EstateGuru is one of the leading European P2P platforms for short-term, property-backed loans. Founded in Tallin, Estonia, in 2014, Estate Guru now also has satellite offices in Latvia, Lithuania, the UK, and Finland.
“A short-term loan from EstateGuru is designed to meet a variety of niche needs with which traditional financial institutions are often unwilling or unable to assist property developers”
The aim behind the company is to provide everyone, regardless of where they come from, with the opportunity to invest in real estate from as little as €50.
What is interesting and different from platforms such as Grupeer is that EstateGuru offers investors and borrowers loans based exclusively on real estate, and more importantly, loans are only given to businesses, not private individuals. At present, only companies registered in and with a bank account in Estonia, Latvia, Lithuania, Spain, Finland, and Ireland are allowed to borrow through the platform.
Over the past 6 years, EstateGuru has developed an average return of 11.95%, on par with Mintos. With over 1,000 funded loans worth over €170,000,000 granted and 40,000 investors worldwide, this platform is certainly one to look out for.
⚙️ 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 Grupeer.
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.
✍🏻 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).
🏘️ 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. Their projects are spread over 6 countries and vary between development, bridge, and business loans.
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.
- 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.
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.
🌟 EstateGuru Premium
For investors investing over €100,000 EstateGuru has developed its Premium program. It was created to decrease the syndication period of loans, therefore allowing a loan to be funded much faster. This benefits all investors due to the decrease in cash drag and increase in average return.
Institutional investors in the investing world are usually investors that have big amounts of capital to invest, while retail investors are the rest who invest lower amounts and are not professional investors. EstateGuru demarks the line between the two at €100,000. An institutional investor typically is more demanding and therefore it makes sense for platforms like EstateGuru to have such a premium program. I have been benefitting myself from the Mintos VIP program, after having invested more than €50,000 on that platform.
Here’s what you get when you become a premium investor:
- Pre-notifications of upcoming loans
- Possibility to mark your interest before publishing the loans
- Bonus offers from larger investments
- Free Trustly deposits
- Invitations to EstateGuru’s events
- Personal EstateGuru contact
EstateGuru Premium will not affect the position of the platform’s retail investors – EstateGuru ensures that a suitable proportion of the loan is always leftover for the retail investors.
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.
EstateGuru is one of the cleanest real estate crowdfunding websites on the scene, and the platform is quite transparent. The number of defaults is quite low and the platform does not show any big red flags, making it a good place to invest in my opinion. It’s a good way to invest in the Baltics, which are a growing market.
It would be an interesting idea to pair EstateGuru (or alternatives like Bulkestate and Reinvest24) with property platforms from other countries, such as Rendity and iFunded in Germany/Austria, Housers in Spain, Italy, Portugal and Property Partner in the UK, thus obtaining a well-diversified property portfolio.
EstateGuru is one of the cleanest real estate crowdfunding websites on the scene, and the platform is quite transparent. So far so good with this platform, they have a very low default rate and I think it’s a great option for anyone who wants to build a real estate portfolio by buying through online platforms like this one.
- Loans are secured by a mortgage registration, with 93% being a first rank mortgage
- Average annual returns of 8-12%
- Broad geographical diversification of development investments in 6 countries
- Auto Invest feature
- Secondary Market
- Great user interface and site design
- Most recent projects are bullet and full bullet loans, which are riskier than annuity type loans