In this article, I would like to present my review of a relatively new real estate crowdfunding aggregator – EvoEstate. Real estate crowdfunding platforms are nothing new and I’ve already written my opinions about some of them, like Housers and Bulkestate.

However, EvoEstate is the first real estate crowdfunding aggregator, or platform of all platforms in other words.

EvoEstate sources and aggregates real estate investment opportunities from over 10 countries. Investors can easily access deal-flow from close to 20 platforms and make cross-border investments hassle-free. As a consequence, all projects are listed in the English language, which isn’t the case with most platforms as well as most of the documents.

The EvoEstate service is completely free to investors and EvoEstate makes money by charging a commission to partner platforms. Below you will be able to find information about types of deals, partner originators, auto-invest, secondary market, taxes, etc.

EvoEstate in Numbers:

• 15 Partner platforms
• 12 Million EUR In investment opportunities
• 8 Countries with active investments

Having a single account with EvoEstate enables you to invest across multiple platforms without the hassle of signing up to each of them.

Consequently, this enables you to easily diversify across multiple countries.

At this moment, EvoEstate has already financed deals from 8 countries, including the United States, which is quite uncommon on European investing platforms.

But diversification is not only about the number of countries available.

They offer 3 types of deals and we’ll look into them next.

Types of Deals available on EvoEstate

Buy-to-let

In these kinds of investments, you earn money from the rental income of the property.

This type of investment tends to generate the lowest returns, however many investors find them very attractive. The reason is that they are the most stable kind of investment. Investing in buy to let is like owning a small part of a property.

For a low amount of risk, investors can expect 3-6% of annual returns as well as probably capital appreciation over time. Capital appreciation is generated by the increased value of the property which, depending on the location, ranges between 2-4% annually.

Such an investment can yield investors a total of 10% annual returns, but you have to be patient and hold the property until the duration of the project. Most of the buy-to-let investments have a duration up to 5 years, but the originators do not disclose the exact dates, as they intend to sell when they will be able to generate the highest capital appreciation. The best part is taht when investing in buy to let properties through EvoEstate you don’t have to limit yourself to just one property but instead you can own parts of property across all of Europe without the hassle of managing them yourself. 

Fixed-interest development and business loans

When investing in fixed-interest loans investors take on the role of the bank, providing financing for real estate development companies. This investment type has underlying assets – real estate collateral, which in case of default could potentially protect investors’ principal investment.

Investors can expect to earn 8-13% interest annually investing in fixed-interest loans, but loans have higher risks involved compared to the buy to let projects. This is because they are more likely to default during a recession when the market cools off and developments struggle to find buyers.

Equity Projects

With this type of investment, investors become co-owners of the business, therefore investors can expect to earn between 14-30% annually.

However, like the business owner, investors don’t only participate in the gains but also in losses, therefore there is a risk that investors could even lose principal.

Equity projects can also be sub-categorised

• New developments – you participate not only in the upside but also in the potential downside, however, the potential returns are much higher.
• Auction products – where a property has been bought in an auction for a below-market price.
• Private investment funds’ deals

Keep in mind that even you own equity in the business, for the vast majority of these deals you still don’t have any say in the management of that business or development, so you need to make sure that the company behind that investment is reputable. Luckily, this is exactly what EvoEstate does for you.

Making cross-border real estate investments can be challenging because of the lack of knowledge of local property markets. The EvoEstate team has local advisors who help them to do provide another layer of due-diligence and they always share their insights together with the official description of the platforms.

What are the main advantages of EvoEstate?

Skin in the game

When I talked with the founding team of EvoEstate, they quoted Nasim Taleb’s quote from book “Skin in the game” which says “How much you truly “believe” in something can be manifested only through what you are willing to risk for it.” The projects page on their platform is spread into two parts, Skin in the game, and other projects. The projects which are in Skin in the game section CEO and CIO invest at least 1000 euros of their personal capital into each deal.

Sophisticated Auto Invest

Auto investment is nothing new in this industry, however, most of them are really limited. EvoEstate’s, on the other hand, provides 9 filters and enables you to create multiple auto investment strategies.

This comes in handy when you want to select certain returns or mortgage rank for development loans or reduce the investment amounts you invest in deals in which EvoEstate has no skin in the game. With EvoEstate investors can setup multiple investment strategies for each country, originator or type of deal individually.

EvoEstate offers 24-hour auto-invest free cancellation feature. If investors don’t like the automatically entered-into investment, they can cancel it without any fees.

Liquidity

EvoEstate has a Secondary Market, which is proving to be very active. When I asked Gustas, the CEO of EvoEstate, about liquidity, he told me that 25% of Secondary Market orders are executed on the very same day. Having an active secondary market is a big advantage fo investors because they can exit in case they are in need of cash.

Here are some more details about the secondary market on EvoEstate:

1. Works irrespective of whether the partner platform has its own secondary market.
   Many partner platforms that EvoEstate collaborates with don’t have a secondary market, but it doesn’t matter. Even on those deals, they offer the secondary market and people can have liquidity.
2. Free and very active.
   EvoEstate charges no fees to the investors for Secondary Market transactions. An important fact is that 50% of Secondary market orders without premiums are being executed within 24 hours.
3. Discounts & premiums.
   Investors can choose whether they want to sell investments with discounts or premiums. This allows to either sell the investment faster and take a small loss, or slower but earning a profit.
   
4. Margin trading.
   Coming soon.
   

Another important aspect of their Secondary Market is that investors can make orders with discounts and premiums. This enables them to generate income not only from investments but also from trading. They will soon introduce a margin trading feature, where investors will be able to use up to 75% of their investment portfolios’ value to trade without having the funds on their wallet.

What makes EvoEstate different?

1. First of its kind
   EvoEstate is the first Real Estate Crowdfunding aggregator in the European market.
2. Skin in the game
   The founders of EvoEstate invest personal capital into each deal provided in the skin in the game section, minimum founders investment each is at least 1000 EUR. In December, total skin in the game of the founders has exceeded 80,000 EUR.
3. Provides markets access
   Most of the Spanish platforms prevent non-residents from investing, however with EvoEstate that’s possible as we have legal capacity and structure to enter in those agreements on behalf of our customers. Also, EvoEstate aggregates private real estate investment funds’ deals which usually have high minimum investments (50-125K EUR), but with us, the minimum investment is just 50 EUR.

Taxation

EvoEstate does not withhold any taxes, except for private individuals who are Estonia’s residents. EvoEstate partners (except Housers) don’t withhold any taxes on EvoEstate, therefore investors get net returns. All of these details can be seen within the tax report that is distributed to the investors at the end of the year by EvoEstate.

You can read my guide on P2P platform taxation for further information on this topic.

EvoEstate vision and future plans for 2020

Recently, I had a chance to meet with EvoEstate CEO Gustas Germanavicius in Barcelona to learn more about their platform. You can listen to the podcast episode we recorded over on the Mastermind.fm website. From the first moment, he was very clear that EvoEstate will continue being the most investor-focused real estate crowdfunding platform.

When I asked him what that really means, he explained: “When you think about real estate crowdfunding platforms, they focus mostly on property companies, because they are the ones who are not able to secure financing from the traditional financing sources, while investors have multiple options. We at EvoEstate are solely focused on the needs of investors and will remain this way.”

He also added a self-reflection: “The main disadvantage at this point of EvoEstate is an unstable deal-flow. Some times we have too many projects and later, very few. We will solve this by adding more partners which we are constantly working on.” Lastly, he finished our talk explaining their vision: “EvoEstate at this point is just taking its baby steps and currently we only offer investments in Euro, later this year we will have integrated currency exchange and our clients will be able to invest in UK deals as well. In the future, our aim is to connect Europe’s, Asia’s, the Gulf’s and Americas’ markets and create the largest real estate investments marketplace.”

You can hear the rest of the conversation with Gustas on my podcast Mastermind.fm.

My Thoughts on EvoEstate

Having spoken with both co-founders of EvoEstate, I am confident in their abilities to grow this platform, and I also think they can do a great job at curating real estate projects.

At a time where it’s getting hard to trust platforms and their projects, EvoEstate can help the investor with little experience by providing an extra layer of due diligence. As such, while I still recommend that you do your own research before you make any investment decision, I think EvoEstate is an ideal place for beginners to start investing in real estate online.

Let me know what you think about Evoestate in the comments section below!

If you join via the link below, EvoEstate will give you 0.5% cashback on your investments within the first 6 months.

Join Evoestate and get 0.5% cashback on your investments

In this review, I’ll talk about my experience with investing in the Spanish real estate crowdfunding platform Inveslar – The Urban Investors. What they mean by the name “urban” is unclear to me, perhaps it refers to the fact that they stick to major cities and towns in Spain.

I’ve already introduced Inveslar in my earlier post about the best Spanish property crowdfunding platforms, but in this post, I would like to focus on my real-life experience with the projects I’ve invested in on this platform.

Registration with Spanish Authorities

Inveslar provides regulatory coverage to investors and developers thanks to the integration with Socilen PFP, S.L., an authorized company registered with the CNMV as a Participatory Financing Platform with registration number 9.

Internationalization

The platform is open to all European and non-European investors, although you will have to obtain a NIE from the nearest Spanish embassy to be able to invest. It’s a minor inconvenience, but once you’ve got your NIE you will also be able to invest in other Spanish platforms too.

The properties available on Inveslar are all in Spain, with a specific focus on Barcelona and surrounding areas.

The website itself is available in several languages:

• Spanish
• Catalan
• French
• English
• German

That covers all the big markets in Europe for investors. The original languages of the site are Spanish and Catalan, and the translations are not perfect but decent enough.

Terms of Investment

For all projects, the investor agreement states that the investor is lending money to the platform.

If you understand Spanish, this is the explanation directly from Inveslar, about how we are investing money on their platform, specificying that we are giving fixed interest loans to developers who in turn invest that money into their projects.

Los últimos proyectos corresponden todos a financiación de circulante. Son préstamos a tipo fijo que solicita un promotor para poder hacer frente a una reforma, permisos de obra, o lo que él considere. La rentabilidad del préstamo no va asociada a la rentabilidad del proyecto, sino que se trata de un préstamo a tipo fijo dónde los inversores cobran mensualmente los intereses, y la devolución del capital se lleva a cabo en la última cuota. Por este motivo no existe un proyecto participativo en sí, sino que se trata de una inversión en un préstamo a tipo fijo a promotor.”

In the early days, Inveslar used to create a separate company for each investment, and the investors would purchase shares in that company. However, they have stopped using that model, since the ley de sociedades de capital in Spain obliges all purchases and sales of shares to take place with a notary present, which makes it impossible to operate an online secondary market.

Secondary markets are very important to investors as they provided liquidity and the ability to sell investments at the click of a button, provided there are interested buyers.

Unfortunately, the Spanish law has not been updated to keep up with modern trends, which forces platforms like Inveslar to use the lending model.

Email Support

Whenever I emailed Inveslar I always got a reply within 2 days, and sometimes comprehensive replies from the CEO himself, so I am very satisfied with that aspect of the experience.

Types of Investment Available

As an investor, when you visit the site and click on the Investments menu item, you will see the following options:

• Crowd projects
• Crowd marketplace
• Properties for sale

Inveslar has also recently announced that they will start putting up projects related to auctioned properties, which I am very interested in. The first auction projects should be available in the coming months.

Let’s take a look at them one-by-one.

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A common question in the property scene is whether one should buy a south or north facing property.

South facing provides the best conditions for sunlight, considering factors like the difference between morning and afternoon sun. Suitable lighting and direct sunlight impact directly in a very significant way many things from mood to electricity costs. A south-facing apartment tends to be warmer in winter, and breezy and not as hot in summer.

You should also think about how you are going to use the house? Are you a night owl or an early riser?…..sunset or sunrise? How will you use it at different times of the year? Now that so many kids go to daycare and most parents work, many prefer a West-facing house or apartment because you get the sun and light in the evening when you are home from work.

However, when buying a property as an investment, it might be worth thinking twice about automatically going for a south-facing property. A study in Japan found that North-facing property is actually a better deal if you plan to resell that property.

On average, north-facing units tend to increase in value after purchasing from the developer, while South-facing units tend to depreciate.

This is an interesting point to consider when you are looking to purchase a new apartment from a developer.

Data on over 196,000 apartment sales from 2006 to 2010 was collected by Attractors Lab. The price of north-facing units on the second-hand market increased by an average of 11.4% from their original price when new.

The price of south-facing units, however, decreased by an average of 5.4% from new.

Some of the reasons for the change in prices are:

• Developers price south-facing units higher, and north-facing units lower.
• In the second-hand market, units of various types and directions appear randomly for sale.
• Purchasers will prefer a north-facing unit with a wider frontage and good views over a south-facing unit with narrow frontage and less impressive views.
• Many people prefer an open view that is not blocked by other buildings and are less concerned about all-day sunlight if they are both working full-time and return home late in the evening.

I’ve lived in both south and north facing apartments in Barcelona, and found advantages and disadvantages in both; I personally don’t have a firm favorite if I have to choose between the two.

Do you prefer south or north facing properties? Why?

Peer to Peer and crowdfunding real estate platforms are an excellent way to get into the property investment game, but as you get more involved into this industry, you are likely to come across private off-market investment opportunities.

By private I mean off-market opportunities that are typically reserved to a much smaller pool of investors and are found through connections in the real estate world. By writing about real estate crowdfunding and talking about it to my friends and connections at conferences, I eventually got in touch with some big players who deal in specific types of property investments.

While the crowdfunding platforms tend to offer a wide variety of properties, such as student housing, new developments, buy-to-sell, buy-to-rent etc, typically the private investment scene tends to be more specific in type and geographical region.

The reason is simple. You will typically find a person or small team who have been working in the industry for many years and have become experts in the market of a particular city or region as well as a specific type of property.

To take Barcelona as an example, I know real estate experts who specialize in obtaining some of the most dangerous and untouchable properties in the city (occupied by squatters, drug dealers, etc), clearing them out and totally refurbishing them to go on and sell for a tidy profit.

Others focus on foreign buyers who tend to be looking for higher-end finishing and specific locations and types of apartments when compared to the local buyers. Since most local developers focus on the local buyers’ needs, there is a niche that opens up that presents nice profits if you manage to meet the high needs of the foreign buyers as well as be able to market to them.

These are real niches with lower competition due to the extra skills needed to succeed. In the first case, you need to be able to know how to deal with very difficult and possibly dangerous people and probably employ people who will do some brute forcing to clear the spaces, and you need to be good at marketing to convince buyers that these black spots are now a great buy.

In the second case, you need to have knowledge of the traits of foreign buyers and speak their language. This will make it much easier to design an apartment for that specific buyer profile as well as know where to market it and then be able to seamlessly tour the apartment with potential buyers and deal with any concerns they might have.

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