EstateGuru is a Euro-based peer to peer lending platform. All the loans listed are backed by property assets and interest rates are above 10%. Triin Jõeleht, investor relationship manager at EstateGuru answered my question in detail. The answers provide insights on how to make the best of this p2p investing opportunity.
What is Estateguru?
EstateGuru is a Nordic peer-to-peer lending platform that facilitates short-term property-backed loans to businesses. The platform currently facilitates loans in Estonia, Latvia and Lithuania with several following destinations already under preparation, thereby being the only peer-to-peer lender in the World to facilitate such loans in three countries. We have more than 6600 investors from 39 countries who are already benefitting from the historic average interest rate of 12.73% and 0% defaults (as of April 2017).
To which challenges is EstateGuru a solution for?
From the borrowers side, businesses find it difficult to obtain funding from the traditional finance providers due to long terms or high level of bureaucracy. EstateGuru professional team has extensive experience in the real-estate industry and is therefore capable of assessing each project on a stand-alone basis. Meaning that our specialists will assess the borrower, the particular business plan and above all the collateral to decide whether the loan application will be accepted.
From the investors side, it is difficult to compare the returns from bank deposits or pension funds to the historic return earned on the EstateGuru platform. We have both retail and institutional investors who have decided to try out our platform and more than 70% of our investors have invested multiple times as they are happy with the results and the statistics. Also, all investments on our platform are secured with property, therefore in case of a default, the property will be sold to retrieve the investments. Moreover, we do not apply any fees for investors and they have the ability to keep an eye on their investments’ performance at all times.
Did Estateguru start in Estonia because of your ties with the country or because it is the ideal country to setup such a property peer to peer lending platform? What are the particular advantages of Estonia when it comes to these types of investment? How do these benefits add value to investors?
EstateGuru started its operations in Estonia as our management has extensive experience (among others) in the Estonian real-estate development and investment management field. However, Estonia is also a perfect place to start such operations in, as Estonia is ranked one of the top countries in „ease of doing business“ ranking, however it is more difficult to obtain funding. Overall, we do not start our operations in countries where we do not have the full knowledge and where the legal structure does not support such business model. For an example, we operate in countries where the first rank mortgage is binding and therefore no institutions can come above the first rank mortgage, not even the tax authorities. In every country we start operations in, we establish a very strong network of specialists and therefore Estonia truly was the perfect place to start also due to its blooming real estate market. Therefore, the legal structure and the nature of the market are definitely beneficial to the investors.
Can you describe Estateguru in numbers?
Estimated returns/rates – 11.08% average interest
Historic average return – 12.73% return from already repaid loans
Default rate since inception – 0%
Total invested funds to-date – €21 million
Total Number investors to-date – 6660
Average Loan to Value – 58.26%
EstateGuru is currently undergoing the approval process for the FCA, when is the approval expected? In the meantime, what other best practices is EstateGuru applying?
There is really no way of estimating if and when the FCA licence will be given and therefore we will continue to develop further nevertheless. Meanwhile, we are following the respective best practices, regulations and laws in each operating country. Even though the peer-to-peer lending market is still rather loosely regulated, we are internally following the regulations of the most strict markets in order to be prepared for potential applicable regulations in the future.
Who are the borrowers applying for loans on EstateGuru? Most of our borrowers are smaller developers who are looking for financing for their development projects or entrepreneurs who have an attractive collateral and are looking for business capital. Currently all borrowers are from Estonia, Latvia or Lithuania.
Estateguru offers several types of investments, can you tell us more from a risk/return perspective on each type?
It is very difficult to give such an overview, as we truly assess each loan case by case depending on the borrower’s background and previous experience; their business plan and its realistic nature; the location, situation and liquidity of the collateral etc. Therefore, it is difficult to say that generally one loan type is more riskier than the other, however mezzanine loans are mostly second rank mortgages and therefore we do not accept most of them. We have accepted a couple of second rank loans on the platform as their cumulative characteristics were suitable for our terms, however mostly we do not accept them as they entail a higher level of risk.
Will there be other product types in the future?
We have had a couple of buy-to-let opportunities on the platform and we would be willing to continue facilitating such loans, however the initiative needs to come from the borrowers’ side. When the business plan is strong and the loan will be given against a high liquidity collateral then we are willing to discuss a wide variety of projects.
Which investors are eligible to open an account with Estateguru?
We accept investors who have registered a bank account in any of the banks of the EEA countries or Switzerland. Currently we already have investors earning the 12.73% interest in 39 countries!
EstateGuru has recently introduced an Auto-Investor, what has been the investor response to this new feature? Quite many investors have chosen to use the Auto Invest feature and the feedback has definitely been positive. We are constantly working towards improving the feature as many new investors are joining on a daily basis. We believe there is a growing tendency of investors trying to automatize their investments and therefore once their trust against EstateGuru increases, they feel more comfortable with the Auto Invest feature.
We are always happy to get feedback from our investors as this is the base for our developments.
In 2017 EstateGuru has expanded it’s business to Lithuania, will there be more such expansions in the future? We are already preparing future markets and in 2017, we are aiming to do our first projects in Ireland and the United Kingdom. We have a strong preparation and business development team and partnerships in each respective markets.
In your opinion, what is the role of peer to peer investments in a modern investment portfolio? We are happy to see that more and more investors are expanding their portfolios and are focusing on alternative investments in addition to their regular conservative portfolios. Therefore, as the industry is slowly becoming more matured as well, more investors are adopting these investment opportunities in their portfolios.
Something special from EstateGuru to the readers of Investitin.com
Use promotion code „EGU06638“ to earn an extra 0.5% for your first three months of investments on EstateGuru.
To learn more about this investment opportunity visit: Estateguru
We thank Triin Jõeleht for the interview.