EstateGuru, once a leading European peer-to-peer (P2P) platform for short-term, property-backed loans, has faced significant challenges in recent years, leading to a decline in performance and investor confidence. This review will delve deeper into EstateGuru’s current difficulties, exploring the reasons behind its challenges, the impact on investors, and the overall outlook for the platform.

Background on EstateGuru

Founded in 2014, EstateGuru aimed to provide an accessible platform for small investors to participate in property-backed loans, primarily across Europe. The platform quickly gained popularity due to its transparency, low minimum investment threshold, and seemingly attractive yields. Over the years, EstateGuru expanded into several new markets, including Germany, Finland, and the Baltic states, rapidly increasing its loan book.

Historically, EstateGuru focused on providing short-term financing to property developers and small businesses, typically for bridge financing, development projects, or refinancing purposes. Investors were attracted by the relatively high interest rates offered—often ranging from 9% to 12%—and the security provided by property-backed loans. Additionally, the platform’s user-friendly interface, transparency, and low barriers to entry made it appealing to retail investors seeking exposure to real estate.

However, as EstateGuru aggressively pursued expansion, it began to face significant challenges. The rapid scaling of operations and entry into new markets exposed weaknesses in their risk management and underwriting practices. What was once a platform known for its transparency and reliable returns has struggled to maintain these standards in light of increased defaults and operational pressures.

Escalating Default Rates

The platform’s aggressive expansion strategy, particularly into markets like Germany and Finland, has resulted in a substantial increase in loan defaults. As of November 2024, over 50% of EstateGuru’s outstanding loans are in default, raising serious concerns about the platform’s risk assessment and management practices (p2pempire.com). The rapid scaling of loan volume appears to have strained EstateGuru’s ability to adequately vet borrowers, leading to an increase in poor-quality loans.

Defaults are especially prevalent in newer markets, where EstateGuru’s local knowledge and borrower relationships are less robust compared to its initial markets in Estonia and Latvia. Investors are now experiencing prolonged recovery times, which negatively affects liquidity and undermines the confidence that was previously associated with the platform’s secured loan structure. It highlights a failure to adapt underwriting standards effectively to different regulatory environments and borrower profiles.

Financial Instability

EstateGuru’s financial health has also deteriorated, with the company reporting a loss of €5.88 million in its latest annual report. Despite an 11% increase in revenue to €8 million, operating costs and employee expenses surged, contributing to the substantial loss. The increased operational expenses are attributed in part to the establishment of new offices, expansion of the workforce, and higher costs associated with managing the growing volume of non-performing loans.

The challenges have been compounded by rising interest rates and changes in investor sentiment. Many retail investors are re-evaluating their risk tolerance, particularly given broader economic uncertainties across Europe. The decline in investor appetite for higher-risk loans has led to reduced funding availability on EstateGuru’s platform, causing delays in financing for new projects and in turn reducing EstateGuru’s commission income.

Investor Returns Under Pressure

High default rates have directly impacted investor returns. While EstateGuru previously offered attractive yields, the current performance indicates that the advertised returns are not attainable for broadly diversified portfolios. Many investors are now receiving little to no interest due to prolonged default recovery processes, and some have even faced principal losses.

Investors who joined EstateGuru during its earlier years might still remember the platform as a reliable source of passive income, but the recent trends have significantly altered this perception. EstateGuru’s communication regarding loan recovery processes has also been criticized for lacking transparency. Many investors are frustrated by the vague updates provided on defaulted projects, making it challenging to assess the likelihood of recovering their funds.

Moreover, EstateGuru’s secondary market, which once offered a potential exit route for investors, has also seen a decline in liquidity. The introduction of new fees has discouraged many users from actively trading loans on the platform, further reducing opportunities for investors to exit underperforming investments.

Management and Strategic Challenges

The company’s rapid expansion into new markets has led to operational difficulties. Management is now focusing on resolving legacy portfolio issues in these regions to maximize returns for investors. EstateGuru has admitted that its underwriting processes did not sufficiently account for the unique risks presented in each new market, leading to inconsistencies in loan performance.

To address these issues, EstateGuru has stated that they are enhancing their due diligence procedures, implementing stricter borrower vetting, and restructuring their debt recovery team. However, these efforts are yet to produce tangible improvements in default rates or recovery timelines. Investors are understandably cautious, as the platform attempts to navigate these operational changes while managing an increasingly skeptical user base.

EstateGuru’s leadership has also faced scrutiny, with critics pointing to a lack of proactive measures during the early signs of loan defaults. Instead of curbing expansion and focusing on improving the quality of the existing loan book, EstateGuru pursued growth, which now appears to have been an unsustainable strategy. Additionally, their focus on scaling into new jurisdictions without fully understanding the local real estate markets has been a critical misstep.

Increased Investor Fees

In response to financial strains, EstateGuru has introduced additional fees for investors, including a 3% secondary market transaction fee, a €3 withdrawal fee, and a €10 monthly inactivity fee for accounts without investments in the past 12 months. These fee increases have been poorly received by the investor community, who feel penalized at a time when they are already grappling with high default rates and diminished returns.

The introduction of these fees appears to be an attempt to stabilize EstateGuru’s financial position by generating additional income from the existing investor base. However, such measures could further alienate current investors and discourage new ones from joining. The secondary market fee, in particular, has reduced the attractiveness of using the platform’s secondary market to exit investments, resulting in lower liquidity and more difficulties for investors looking to sell off troubled loans.

Impact on Investor Sentiment

The combination of escalating default rates, increased fees, and financial instability has taken a significant toll on investor sentiment. Investors who once praised EstateGuru for its simplicity, transparency, and strong returns are now voicing their dissatisfaction across various investment forums and social media. Complaints often center around poor communication, the lack of transparency in loan updates, and the inability to exit investments without incurring heavy losses.

The drop in sentiment has also led to a reduction in new capital flowing onto the platform. EstateGuru previously relied heavily on reinvestment from satisfied investors, but with the current climate, many investors are opting to withdraw funds rather than reinvest. This has created a funding gap that EstateGuru is struggling to fill, further exacerbating the issues faced by borrowers who rely on the platform for financing.

Salvaging Positive Aspects

Despite recent challenges, EstateGuru has historically provided opportunities for investors to participate in real estate projects with a low minimum investment threshold. The platform’s focus on property-backed loans offered a level of collateral security, and its user-friendly interface and auto-invest features were well received by investors. In its earlier years, EstateGuru successfully funded numerous projects and provided steady returns to its investors.

The diversification opportunities offered by EstateGuru—across geographies and types of real estate projects—remain appealing in theory. For those willing to accept higher risks, EstateGuru could still offer potentially lucrative opportunities if the company manages to turn its operations around. The fact that all loans are secured by real estate means there is still some hope for recovery, even if the timeline is uncertain and often delayed.

⚙️ How does EstateGuru Work?

EstateGuru requires a minimum of €50 to start investing in real estate projects operating in 6 countries: Estonia, Latvia, Lithuania, Spain, Finland, and Portugal. This minimum amount is significantly higher than other crowdlending platforms such as Mintos.

The platform obliges builders, developers or owners to present a business plan and an exit strategy which is reviewed in detail. Once this is approved by EstateGuru’s risk experts, the project is released on the platform and made available to its investors.

Once the loan is fully funded, the contracts are signed and the funds are released to the borrower. Each loan is secured with a mortgage, usually a first rank one (93%).

The upside for borrowers is that through EstateGuru, they get access to funds up to 5 times faster than through traditional banking procedures and at better rates than those provided by standard non-bank lenders.

Should the syndication period, the length of time that a loan can be open to investors on the platform, expire before it reaches its target loan, all funds are returned to the investors’ virtual accounts.

EstateGuru’s business model is to finance projects which have solid collateral, using first-rank mortgages, which is the most straightforward and secure type of funding in real estate lending.

Real estate is currently regarded as the best kind of collateral since it is something utterly physical and visible. EstateGuru also uses residential real estate as collateral. The rationale here is that people will always need a home and place to live, so the demand for real estate is not going to suddenly disappear. The value might fluctuate, but long-term it’s always going to be there. On the other hand, for example, a company can go bankrupt and thus its value will go down to zero with no chances of ever recovering. Hence it is a much weaker form of collateral.

✍🏻 Registering to EstateGuru

EstateGuru’s website is clean, user-friendly and well-designed. It comes in 5 different languages: English, Estonian, Latvian, German and Russian, with an online chat system available in which team members typically reply within 20 minutes.

Signing up is fast and requires 5 simple steps to get in and start investing.

The platform allows users to register through email, Facebook or Gmail. I always suggest setting up a specific password for each platform for added security.

Upon verifying the email, simply enter the investor or company representative information. EstateGuru also presents you with the option of 2-step authentication.

Next, you can either upload your passport, ID card or driving license manually or by using Veriff, an online identity verification system which uses your phone camera or webcam to confirm your identity.

The final step in the registering process is the KYC section. This step is required to be compliant with anti-money laundering laws.

Once your registration is complete, head over to your dashboard for an overview of your portfolio. Here you can submit your first deposit, which must be done via a regular European bank payment transfer (SEPA).

Following your first deposit, EstateGuru allows for transfers via LHV Bank Link, as well as third-party service providers such as Trustly, TransferWise, Revolut, N26, Lemonway, and Paysera.

🏘️ What Can You Invest In?

One of the benefits of investing your money in a crowdlending platform such as EstateGuru is that you get to choose which projects you wish to invest in.

You will notice that certain projects are split up into stages. Since the platform only lends against the current value of the collateral and not the future value, EstateGuru makes use of the stage financing method. By scheduling the project in stages, the borrower can increase the collateral value of the property by developing it further with the acquired funds. In this way, the investment amount increases at each stage of the project, due to the LTV increase.

Conveniently, EstateGuru allows investors to filter by interest rate, LTV, Country and Schedule Type. Schedule Types come in the forms of Annuity, Bullet or Full Bullet, the latter being the riskiest out of the three.

In an annuity-type schedule, both the loan interest and the principal will be paid periodically. In a bullet-type schedule, the loan interest will be paid periodically, with the principal amount being paid at the end of the loan period. Consequently, in a full bullet type schedule, both the interest and the principal will be paid at the end of the loan period.

At the time of this review, their latest investments were presenting higher loan amounts with Bullet type schedules. This shows an increase in higher-risk investments compared to their previous projects.

EstateGuru presents investors with extensive information regarding each project and the borrower.

This includes:

• A general overview of the project
• Loan terms, including the Loan to Value (LTV) rate
• Collateral information
• A description of the commercial market of the respective country
• Borrower information and any previous projects

The project pages provide images of the development, and in some cases, renders of the proposed finished product.

Another great feature is that the address and map for each project are listed on the right-hand side of each project page. This is coupled with an appraisal report.

You will notice that certain projects have an added 1% bonus to their annual interests. This means that the borrower adds this bonus for any investments of €10,000 or more.

With no fees for investors, it is encouraged to diversify your portfolio as much as possible to mitigate risk and maximize returns.

How Secure are These Investments?

EstateGuru employs a business model that places a high priority on security, a conservative approach to risk, liquidity, a focus on short-term loans, and the fact that the real estate market is most likely to suffer less than other industries in this crisis.

Over 90% of the loans offered on EstateGuru’s platform are secured with a first rank mortgage. This means that, in the rare cases where loans go into default, investors are offered great protection against loss of capital.

As an additional layer of security, the average Loan to Value (LTV) level on the platform is below 60%. This buffer means that even a significant drop in real estate values will not impact investors’ capital or the ability to recover principal loan amounts in the case of defaults.

EstateGuru have always been very conservative in terms of risk. They emphasize the fact that they thoroughly analyze every project (borrower, collateral, business plan) no matter how small the loan amount.

Real estate, by its very nature, makes valuation easy and offers a level of predictability that other markets in the P2P industry cannot match. Sending an independent evaluator with local knowledge to a property to determine the viability of the application offers great transparency when EstateGuru determines LTV rates. In addition, they always double-check using Automatic Valuation Models.

EstateGuru’s LTV rates are calculated on the current value of the property, never the projected future value.

As we are seeing, many of the P2P platforms that are struggling generally act as middlemen between investors and loan originators. This adds a murky third layer to the entire exercise and it can be very hard for investors to know exactly who they are funding.

As the P2P market has grown to become a widespread asset class with a proliferation of platforms vying for investments, the number of companies offering this service has grown exponentially.

Despite all this, EstateGuru has shown clear signs of mismanagement as many of their loans have not been recovered.

🕵️ Transparency

EstateGuru’s CEO and co-founder Marek Pärtel has been involved in the real estate industry since 2002. He is joined by Kristjan-Thor Vähi, who currently acts as a passive co-founder within the platform. Pärtel is also the co-founder of Invego – a property development group, of which Vähi is the Managing Partner.

EstateGuru promotes transparency throughout its website, with statistics and annual reports easily found in their footer section. EstateGuru was very responsive to any questions relating to the people behind the platform, a very good sign for any platform.

The team members behind the platform are all listed, together with their LinkedIn profiles and email addresses. The EstateGuru team consists of finance, banking, IT and real estate experts. Whenever Marek publishes posts on the company’s blog he writes in flawless English and communicates his ideas very clearly. As an investor, I really appreciate having someone like him at the helm of a platform I’m putting my trust in.

🙋 FAQs

Who can invest in EstateGuru?

Any individual above 18 years of age who has a bank account in any of the EEA member states or Switzerland can invest on the platform.

What is the average LTV?

EstateGuru guarantees an average LTV (Loan to Value) of 60% (max 75%). The LTV is the ratio between real estate value and real estate debt. A property valued at €100,000 with a loan amount of €70,000 results in an LTV ratio of 70%. EstateGuru’s maximum lending rate is 75% and on average it is even lower at around 60%.

What is the project investment period?

Investment periods (the period in which the loan will be repaid) and loan terms for EstateGuru’s selection of real estate projects varies between six months and two years.

What is the difference between a development, bridge, and business loan?

A development loan is a loan used to finance the construction or planning process of a project.

A bridge loan is a short-term loan used until permanent financing is secured, or current obligations met. It provides immediate cash flow required to achieve a specific target, such as enhancing the value of the property or selling the underlying asset.

A business loan is a loan used to cover day-to-day expenses of the firm, acquisition of goods or equipment, business expansion, pending obligations, etc.

All EstateGuru’s loans are secured with a mortgage, regardless of type.

Does EstateGuru have an Auto Invest feature?

Yes, EstateGuru provides an Auto Invest feature starting from €50, with advanced settings available from €250.

Does EstateGuru have a secondary market?

Yes, EstateGuru’s secondary market can be used as a liquidity facility.

Can I invest through my mobile phone?

Although EstateGuru does not have a specifically designed App, the website works well on all devices, so you can keep track of your investments on the go.

Will I be notified of any deal alerts?

EstateGuru allows users to dictate the amount of information being sent through notifications to make the most out of deals on the platform. You can opt for notifications regarding every single investment opportunity that comes up, or take a broader approach with updates at regular intervals. It’s all up to you.

Conclusion

Given the significant challenges that EstateGuru has faced over the past year, potential investors should exercise caution and conduct thorough due diligence before investing. The high default rates, combined with increased fees and prolonged recovery timelines, have made EstateGuru a much riskier platform than it was in its earlier years. Existing investors are advised to closely monitor their portfolios, stay informed about the platform’s ongoing recovery efforts, and carefully evaluate whether the risk-reward profile still aligns with their investment goals.

While EstateGuru is attempting to address its current difficulties through enhanced due diligence and management restructuring, it remains to be seen whether these changes will be effective. For now, the platform may no longer be suitable for conservative investors seeking stable, passive income. Instead, it may appeal to those who are willing to take on substantial risk in the hope of benefiting from potential future improvements in the platform’s performance.

Alternative real estate platforms that you can try instead are Raizers in France, StockCrowdIN and Brickstarter in Spain, and CrowdProperty in the UK, thus obtaining a well-diversified property portfolio.