If you’re exploring P2P lending platforms in Europe and you’re wondering which one is right for you, you’ve come to the right place. In this article, we’ll explore EstateGuru. The EstateGuru P2P lending platform is one of the most popular with investors. In our EstateGuru review, we’ll discuss your expected returns, loan diversity and more to help you understand if this platform is right for your investments. Let’s get started.
What is EstateGuru? Understanding the basics
EstateGuru is based in Estonia, and it was first founded in 2013, making it a bit older than some of its other competitors. It’s open to investors in the European Economic Region (EEA) and Switzerland.
Since the company began more than six years ago, it’s attracted quite a few investors. Currently, more than 28,894 investors have used the EstateGuru platform. They have funded nearly €140 million in loans. In total, EstateGuru has paid out more than €9 million in earnings.
The company focuses exclusively on real estate loans. This is good for investors who are interested in mitigating their risk by investing only in loans that are secured by property, so it can be thought of as a competitor to other platforms like Envestio.
It has a large community of investors, with nearly 9,500 Facebook fans, and has a reasonably good TrustPilot score of 7.8.
Returns from EstateGuru: Earn up to 13% on your investment
Overall, the returns from EstateGuru are good, but not stellar. Most of the loans that it offers provide an interest rate of between 11-13%, with an average annual return rate of 12.16%. This is higher than some of its other competitors in the real estate space. However, this is lower than other P2P lending platforms which offer more diverse loans.
Compared to consumer loans, property loans usually have a lower return. This is because they’re less risky. The property is used as collateral for the loan. This means that if the borrower defaults, the property can be seized to pay for the remaining balance. This reduces the risk for the lender, but also your possible rate of return.
There are also not a huge number of loans available from EstateGuru. They focus on quality over quantity. As of publication time, there were only 5 loans available for investors to choose from. If you are looking to invest in a lot of different, smaller loans, EstateGuru is not the best option for you. By design, you’ll be investing mostly in just a few projects.
Given how safe the loan returns at EstateGuru are, though, this is not a bad thing. The company has a good track record of picking high-quality borrowers. Earning up to 13% from EstateGuru is acceptable if you’re looking for a low-risk P2P lending platform.
EstateGuru loan diversity: A reasonable selection of loans
As mentioned, EstateGuru only offers a few loans at a time. It also only offers real estate loans and property loans, mostly to commercial developers. Typical loan terms range from 12-24 months, with few loans exceeding 24 months. Loan amounts vary. Some loans are issued for less than €20,000, while others exceed €510,000.
Naturally, you can pick and choose the loans in which you would like to invest. You can take a look at each proposal and its details, and determine if the business plan is solid. Uniquely, EstateGuru also publishes the Loan-to-Valuation (LTV) ratio for each loan.
LTV is a good way to determine the risk of a loan. It refers to the value of the loan compared to the value of a property. An LTV ratio of 50%, for example, means the borrower wants to take out a loan worth 50% of the value of their property. Usually, a lower LTV means less risk.
While EstateGuru does have good loans to choose from, it does only offer property loans, and the majority of its projects are in Lithuania, Estonia, and Latvia. You won’t find a wide geographic diversity of borrowers.
Still, the EstateGuru P2P lending platform is a good option if you are interested in property-backed loans. Every single loan issued by EstateGuru is backed by a mortgage or property loan.
The features of EstateGuru: Autoinvest & more
EstateGuru has decent features, but this is its weakest area. You can find a lot more features in competing platforms like Grupeer. Let’s start with the good, then move onto the not-so-good.
First, EstateGuru does have an autoinvest feature, and it’s pretty good – if you can afford it. What do we mean? Well, there’s a bit of a strange restriction. If you invest less than €250 per loan, you can’t choose detailed criteria for your investment, such as LTV, loan type, type of loan security, interest rate, and so on. You can only choose your maximum desired loan duration. That’s it.
We’re not sure why this restriction is in place. EstateGuru only has a minimum investment of €50, so even if they did want to restrict access to autoinvest features, it would make more sense if they restricted it to loans of €50 or more. So, while the autoinvest feature is useful and it’s easy to get started, most people won’t be able to afford using it. That means you’ll need to invest manually, in most cases.
EstateGuru also does not have a secondary market, so there is no way to buy and resell loans, which means your investments will suffer from a lack of liquidity. There’s no easy way to exit a loan prematurely if you need to. You’ll have to hold onto your investments until the end of the term.
There is also no buyback guarantee in case of default. However, this is less of a concern with EstateGuru than it is with some other competing P2P lending platforms. Because EstateGuru backs all of its loans with mortgages and property loans, they can repossess the property in question if a borrower fails to repay. Then, it can be sold, and investors will be compensated.
As mentioned, you can get started with just €50. That’s higher than some competitors, but still a pretty good minimum investment. This platform currently supports Trustly and SEPA transfers for funding new accounts.
The EstateGuru user experience: Smooth and simple
In our EstateGuru review, we’ve found that the user experience is top-notch. Beyond a few pages that take a bit longer to load than we’d like, we have absolutely no complaints.
The entire EstateGuru website was completely redesigned in 2018, and it shows. The experience is great. Signing up is quick and easy, and takes just a few minutes. When you sign up, you’ll need to provide some basic information about yourself, as well as a webcam photo and a picture of your ID to confirm your identity. While EstateGuru says it may take up to 2 days to confirm your ID, this usually takes only a few minutes.
The English translation is excellent and easy to understand, and there are plenty of great tools that help you learn more about your investing performance. You can export most of these statistics in .CSV format so that you can crunch the numbers further in Excel or a similar program.
Overall, it’s easy to sign up, transfer funds, and start investing with EstateGuru. You can get started in just a few minutes.
Should I invest with EstateGuru? Risks & recommendations
The risks of investing with EstateGuru are the same as investing with any other P2P lending platform. There’s always a chance that EstateGuru could go out of business, or that so many of its borrowers fail to repay that it’s forced into closure.
However, the risks of investing with EstateGuru are much lower than many of its competitors. This is because all of its loans are backed by property. If a borrower fails to repay, EstateGuru can sell their property, which it has already done in the past. This means that, even in the rare case that a borrower defaults, investors have a way in which they can recover their principal.
If you are interested in property loans in Eastern Europe, EstateGuru is a great option for you. However, we would not recommend using it exclusively if you are looking for a diverse portfolio of different loan types, or if you prefer returns higher than 11-13%.