among real estate platforms, it is the market leader.

How does EstateGuru work?

To get started as an investor on EstateGuru, you first need to register and deposit money into your account via a bank transfer.

By the way, with a first bank transfer you also confirm the bank account to which you can make payouts in the future.

After that, you can invest directly in the offered loans.

For investments, the platform requires a minimum investment amount of €50. Otherwise, you do not have to consider any other conditions.

You can choose whether you want to invest manually or automatically.

Moreover, you can invest EstateGuru both on the primary market (initial issuance of loans) and on the secondary market (loans from other investors).

Features

In the following, we would like to present the most important features of the platform.

Regulation

EstateGuru is not regulated by the Estonian Financial Market Authority.

According to EstateGuru's opinion, the platform is not subject to the same rules as other financial companies, and this opinion was also confirmed by the Estonian regulator.

In Estonia, the supervisor's view is that crowdfunding platforms should regulate themselves, following FinanceEstonia's best practice guidelines.

In this context, EstateGuru received a Best Practice award in January 2020.

Loans

The average interest rate on loans is 11% and loans are offered with interest rates ranging from 7% to 11%.

In comparison, the average interest rates are below average, and several platforms offer higher interest rates at once.

These are, among others, viainvest with 13% and Mintos with 12% and among the real estate platforms Reinvest24 stands out with about 17%.

On EstateGuru, only real estate loans from 8 countries are offered, but most of them come from:

  • Estonia,

  • Lithuania,

  • Germany,

  • Latvia and

  • Finland.

Maturities range from 6 to 36 months, while most loans have a maturity of approximately 12 months.

Furthermore, loans differ by balloon vs. full balloon, by loan-to-value ratio, and by senior and junior.

Quickly explained

Full balloon loans are riskier, and the same is true for loans with a higher LTV and for second tier loans.

Second-ranking loans are riskier because they are serviced later than first-ranking loans in case of failure of the real estate project (insolvency).

Manual investing

On EstateGuru, you have the possibility to select each loan you want to invest in individually.

This makes sense, especially in the beginning, when you intend to invest your investment amount quickly.

You can also use the secondary market, if there are not enough loans on the primary market that meet your requirements.

Auto Invest

You can automatically invest in the loans with Auto Invest.

Especially convenient in this context is that you can also choose from three preset strategies, which differ according to return and risk expectation:

  • Conservative,

  • Balanced and

  • Individual (set your own strategy).

We have taken a closer look at the suggested strategies and consider them to be appropriate.

However, if you want to follow your own strategy, you can set various preferences.

The most important ones are:

  • Investment per credit,

  • interest rate,

  • loan term,

  • loan type,

  • Repayment type,

  • LTV and

  • collateral.

Loan-To-Value (LTV).

On EstateGuru, the risk of real estate loans is evaluated with the Loan-To-Value ratio.

This is not a peculiarity of the platform, but a typical ratio in the real estate business.

With Loan-To-Value, the lower the Loan-To-Value ratio, the lower the risk.

Example

A real estate loan of €300,000 with a property value of €400,000 has an LTV of 75%.

A real estate loan of €200,000 at a real estate value of €400,000 has an LTV of 50%.

As with other financial investments, more debt taken on in relation to the existing value leads to higher risks: This relationship is represented by the LTV as a ratio.

Balloon vs. full balloon

Estateguru Balloon and full balloon

A special feature on EstateGuru is that loans are offered with the repayment types "balloon" and "full balloon".

Many new investors are a bit confused by the terms at the beginning, and you may feel the same way.

Fortunately, there is a simple concept behind it.

A balloon is a bullet loan, also known as a "bullet loan": With these loans, the loan is not repaid (amortized) over the term and is paid back in one lump sum at the end.

A full balloon is then, if you like, a step up from a balloon: with it, the loan is not repaid (amortized) and also the interest is not paid until the end.

Basically, full balloon loans are riskier than balloon loans because it is not decided until the end of the term whether you will get any interest at all for your money.

However, this risk is compensated by higher interest rates for full balloon loans compared to balloon loans.

Secondary Market (Secondary Market)

On EstateGuru, a secondary market is offered that you can use to get out of your loans earlier or to buy others' loans.

Essentially, the market is no different from the primary market, except that it shows you the discounts and markups on the loans.

In our opinion, it is kept arranged clearly, and you can invest in a loan with one click.

Unfortunately, as mentioned above, it is not possible to automatically invest in the loans of the secondary market.

Tax report

On EstateGuru, you can download a tax report with just a few clicks.

You just have to specify for which period (year) you want the report to be generated.

App

Unfortunately, the platform does not offer its investors an app to manage their investments.

Currently, we do not expect this to change in the future.

How much does investing on EstateGuru cost?

Investing is basically free on EstateGuru.

You can invest in loans on the primary market without any fees.

But for sales on the secondary market, the platform charges a fee of 2% of the amount.

And for cash withdrawals, a fee of €1 is also charged.

Warning signals (red flags)

Currently, we have not noticed any warning signals with EstateGuru.

EstateGuru Referral and Cashback

You can get a cashback of 0.5% on EstateGuru if you use our cashback link.

For the calculation of the cashback, your investments during the first 90 days (3 months) after your registration are considered.

0.5% cashback on EstateGuru

Frequently asked questions

Below, we address some questions that are often asked about EstateGuru.

EstateGuru is regrettably not regulated by an official financial market regulator, which typically dispels any doubts about its safety.

Nevertheless, we would rate EstateGuru as a safe platform.

This is supported by the fact that the platform has financed loans worth more than €600 million, and this would not have been possible without a legal business model.

How does EstateGuru earn money?

EstateGuru makes 90% of its money from commissions charged to real estate developers.

In addition, there are management fees and other revenues.

Who owns EstateGuru?

EstateGuru was founded by Marek Pärtel, Kaspar Kaljuvee and Marko Arro, who together hold the largest stake in the platform to date, at around 70%.

The remaining 30% is divided between angel investors, venture capital funds and smaller private investors (crowdfunding).

Expert conclusion

EstateGuru is a safe P2P platform with a financed loan volume of more than €600 million.

Although the interest rates are still in an attractive range, they could be a bit higher compared to other platforms. For investors, the use of the platform is almost free of charge, the only exception being the secondary market fees.

After a quick registration and an uncomplicated deposit, it is easy to invest in loans via Auto Invest.

What we miss most about EstateGuru is an official regulation, or the prospect of it. Eventually, that should be the intention of the platform. That would also have a strong impact on our overall rating.

In summary, we think the platform is recommendable.

0.5% cashback on EstateGuru

Not convinced? These are the alternatives

Last updated on 16 October 2022