Category: Money | Page 29

How P2P Lending and Property Crowdlending is Taxed in Spain

Last updated: September 29, 20225 Comments

Crowdlending is very popular in Spain, and I have written about my experience with property crowdfunding platforms in Spain before. For the purposes of this article, crowdlending and crowdfunding are interchangeable as they are treated the same for tax purposes.

This includes P2P lending platforms in Europe; as a Spanish resident this income will also be taxed according to the savings rates.

Any interest obtained is declared as benefits from movable capital. This is pretty much the same as profits obtained from deposits or dividends from stocks. You need to declare interest even if that same interest has been re-invested or never withdrawn from the crowdfunding platform. If you receive dividends in 2020, you will declare them in 2021; always one year later.

In the IRPF form, look for box number 23, where you will need to insert the total amount of profits, without discounting any retenciones imposed by the platform.

If you are receiving dividends from foreign crowdlending platforms, they will be declared in the same way as the Spanish ones. Remember that in the IRPF you declare your worldwide income. There is no other obligation to comply with when investing in foreign platforms.

Most Spanish crowdfunding platforms will automatically deduct 19% from your profits and declare them to Hacienda. Once you access your Hacienda account, you will be able to see all your retenciones.

Income from property crowdfunding is classified as savings income in Spain. There are the following tax bands in place:

Spanish tax rate on savings income up to €6,000: 19%
Spanish tax rate on savings income from €6,000 to €50,000: 21%
Spanish tax rate on savings income over €50,000 to €140,000: 23%
Spanish tax rate on savings income over €140,000: 27%

You might have noticed that the lowest band is 19%, and that is why the Spanish crowdfunding platforms automatically pay tax of 19% on your behalf. If your income from such platforms is higher than €6,000, you will have to pay additional tax according to the bands above.

If you are participating in property crowdfunding on platforms that are based outside of Spain, they will normally send you the full proceeds from any dividends or capital gains due to sales of property. You will then have to declare the income on your IRPF tax form, which is due for submission between April and June of the following year.

I hope that helps you understand what taxes you typically have to pay after investing in property crowdfunding platforms.

Note that you will also have to take into consideration the Modelo 720 when thinking about taxation and reporting. While modelo 720 does not require the declaration of any loans given out to thid parties, you might have idle cash sitting in your platform’s accounts and sometimes these need to be declared.

If you have any further questions let me know and I’ll do my best to answer them.

You can find more information about paying taxes in Spain on this site.

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Please note that I am not an accountant or financial advisor, the above is the fruit of my personal research, and might contain inaccuracies. Before you submit any tax returns, I highly recommend you contact a tax consultant or accountant to check your numbers.

How to Open a Maltese Personal Bank Account

Last updated: January 04, 2024Leave a Comment

One of the first steps in establishing a life in Malta is opening a bank account. In this article, I will talk about the typical process for opening an account at a local bank, and some alternatives if that doesn’t work out for you. Unfortunately, banks in Malta have become excessively stringent and many people, especially expats, are finding it impossible to open a bank account with one of the local banks.

1. Choosing the Right Bank

There are several banks in Malta, both local and international, that offer various banking services to individuals. Some of the most prominent banks include:

Bank of Valletta (BOV)
HSBC Malta
APS Bank
Lombard Bank
Banif Bank (now BNF Bank)

Each bank has its own set of account options and fees, so it is essential to research and compare their offerings to find the one that best suits your needs.

2. Required Documentation

When opening a bank account in Malta, you will need to provide the following documents:

A valid passport or national ID card (for EU/EEA nationals)
Proof of address (e.g., a utility bill or rental agreement)
A reference letter from your current bank or a bank statement
Proof of income or employment (e.g., a payslip, an employment contract, or a pension statement)
Tax Identification Number (TIN) or Social Security Number (if applicable)

Some banks may also require additional documentation, so it is advisable to check with your chosen bank for any specific requirements.

3. Opening a Bank Account in Person

Most banks in Malta require individuals to open an account in person at one of their local branches. It is a good idea to schedule an appointment with the bank to ensure a smooth and efficient process. During the appointment, you will be asked to present the required documentation and complete an application form. The bank may also ask about the purpose of the account, the source of funds, and your expected banking activity.

4. Opening a Bank Account Remotely

In some cases, it may be possible to open a Maltese bank account remotely. However, this option is usually limited to individuals who already have a relationship with the bank or can provide a strong reference from their current bank. Additionally, remote account opening may involve more stringent documentation requirements, such as notarized copies of your documents.

5. Bank Account Features and Fees

Maltese bank accounts typically offer various features, such as online banking, debit cards, and access to a network of ATMs. However, it is essential to be aware of the fees associated with these services. Some banks charge monthly account maintenance fees, transaction fees, or fees for using ATMs outside of their network. Make sure to review the fee structure of your chosen bank to avoid any unexpected costs.

BoV VS HSBC

The two big banks in Malta are HSBC and Bank of Valletta.

Here are some of my notes on opening and maintaining bank accounts with both of these banks.

Internet Banking

Although BOV revamped their internet banking system in 2018, they only made it even worse than before, both looks and functionality-wise. HSBC offers a clean interface and an easy way to contact bank officials and get your queries resolved in a timely manner via the internet banking interface. I’ve previously sent messages to BOV from the internet banking that I never got replies to.

The internet banking key of HSBC is also much thinner and thus is easier to carry around.

Branches

HSBC is a clear winner here. Staff is professional and smart, and the offices are modern and well appointed. BOV offices seem to be older and badly designed.

Getting Things Done

HSBC has a reputation of being tougher with their requirements than BOV. Nowadays, however, both of them have strict procedures to adhere to, and if you follow the procedure, I’ve actually found dealing with HSBC to be a more pleasant experience and always very efficient.

Crypto-Friendliness

BoV does not allow outgoing transfers to crypto exchanges, while incoming transfers might also be subject to checks and blocks. HSBC also prevents its users from interacting with crypto exchanges.

ATMs

Again, I think the HSBC ATMs are easier to use and easier to access.

Fees

BOV charge €60/year if your residential address is outside of Malta. HSBC charges €30/month to companies, while BOV doesn’t.

Which Bank Should You Use?

I’ve always believed that it’s always safer to use two banks rather than one. It gives you more peace of mind in the unlikely event of things going south. It also gives you the opportunity to compare and contrast banks and take your business to the one that serves you best. It might also very well be the case that one bank excels in one area but is poor in another and vice versa.

After holding accounts with both BoV and HSBC for more than 20 years, I’ve decided to shut down my BoV account for two reasons. One is that their new internet banking system is horrendous, and second because every year I kept getting hit by some new hidden charge or issue and I’m tired of dealing with them anymore. HSBC have always been the more professional bank so I’m sticking with them.

It is also worth noting that in recent years we have seen the rise of virtual banks such as Revolut and N26, and they offer a far superior experience to the normal customer who just wants an account to deposit money and spend accordingly.

I think N26 has the edge at the moment, and they provide spending analysis via their impressive mobile app, something that will probably take years before BOV or HSBC can implement. They also provide the ability to link smartphones to your account and thus pay through your phone. If you need direct debit facilities, European businesses are now obliged to accept direct debits from non-local banks, so this is no longer a reason for needing a local bank account. N26 will do just fine. However, last time I checked, N26 is not available for Maltese residents yet.

Another option is to open an account with Wise. This can work both as an individual or as a business, and indeed, many of the companies who are opening up in Malta use Wise as their banking partner, due to the difficulties in opening a bank account with a Maltese bank at the moment.

So right now, the best two options for residents in Malta are:

Wise
Revolut

Both will you give you a multiple currency account (USD, EUR, etc). What you would need to do is transfer money out from your BOV account and into your Transferwise or Revolut account. Then from there you can transfer onwards into your cryptocurrency exchange of choice, no problems at all. The same applies for withdrawing money from exchanges, it works the other way round as well.

If you want to learn more about Wise, check out my previous post on Borderless Banking. Another bonus of using Wise and Revolut is that you will be able to get much better rates when converting from one currency to another. The classic case for Maltese people who work in the UK is converting money between GBP and EUR and vice versa. By using Wise or Revolut they can get better rates than when using a Maltese bank to do the conversion.

Open a Revolut account | Wise account

What about Crypto Transfers?

The big banks have proven to be reluctant to deal with crypto, so you’d need to look at the smaller banks. Unfortunately, due to Malta being a small country, there aren’t that many options.

Agribank seems to be the only banking provider in Malta that allows transfers to and from crypto exchanges.

Paytah is touted to be a crypto-friendly bank and it is definitely involved with crypto companies and payments processing, however, it has repeatedly been in the news for the wrong reasons.

If you explicitly want to make crypto transfers, either as an individual or as a company, then your only option is Agribank at the moment.

The Ultimate Guide to Investing in European Real Estate Online

Last updated: May 08, 202412 Comments

Real estate investing needs little introduction. We all know that this asset class has been one of the top choices for investors since time immemorial. Nothing beats owning land and buildings. It’s an asset that you can see, use or rent out. It doesn’t require any technical knowledge so the barrier to entry is very low. And that is why real estate remains the number one place for people to park their money.

I have been dabbling in real estate through various platforms over the years, and this has given me a good idea of what works and what doesn’t. Here’s a quick list of some of my favorite property-based P2P lending and real estate crowdfunding platforms reviewed on this site.

For more information about real estate investing you can head over to my dedicated page on property investments.

REITs vs Real Estate Crowdfunding vs Private Investing

When talking about the real estate market, currently there are three ways of investing:

Property Crowdfunding
Real Estate Investment Trusts (REITs)
Private Investing

There are various pros and cons of each way of investing, so I will describe all three of them in more detail so that you can decide which one is most suitable for your situation and goals.

Property Crowdfunding

Real estate crowdfunding platforms are part of the fintech surge of recent years and have become very popular in countries such as the US, UK, and Spain. A property crowdfunding platform will typically have an attractive and modern website and give the user an experience that is very similar to owning the property directly. As an investor, you will have the opportunity to view properties in exposition phase, where you can read about the location of the property, the developer’s plans and financials, as well as the type of financing to be used (leveraged vs non-leveraged).

Typically, your money will be tied up for a 3-5 year term, although many platforms have now introduced a secondary market where you can put up your shares for sale to other investors.

I have personally invested in several property crowdfunding platforms (such as Raizers) and so far I’m happy with the results. I’m convinced that we’ll be seeing many more people making their first entry into property investing via property crowdfunding platforms versus REITs or private ownership.

Real Estate Investment Trusts (REITs)

Let’s now talk about one of the best ways you can diversify your property portfolio; real estate investment trusts (REITs). They started in the USA but are now available in many other countries around the world. A pure REIT represents the shares of an individual real estate company, while a REIT electronically traded fund (ETF) passively track indexes for the larger real estate market. These REIT indexes include a number of different types of REITs as components. The individual performance of REITs can vary widely. Many REITs are traded on major stock exchanges, but there are also a number of private and non-publicly traded REITs.

REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and timberlands. Some REITs engage in financing real estate.

The iShares Europe Developed Real Estate ETF is an example of a European real estate ETF that you might want to check out. The ETF seeks to track the investment results of an index composed of real estate equities in developed European markets. You can expect to pay around 0.5% in fees when choosing such an ETF.

The Vanguard REIT ETF (VNQ)is the largest US REIT in the sector and began trading in 2004. It invests in stocks issued by REITs and seeks to track the MSCI U.S. REIT index, the most prominent REIT index.

One thing to consider is that a publicly-traded REIT is usually highly liquid. That means that you can easily sell your investment at any point in time if you need the money or if you’re not satisfied with your investment.

With a REIT you can obtain much wider portfolio diversification with the same amount of money when compared to private investment. You will also be totally detached from the management of these properties, which you might consider to be a bad thing or a good thing, depending on your interest and skills in real estate.

Private Investing

Private investment is the oldest and most well-known form of investing in the property market. An investor would purchase one or more properties and rent them out to obtain a monthly rent payment. To possibly obtain higher returns, the investor could also flip properties. Flipping properties involves buying an older property, fixing it up and selling it again. The whole operation is usually done within 8-12 months and in areas where the price of housing is rising in a fast and consistent manner.

Private investing offers you maximum control over your investment. You can deal with clients personally as well as refurbish the property as you deem fit. If you’re an expert in the local market and have the right contacts, this might be a good opportunity for you. Needless to say, you will need a lot of time to supervise the refurbishment of properties, as well as to make sure that your rented properties are well managed and your clients are properly taken care of whenever they have a problem.

The biggest con with private investing, apart from the time requirement, is the lack of diversification. Unless you have millions of euros/dollars to invest and have a deep knowledge of the property market in several countries/cities, you will struggle to diversify your property portfolio. You will thus be at the mercy of the local economy of typically one city/country, as well as the building you invested in.

Another issue is that if you invest in just one or even a few properties, vacant periods will seriously affect your cash flow. It might easily take one or two months to find a new tenant (even assuming strong demand in the rental market) and during that period you will have zero income from your property. Whether this will affect your lifestyle, of course, depends on your particular situation. Imagine a retired person with limited savings who relies on the rent payment from one property to get him through each month. Then imagine the property remains vacant for a few months due to whatever reason. You can understand why that would have a very significant impact on his life.

Personally, I am not a fan of private investing. Dealing with the day-to-day issues that crop up is something that would seriously affect my sense of freedom, and hiring a property management firm would involve more overheads and take away control over the level of service that the clients receive.

Secondly, I am not a property market expert and have little interest in keeping up-to-date with several local markets.

Thirdly, I don’t have the money to purchase several properties in order to diversify, and neither do I fancy taking out loans from the bank to fuel such purchases. Again, I’m only giving some insight on my personal situation to illustrate that every person needs to make his own analysis of his situation and conclude whether one style of investing is ideal for him or not.

To sum this section up, I would say that private investing is ideal for people who are passionate about property, have considerable capital to play around with (or are comfortable with taking out several loans), and want to do this as a part-time or full-time job.

Why I Prefer Real Estate Crowdfunding

As I already mentioned, private investing is definitely not something I’m interested in at this stage. I have zero interest in the day-to-day management of properties, and furthermore, I don’t have the capital nor the wish to take on loans to finance the purchases of property.

My biggest issue with REITs is precisely the fact that you are very detached from the underlying properties.

With property crowdfunding, I find that I can stay free from the annoying parts of managing properties, while at the same time having full access to the properties’ financials, business plans and individual performance. So far I’ve had a go at investing in Spanish property, UK real estate, as well as participating in a German real estate crowdfunding platform. The Baltic real estate platforms were the best performing by far.

Apart from the potential to earn a good return, property crowdfunding is a great educational experience that will probably come in handy in the future if I decide to go for private investing or buy my own property to live in.

Why do Borrowers Obtain Finance from Real Estate Crowdfunding Platforms?

A common question that comes up with investors new to real estate crowdfunding, is why exactly do borrowers go to these platforms when borrowing rates are so low these days? Why don’t they go to the banks directly?

Every entrepreneur and property developer is looking for the best measures to save money and earn a solid profit, so why would they take on debt obligations with an interest rate of 11% per annum?

The answer is not unequivocal as there are several advantages to be taken into account when evaluating financing possibilities on P2P lending platforms and real estate crowdfunding sites:

Speed

When using traditional financing methods, real estate developers often fail to get the desired results within the required timeframe – banks make decisions slowly, the period from application submission to receiving funding may be up to 4-6 months, while P2P lending platforms can provide an indicative offer within 24 hours of submission and money on the borrower’s account within 2 weeks. Developers are happy to use this opportunity as a “bridge” – you can start working on your project while the bank is still evaluating it.

Loan Period

When considering the possibility of using a P2P lending platform for financing your project, it should be taken into account that this is a short-term solution for the sales period of the property, during the development phase of the project or a bridge loan. The major benefit can however be seen in the fact that many of the above platforms allow early repayments with no penalties, so should the borrower sell one of the apartments or establish long-term financing, they can repay the loan earlier if convenient. This means that if the funds were used for 6 months and 6 days, then the interest payment will be calculated for exactly 6 months and 6 days.

No monthly payments

P2P lending platforms normally enable flexible repayment schedules, for example, the possibility to pay both interest and principal at the end of the period – you won’t find this kind of opportunity in traditional financial institutions. This significantly boosts work on a new project by enabling the borrower to fully focus on the project, with no additional liabilities each month. The developer can use the money to actually finance the project, not to pay interest.

Additional marketing

What is the cost of a new development project’s sales campaign in the media and how effectively can you reach people who are interested in real estate? Many of these platforms have thousands of registered investors from different countries interested in property and development, which gives the developers free publicity for their projects.

Doesn’t the publication of a project’s financial data in a public manner negatively affect the eventual sale of the property?

Not really, although it might initially appear to have that effect. In reality, what happens is that the eventual buyer is looking at the property and comparing the price to other properties in the same area in the same conditions. The buyer is also comparing the price and property to other properties he has shortlisted, even in other areas. Therefore, ultimately these two facts are much more important than the limited downside of the project details being published on the platform.

Many platforms also limit access to the project’s most important financial details to investors themselves, meaning the eventual buyer (unless he is an investor himself) would not have seen those details.

Communication and knowledge

A less important factor might be the opportunity to get another partner on board. A partner who understands the business has evaluated dozens of similar projects. If your project gets rejected, it probably means that there is something seriously off and you can go back to the drawing board to make adjustments. With banks, sometimes getting rejected is just the result of excessive bureaucracy and doesn’t mean there is necessarily anything wrong with your project.

When investing in real estate, there are many ways we can put our money to work. Each type of real estate investment carries its own risk factor as well as yield percentage.

How Property Crowdfunding is Taxed

So how does taxation of property crowdfunding finance work? We can use Property Partner as an example.

Property crowdfunding is a form of indirect property investment. This consists of the investment in shares of a company that owns, develops and manages property on behalf of its shareholders. Investors will hold legal shares in the company that owns a specific property. For each investment, an SPV company is created. Information on the special purchase vehicle (“SPV”) that holds the property can be found on the companies house website. Please type the SPV name into the search box on their site to find out more details.

Each property is held for a fixed term which is specified on each investment page. The investor hopes to receive a financial return in the form of dividends on rent received as well an increase in the value of the property subsequently shown as an increase in share price. The value of investment may go down as well as up and, as with all investments, you may get back less than you have invested. Indirect property investment allows investors to enter property markets without having to provide the full, up-front capital of buying a house or flat.

Your shares are held in a nominee account, registered in the name of Property Partner Nominee Limited. This account is ring-fenced from the assets and liabilities of Property Partner. You, as the beneficial owner, will receive all of the economic benefits including dividends and capital returns. More information on the nominee structure can be found on the Property Partner site.

Investment Costs are calculated using a First In First Out (FIFO) costing method per share, rounded to the nearest penny.

What income is taxed?

In most countries, you are taxed on capital gains as well as dividends, which are the two ways you can make money with property crowdfunding on platforms such as Property Partner.

With that in mind, you will then have to consult the laws of your country of residence to determine the tax rates for capital gains and dividends.

How to Evaluate Real Estate Crowdfunding Investments

With the proliferation of real estate crowdfunding websites over the past years, investors can now invest all over Europe and the UK from the comfort of their homes.

Not all platforms and investments are equally good, however, and while it is good practice to diversify and thus spread the risk, it still makes a lot of sense to have a basic skill set in evaluating real estate investments, before you hit the Invest button.

In general, from my experience, investing in loans tends to be riskier, however, it is the format favored by many projects on these crowdfunding websites, as it is much more straightforward to structure. The alternative is to set up a company that owns the property, but that incurs more costs and is harder to manage. The advantage for an investor, however, is that he would own shares in a property and thus not be at the sole mercy of the developer.

Loan-To-Value

If the deal involves giving a loan to a property developer to build or refurbish a property, a very important metric to look at is loan-to-value, or LTV in short.

The lower the loan amount compared to the value of the property, the safer you are as an investor, as it means that in case of any problems, the chances of recouping the investment are higher.

You have to be extra cautious with this one, and take a close look at what value figure is being taken into consideration.

This can easily be explained by an example. Let’s say the developer puts up a project that involves buying an old and dilapidated building at 500,000 Euro, refurbishing it completely to luxury standard, and selling it off within a year for 1,000,000 Euro. He asks for a loan of 250,000 Euro for the project.

Now, here’s the trick some platforms use. Instead of listing the project as having a loan-to-value figure of 50% (250,000 divided by 500,000), they will use the anticipated value of the finished project, giving a loan-to-value figure of 25% (250,000 divided by 1,000,000).

I would advise staying away from these kinds of projects, as they tend to be much riskier. The price that the project is eventually sold at depends on many factors, including how good of a job the developer does, prevailing market conditions, the buyers’ profile, etc. As investors, we should concentrate on the facts, and therefore look at the value of the property right now, and that is 500,000 Euro in our example.

The fantastical figures that developers provide can lead to investors getting burned, as happened with the Lendy platform, which eventually went bust.

First or Second Rank Mortgage

A mortgage is the collateral of real estate which is pledged against borrowed capital. It is divided into primary and secondary ranks, which indicate which investor or institution is the first to recover the money. Typically, a first-rank mortgage holder in large projects is a bank or other large financial institution, while the second-rank mortgage is held by crowdfunding platforms or other institutions.

In general, you should prefer first rank mortgages. Platforms like LANDE only do first rank mortgages, for example. Other platforms might offer the riskier (but potentially more profitable) second-rank mortgages.

Secondary rank mortgages are quite popular on the German and British real estate crowdfunding platforms, such as Property Partner.

There are nuances, of course.

For example, if the property is already built and has tenants that generate rental income the risk is naturally lower. When assessing the risk in such a scenario, one should look at the property’s profitability.

Consider the case of a €5M property that is generating a net rental income of €350,000 or a 7% annual return, You can check what would be the return for primary and secondary mortgage holders. You can do this with a simple formula: €350,000 (rental profit) / €3,600,000 (sum of primary and secondary mortgages loan values) * 100 = 9.72% net yield.

This step is important to assess the liquidity of the real estate, which helps to understand whether after a takeover of the asset it would be difficult to find a buyer and repay both mortgages to the investors. In this scenario, selling a property that is generating a yield above 9% shouldn’t be complicated.

Apply Financial Ratios & Rules

When you are buying a property, or investing through online real estate crowdfunding platforms. it’s a good idea to keep in mind the following ratios that can help you in judging whether this is a good investment or not.

Price/Rent Ratio

Look at the median price and median rent for the area in which you are considering buying a property. You will want to favor lower ratios versus higher ones.

The 50% Rule

The 50% Rule is just a shortcut to estimate the Net Operating Income or NOI of a rental property.

The 50% Rule says that you will only keep 50% of the rent you collect on an average rental after paying for vacancy, management, taxes, insurance, and maintenance.

The 50% Rule and NOI exclude mortgage costs.

Capitalization Rate

The 50% Rule allows us to quickly determine a cap rate so that we can decide to pursue the deal or not.

A capitalization rate is a tool experienced investors use to compare the performance of one property to another.

In some neighborhoods, a 6% cap rate will be a great deal. In other neighborhoods (usually lower-priced ones) a 12% cap rate or more might be needed to make it worthwhile.

The 1% Rule

The 1% Rule states that your gross monthly income from the rent of a property must equal or surpass 1% of the total investment in that property. By total investment, I mean the purchase price plus fees and expenses to refurbish the property before putting it onto the rental market.

As an easy example, if your total investment into a property was €100,000, then you would want to get at least €1,000 a month in gross rental income.

The 2% Rule

This is exactly the same as the 1% Rule, except this time we are looking for a 2% gross return in monthly rent versus the total investment.

When To Apply Each Rule

The obvious question is, therefore: when should we apply each of these rules. The answer is that it is totally dependent on the area you’re considering. There are some areas where a 2% deal is possible from time to time, and other areas where even a 1% deal would be a real stroke of luck.

The key here is to know the yields being produced in the area and the investments needed to produce those yields. Armed with that information you can then decide whether to apply the 1% or 2% rule to your investment options.

Rule Limitations

Like every shortcut, these rules have limitations. The major limitation you should be aware of is that what matters most in buy-to-let is the net rental income.

Here are a few costs that will eat into your gross monthly rental:

Taxes
Insurance
Maintenance
Management
Vacancy/Turnover
Condominium Fees

Some of these costs will inevitably be equal for all properties in a particular area (taxes is one such example), but others may not (for example maintenance). An older building might meet the 1% Rule criteria while a new building wouldn’t, however, the older building will probably have significantly higher maintenance costs. It might therefore very well be the case that the newer property might end up outperforming the older property even though at first glance and based on the 1% Rule the old building looked like a better investment.

Using the Rules

Given the additional intricacies we discussed, the best use of these rules is for quick filtering and comparison. If you’re using crowdfunding property platforms, for example, you’re likely to have several options to consider every month, and having a few quick rules to sort out the wheat from the chaff will be useful in saving precious time. Once you narrow down your options to a handful of properties, you can then dig deeper until you find your perfect investment.

Consider the Platform’s History

Take a look at the history of the platform you plan to invest in. Ideally, it should have been operating for a number of years already with no significant issues. If it’s been through a sideways or downward market and emerge unscathed that’s even better. Everybody can perform well when the market is up, but when the market is not helping many platforms cease to make updates and run into problems.

Property Partner are a good example of how to keep things professional and take care of your investors in a bad market, such as that of the UK during and after Brexit and the COVID crisis.

Read Reviews

While you should always assume that the reviews you read online are biased in some way or another, I still recommend checking out blogs, forums and specialist review websites to get a general feel of whether a platform is trustworthy or not.

Do you use any other criteria when evaluating real estate crowdfunding platforms? Let me know in the comments section.

Yield VS Risk Relationship in Real Estate Investing

Like any financial product, the higher the estimated yields the higher the risks. Investment opportunities with renovation are placed in a balanced position in the real estate investment type chart, almost in the middle, which is also why they are one of the most popular projects on many crowdfunding platforms.

Which are your favorite types of real investment? I’m a big fan of renovations that last around 8 months from purchase to an eventual sale. I tend to balance my portfolio with this type of investment together with savings opportunities where I get dividends/rent every month and have a constant flow of income.

Do you invest in real estate? Have you tried out property crowdfunding or other types of investing in property? Let me know in the comments section.

🆚 PayPal VS Wise Borderless

Last updated: February 15, 202326 Comments

Wise introduced borderless banking in 2017. The big advantage it gives you is that you can have bank accounts in multiple currencies. As soon as they launched I started to think of how it could help me get rid of PayPal and its high fees.

First, let me introduce you briefly to Wise Borderless. If you want to read my full review of this product, do browse over to my review of Wise Borderless.

The vast majority of entrepreneurs I know require a combination of accounts in these three major currencies:

US Dollars (USD)
Euro (EUR)
British Pounds (GBP)

The problem so far has been the simple fact that it’s unnecessarily and frustratingly hard or downright impossible to open a bank account in another country than the one your business is based in.

So for example if your business is based in the UK, but you make all your online sales in USD, you would probably want a USD account so that you would be able to transfer money to it without losing on exchange rates.

This problem is now solved with Transferwise’s borderless banking system. Once you open an account with Transferwise, you will be able to apply for borderless banking and select the accounts you need (USD, EUR and GBP available at the moment). Within two days you will have them in place and you can then start receiving client payments to these accounts.

So what are borderless accounts?

Your borderless account is a bit like having local accounts all over the world, without having to open a real bank account abroad.

It’s a multi-currency account that lets you keep money in 28 currencies, and convert between them at the real exchange rate whenever you need.

You get bank details (like account numbers, bank codes and IBANs) issued by TransferWise so you can receive money in different currencies around the world with zero fees. These aren’t actual bank accounts (they only work similarly to bank accounts), so you don’t have to fill in any forms or have a foreign proof of address. They’re your unique bank details issued by TransferWise to you, that you can give to your friends, company or customers in the US, UK, Eurozone and Australia to get paid in those countries as if you had a bank account there, with zero fees.

How do they work?

Add money to your account in any of the supported currencies. Then activate the currencies you want to convert to or hold money in.
Convert money between your currencies in seconds whenever you need, always at the real exchange rate, with our low conversion fees.
Send money directly from any currency in your account to pay bills, pay friends or move it to another account of your own.
Activate AUD, EUR, GBP or USD in your account to get account numbers and IBANs. Give them to your friends, company or customers to receive those currencies from any bank account in Australia, Eurozone, UK or US with zero fees.

Wise vs PayPal

I’ve written about the loss of money due to currency conversion when using PayPal before, so I was hoping that Borderless Banking would solve this issue once and for all.

First Use Case – Invoicing Clients

The first thing I thought of was to replace PayPal completely with TransferWise. Instead of issuing my clients invoices through PayPal, I would ask them to send money directly to my Borderless accounts thus incurring no fees. Apart from incurring no fees to receive the money, I would also avoid the currency conversions, since I now have accounts in the four major currencies I use the most.

TransferWise works perfectly in this case, and for this purpose I was able to eliminate PayPal completely from my workflow.

Second Use Case – Paying Employees or Freelancers Globally

I’ve always used PayPal to pay my employees or collaborators who work in other countries, but this is expensive for both me and them. Again, TransferWise Borderless proved to be a great solution.

I can recommend the borderless accounts for this purpose as you will definitely save a ton of money.

Third Use Case – Withdrawing money from PayPal

Unfortunately, I still had to keep on using PayPal as it is one of the most comfortable ways to set up automated payments for digital products, especially in countries where Stripe is not yet established.

The problem, as I described in another post, is that PayPal charges hefty fees for currency conversions when withdrawing money to your bank account. Even if you use my method to eliminate the conversion on PayPal’s end, you will still have the money converted automatically by your bank when it arrives there. The ideal solution is to have USD be transferred from PayPal to a USD bank account, and so on and so forth with the other currencies. This makes borderless perfect for the job.

My idea was to add each of my borderless accounts to PayPal as withdrawal methods.

However, after checking with PayPal, they have informed me that at this stage they don’t support virtual bank accounts, which is what TransferWise’s Borderless banking solution is classified as.

2Checkout do not allow withdrawals to a Borderless Banking account unfortunately, so I can’t use them there either.

It would also be interesting to know what Stripe are doing, so if any of my readers wants to try that, do leave a comment with the results.

You should be able to use Borderless Banking with other services that support bank wire transfers, such as affiliate systems like Avangate and Shareasale.

While I did not have any luck adding the borderless accounts to PayPal, several readers have reported that they managed to do so by calling PayPal directly. I hate waiting on calls to be honest, and the prospect of dealing with some PayPal rep and trying to convince them to do something like this wasn’t very enticing, so I didn’t bother.

If you want to try it, here’s how:

Go to the contact page within your PayPal account, click call us and you’ll get a freephone number to call (which works on Skype too) and a code to give them. Once you call you have to answer some security questions, then give them the ACH routing number and account number of the Transferwise US bank account. If you’re lucky it will show up instantly on your PayPal account as the Community Federal Savings Bank.

Wrapping Up

This is a great step in the right direction. Revolut released something similar earlier this year, but TransferWise’s solution is better. The last step now is for everyone to be able to use this type of account with PayPal for withdrawals.

In any case, you can still ask clients to pay you to one of your multi-current Wise Borderless accounts, and that’s already a huge bonus for those entrepreneurs and companies who receive invoice payments directly rather than through payment gateways such as 2Checkout, Stripe or PayPal.

Don’t forget that you can now also get a TransferWise debit card, which gives you direct access to your multi-currency Borderless accounts so that you can spend your money anywhere around the world where cards are accepted.

This is post 9 of 11 in the series “PayPal”

💶 The Best European P2P Lending Platforms in 2025

Last updated: March 17, 202593 Comments

Amongst all the online investment platforms available today, European peer-to-peer lending sites are the ones that offer the highest returns.

Let’s have a look at how P2P lending works and which are the best European P2P lending sites.

Why do I focus on Europe? Simply because I am European and currently based in Europe. Most US lending sites, as well as some UK lending platforms, prohibit European citizens from investing, so this post focuses exclusively on those platforms that are available to all European citizens. The nice thing is that the majority of European P2P platforms accept international investors.

Another reason for focusing on Europe is that currently, the European platforms offer higher returns than those in the United States or Asia.

Without further ado, let’s jump straight into a list of what I consider the best platforms available nowadays. I will then proceed to talk about the P2P lending space in general for those who are new and want to learn more about this asset class.

The Best European P2P Lending Platforms

Now let’s explore each of them further.

If you’re unsure which platform to invest in, one of the best things you could do is to check the platforms’ ratings on multiple channels. I’ve analyzed most of the platforms out there, used several, and taken a look at their Facebook, Trustpilot, and Google scores, so here’s the list of top P2P platforms in Europe at the moment.

I also keep an eye on the market data on European P2P lending every month, as this is an important indicator of whether any of the platforms are in trouble or whether they are in a healthy growth and profitability stage.

Mintos

Mintos is undoubtedly the powerhouse of European P2P lending platforms. Founded in 2015 in Riga, Latvia, Mintos has quickly grown to become the largest and most trusted platform in the region. It offers a plethora of investment opportunities across a wide variety of loan types, including personal loans, business loans, and mortgages. With more than 340,000 investors and a stunning €7 billion in funded loans, Mintos has established itself as the go-to platform for P2P lending enthusiasts.

The interface is great; everything is understandable and you don’t need to fish around for data. You get a daily report in your inbox and you can also use the auto-invest functionality, which I always do.

See also: My full review of Mintos – I invested €150,000

Mintos has a solid secondary market which provides investors with liquidity. If you want to sell off your loans at any point, you can put them on the secondary market, choosing whether to apply a discount (making them more attractive) or add a premium (less attractive). If you want to sell quickly, applying a discount is the best way to do this.

The minimum investment in any single loan on the primary market is EUR 10, DKK 80, GEL 25, PLN 50 or CZK 300. There is no minimum for investments in the secondary market.

You have to be careful when setting the auto-invest parameters on Mintos. Check out the Mintos lender ratings post on Explorep2p as well as the Mintos loan scanner to see which are the most trustworthy lenders on the platform.

The income earned at Mintos is taxed for each investor based on the legislation of the respective country where the investor is a tax resident. Each investor can receive extensive information necessary for tax returns when logged into their Mintos investor account.

You can add funds safely via your online banking directly in the app, by bank transfer, or with a debit/credit card. I recommend using N26, Wise or Revolut when doing deposits and withdrawals as you avoid fees altogether.

Companies can also invest through Mintos without any problem. There are specific documents that need to be provided in order to comply with AML legislation, but it’s pretty straightforward.

During the past three years, Mintos experienced significant growth, making it the peer-to-peer lending market leader for continental Europe with a 38% market share according to AltFi Data. Since their establishment, they have exceeded EUR 660 million in cumulative investments by investors and they expect the number of loans funded to reach EUR 1 billion by the end of the year.

Over the past years, Mintos have made considerable investments in technology, people and the marketplace, making the service even more convenient for investors. The number of investors has been growing in exponential numbers year on year. As an investor, this is reassuring, as I know I’m not alone using this platform, but I’m joined by tens of thousands of others like me.

On Mintos, you can expect returns between 6% and 18%, and the minimum investment per loan is €10.

Lonvest

Lonvest is a promising newcomer in the European P2P lending space, offering investors an opportunity to earn passive income through carefully selected loans. Despite being a relatively new platform, Lonvest has positioned itself as a serious player by focusing on transparency, investor security, and attractive returns.

The platform provides investors with access to loans that are backed by a reputable loan originator, ensuring a layer of protection against potential defaults. With a straightforward and user-friendly interface, investors can easily navigate their portfolios, set up automated strategies, and track their earnings in real time. Lonvest also offers competitive interest rates, making it an appealing choice for those looking to diversify their investment portfolios beyond traditional assets.

See also: In-depth review of Lonvest

One of the standout aspects of Lonvest is its commitment to building a sustainable and secure lending environment. The platform implements rigorous due diligence processes to assess loan quality and borrower credibility, ensuring that investors are exposed to well-vetted opportunities. Additionally, with buyback guarantees in place on many loans, investors have an extra layer of confidence when deploying their capital.

For those seeking a fresh yet reliable P2P lending option in Europe, Lonvest is certainly worth considering. Its combination of solid returns, transparency, and security features make it an attractive addition to any investor’s passive income strategy.

Swaper

Swaper is one of the latest entries into the P2P lending space in Europe, having started operations in May 2019. They have found success pretty quickly though, amassing more than 4000 active investors, 160m euro in investments and 2.1m euro in interest paid back to investors.

See also: In-depth review of Swaper

I really like this platform and the team has been extremely pleasant to deal with whenever I contacted them.

Join Swaper

PeerBerry

Launched in 2017, PeerBerry has been gaining quite a lot of popularity among peer-to-peer platforms recently. As with many crowdlending platforms, PeerBerry originated in the Baltics – specifically Riga, Latvia.

This platform has an average annual investment return of 11.51%, a solid return for most platforms. With more than 18,000 investors and over €212 million in funded loans, PeerBerry is certainly making some waves in the peer-to-peer business.

As with many peer-to-peer platforms, PeerBerry offers an Auto Invest function and a BuyBack guarantee. Unfortunately, however, no secondary market is available yet.

I really like this platform and its website. PeerBerry has the potential to be one of the big players in European P2P over the coming years.

Open an account with Peerberry

LANDE Finance

LANDE was started in 2019, when two experienced professionals from the secured lending sector Ņikita Gončars and Edgars Tālums became aware that there is a niche in the crowdlending market, as none of the existing market players offered low-LTV investment deals.

LANDE is going after the agricultural loans niche. There is currently a big gap between the financing needs of farmers in Eastern Europe and what’s available to them from banks and other lending providers.

Read more: My full review of LANDE

All projects are first rank mortgage, which is the most secure type of mortgage you can get. Other platforms offer second-rank mortgages which are riskier, but can have higher interest rates.

I would recommend having a look at LANDE as it might be one of the most innovative players in the space going forward. It’s worth mentioning that LANDE also has skin-in-the-game for every project launched.

Invest on LANDE

Bondora

Bondora is one of the oldest peer-to-peer lending platforms, and I joined early on in my P2P lending journey, around 2016.

While this platform has been criticized by investors in the past, my portfolio has been chugging along quite well over the years, and my only complaint would be about the graphics and UI of the platform, which I find really ugly.

Read more: My in-depth review of Bondora

I’ve obtained a return of 17% while investing on Bondora.

If you’re looking for a reliable platform I would recommend taking a look at Bondora, as they have one of the best track records in the industry.

Invest on Bondora

Profitus

Profitus is a Lithuanian real estate crowdfunding and investments platform that has been operating successfully since 2019.

Read more: My review of Profitus P2P lending

The platform acts as an intermediary between investors, who are looking to employ their free money and those who want to receive funding for business ideas and real estate projects.

Try Profitus

What about Other Platforms?

There are several other sites that I consider either a scam or badly managed and on the course toward bankruptcy and loss of investor funds. Be very careful who you trust when investing in these platforms.

Many people just want to paint a nice picture for any platform just to take in commissions, and the platforms themselves all try to emphasize how safe they are and what great opportunities they are offering to investors. Don’t believe everything, and check out my list of worst P2P lending platforms before you proceed.

If you’re concerned about the safety of P2P platforms, make sure you also read my post on whether it is safe to invest in P2P lending.

🌍 Who Can Invest in P2P Lending Sites?

These European lending sites are open to all European investors, possibly even those outside of Europe in some cases. The only exceptions are the UK-based platforms, which are typically restricted to investors resident in the UK. CapitalRise is one such example. It’s been around since 2005 but is restricted to UK-based people.

The majority of platforms that are open to other countries are based in the Baltic countries.

Many of these platforms are available in more than one language, precisely to cater for the fact that in Europe people speak so many different languages and might not be comfortable investing their money if the site is only available in English.

From my experience, at the moment in Europe, the country with the most investors in P2P lending is Germany, leading by a long margin. German investors love P2P platforms. Germany is a country where people have a high purchasing power and they are looking for good returns on their savings, and hence P2P lending platforms are a great match for them.

What Returns Can Lenders Expect?

The returns that lenders/investors can expect vary depending on the economic climate. If interest rates are low in general, then we can expect that platforms will offer lower rates as well. This is the current economic outlook worldwide. But 15-20 years ago bank interest rates were very high, so it would not have made sense to invest in P2P platforms when your savings account already rewarded you with 10% returns guaranteed.

Nowadays, you barely find any bank accounts giving you 1% returns, so the returns of 10-15% offered by P2P lending sites are way better in comparison.

It is important to understand that such investments are to be considered alternative investments with a rather high-risk profile. You will most probably have loans that default, but the idea is that the overall returns will eclipse these minor defaults.

Risks of P2P Lending

For each investment class, and indeed every investment you make, you need to carefully consider the risks involved. There’s a lot to say about the safety of P2P lending and what risks you need to consider, so I wrote a separate guide on whether P2P lending can be considered safe that you should find interesting.

Alternatives to P2P Lending

If, like myself, you want to diversify beyond P2P lending, I would suggest you read up on real estate crowdfunding platforms as well as crypto interest accounts. You can obtain similar rates of return (usually 3-4% less than P2P lending) but these other types of investors tend to be safer as they involve collateral.

✅ Conclusion

If you’re interested in trying out peer-to-peer loan platforms, I suggest you start with Peerberry or Swaper.

If you have any questions about any of the platforms I mentioned, or how the model of peer-to-peer loans works, please leave a comment and I’ll do my best to answer your questions.

Before you make any investment decisions, I also encourage you to have a look at how your country taxes proceeds from peer-to-peer lending. You can check out my article on how peer-to-peer lending is taxed to get started on this topic.

You should also read about the risks of P2P lending before making any investments, and make sure you are comfortable with that level of risk for the money you are putting into P2P lending platforms.

Have you invested in p2p lending platforms? What has been your experience with these platforms?