The projects usually come with a term of 1 to 2 years, occassionally a bit long or shorter. There were not that many projects in the past . Often only 1 or 2 a month. Recently the pace has been picking up. Investor demand strongly outweights supply. Often the autoinvest bids fill a new offer instantly, if not then it is often filled within a hour of coming on the plattform. There are no fees for investors. Only a few offers pay interest during term, with most accruing interest to be paid at the end of the term. There are no fees for investors.
I only invested in a handful of projects to gain some experience. Today Crowdestate launched a new look for the website. This is how my small Crowdestate portfolio is displayed:
My Crowdestate portfolio – click for larger view.
Crowdestate secondary market
Today Crowdestate launched a secondary market. There is a “Sell Shares” button besides each of my active investments. To test it, I just offered one of my loans at a markup. The marketplace allows sellers to set markups or discounts.
Crowdestate is a leading Nordic real estate crowdfunding marketplace offering high-quality, pre-vetted real estate investment opportunities. Only the best investment opportunities survive our rigorous due diligence process, and these are the ones we open for investing on our platform. With each project, we present our investors with extensive background information, risk level, SWOT, business plans and financial models. Combine it with Crowdestate’s low, just 100 euro minimum investment – all of this makes investing into real estate quick, easy and affordable to everyone.
What are the three main advantages for investors?
Pre-vetted real estate investment opportunities – Our experienced real estate and finance team evaluates thoroughly each aspect of every project and picks the best investment opportunities to be published for crowdfunding. Low minimum investment amount – the minimum investment on our platform is just 100 euros, meaning basically anyone can afford to invest into real estate with Crowdestate. Everyone can invest – Crowdestate is open to all investors all around the world, provided that they have a way to make an international bank transfer to their virtual investment account previously created on our platform.
As an additional advantage, we charge no fees from our investors.
There are many different types of investment opportunities on Crowdestate. Debt, equity, secured, unsecured… Why did you decide to use so many different types for the offers?
If we look at the real estate industry, any real estate project needs different types of capital – from senior loans to mezzanine debt to preferred or common equity. Crowdestate’s aim is to become a full capital stack provider so we can address our Sponsors’ needs properly. This is the reason why we have not limited us to a single capital type.
If we look the real estate projects from investors’ perspective, investors have different investment preferences (e.g. time horizon, risk tolerance etc) and therefore they are looking for different types of investment. Young and aggressive investors might like high-risk equity deals while some other investors might prefer lower risk-lower return senior loans.
What ROI can investors expect?
The historical money-weighted average internal rate of return on our exited investment currently at 29.59%. However, as the fast-increasing money supply is driving the expected returns down, the investors’ annual returns are probably going to remain between 10-20%. The return rate is a reflection of project’s riskiness – a mortgage-backed senior loan might yield around 10% per annum while riskier mezzanine or equity investments may offer much higher yield.
How did you start Crowdestate? Is the company funded with venture capital?
During my few decades in the banking industry, I have met hundreds, maybe even thousands of clients, who are unhappy with the investments offered by their banks and they have clearly expressed their preferences to invest in real estate. Unfortunately, for most of these people investing into real estate never became a reality. They simply could not afford it due to the high entry costs and significant individual investment ticket.
At the same time, funding real estate projects had become a challenge for developers as banks became more and more picky.
I founded Crowdestate in 2014 to match the needs of the investors to the needs of real estate companies.
Is the company profitable now?
Yes, Crowdestate has been profitable from its very first year, and we have reinvested all the profits to developing the business.
Is the technical platform self-developed?
Yes, our platform was developed from scratch, and we are constantly working on improving it.
Are there any new features for the platform your team is working on? What about a secondary market?
We are currently finishing updating our mortgage-back loans offering and we will have very quick and automated approach there. We are also introducing a reverse interest auction to determine a true market rate for a specific project and an autoinvest feature.
We are also considering opening a Secondary Market for investments within this year allowing our investors to buy and sell their investments to other Crowdestate’s investors.
Currently there are usually one or two new investment opportunities per month. Can investors expect more deals in the second half of this year?
Our thorough vetting process eliminates most of the original investment ideas and therefore limits the number of investment opportunities we can present o our investors each month. Our Estonia and Latvia based teams are working hard to identify high-quality investment opportunities in the region.
We are also testing the interest for crowdfunded corporate finance deals and we are launching a new mortgage-backed loans solution soon. We expect those new solutions to increase the variety of investment opportunities on the platform.
Crowdestate is open to international investors. Can you please share from which countries the majority of your investors come?
Crowdestate is visited from all over the world and our investors come from South-East Asia to North-America.
As Crowdestate was founded in Estonia, Estonians are still the largest investor group, but the fast-growing number of international investors will bypass them probably quite soon.
Do you plan to cooperate with institutional investors? In which way?
Crowdfunding is about crowd and investment democracy and we prefer to serve a large number of small investors to serving a small number of large investors.
What is the current state of the real estate market in Estonia?
We believe the overall health of the market is good as the economy is doing well, interest rates are low and real wages are growing fast. At the same time, we have some suspicions on the health of specific sectors, namely offices and retail spaces – there is a lot of speculative developments in those sectors and we will probably see some changes there.
How do you think the property development market will be impacted by p2p lending in Estonia / in Europe in the future?
One of the leading Scandinavian banks stated recently, that the residential developments should be funded by equity, prepayments and crowdfunding. As the credit is quite tight in most of CEE countries, crowdfunding will play a significant role in funding the real estate development market.
Where do you see Crowdestate in 3 years?
I hope that Crowdestate is present outside our current domestic markets and we can help hundreds of thousands of investors in turning their savings into earnings.