We all, to a greater extent, understand and recognize the potential financial benefits we can realize by investing in real estate. Well, real estate is a fundamental asset class that can be considered as a secure investment, which can not only provide regular and steady income but can also offer long-term capital growth. As an investor, investing in real estate could help you secure financial freedom sooner than you might think!
And because I do not encourage you to quit your “mundane” 9-5 job to become a full-time real estate investor, I strongly believe that real estate crowdfunding is the best way to invest in real estate. It not only allows you to build a passive real estate portfolio but it also allows you to quickly diversify over several real estate properties. The fact that you get to invest in real estate along with other investors, typically on a platform that proposes real estate deals and takes care of all the work from listing the deals, doing all the legal paperwork to managing the properties makes it even sweeter. One such platform is Crowdestate.
By using Crowdestate as your real estate investing vehicle, you get the chance to invest in some of the best real estates in Europe with a very low amount of money (from 100 Euros), diversify quickly into many properties, and have a totally passive real estate portfolio that leaves you with the freedom to do other things.
Therefore, this post reviews and analyzes Crowdestate: an innovative platform that’s disrupting the real estate crowdfunding market in Europe. At the end of this read, you should be in a better position to decide whether the platform might be a great place for you to invest your money.
Table of Contents
What is Crowdestate?
Launched in January 2014, Crowdestate is a seasoned crowdfunding platform that offers real estate and business financing opportunities to investors. With its headquarters in Tallinn, Estonia, Crowdestate is a well-established platform with offices in Italy and Latvia.
Most of the projects on the platform typically have a duration ranging from a few months to four years with high yields, usually above 14%. Like many other crowdfunding platforms, Crowdestate has a minimum investment of €100 on a single loan.
Platform’s Key Features at Glance
- The platform has been active since 2014;
- 52 821 registered investors from 126 countries;
- Over 295 projects funded;
- Average interest rate of 16.31%;
- Loans are used to fund viable real estate projects in Europe;
- It offers auto-invest features;
- There’s a secondary market (meaning you can exit early);
- Minimum investment is €100;
- There’s no buyback guarantee (But no default so far).
How Does it Work?
To invest through Crowdestate, you need to sign up, create your investment account, and transfer money to that account. Once you’ve transferred funds to your account, you can choose from several real estate investment projects that are available on the platform. You can also select mortgage loans and corporate finance that are available on the platform. As long as you’re a registered user, Crowdestate allows you to open several investment accounts, which give you more flexibility.
Like many crowdfunding platforms, Crowdestate offers investment opportunities with varying periods, interest rates (return expectations), and risk profile. The platform ensures that these details are easily accessible to enable you to make sound investment decisions based on your needs, personal preferences, and, of course, risk tolerance.
Keep in mind that you cannot terminate the loan agreement once you’ve invested your funds on any given project but you can sell the loan on the secondary market, especially if you’re looking to liquidate your assets quickly.
Here’s a summary of how the entire process works:
- Borrowers – Real estate developers and companies submit their real estate projects to Crowdestate with all the required documentation.
- Crowdestate thoroughly assesses the investment, its risks, formalizes the loan agreement with the borrower and makes the final decision whether or not to publish the project on the platform.
- If accepted, the real estate project is published in the Crowdestate’s marketplace, as well as all relevant information about the project.
- Investors (Lenders) choose the project to invest on, as well as the amount to invest. They’ll then receive monthly interests, as well as part of their invested money periodically (usually after every three months).
- Crowdestate ensures that its members’ investments are safe at all times until the project is exited.
Who Can Invest Via Crowdestate?
To invest through Crowdestate, you need to be an adult (at least 18 years old). And depending on your financial situation, you can invest as an individual or through a company.
Crowdestate allows people from a vast majority of countries to invest through the platform. Unfortunately, people from the United States CANNOT invest through the platform due to complex regulations that the U.S. government has set. If you’re unsure whether you can invest through Crowdestate, you can check here – https://financefreedom.eu/crowdestate/
How to Register an Account at Crowdestate
The first step towards using Crowdestate as your investment vehicle is to open an account on the platform. The process is quite easy and will take less than 5 minutes. All you have to do is provide is your name and email address. You can choose to either sign up via Google account or your Facebook account.
After signing up, you can now navigate through the platform and see the content, but you’ll still have to create an investment account to start investing.
The requirements to open an investment account include:
- Account type (choose between individual and company);
- Account name;
- First name;
- Last name;
- Email Address;
- ID Code (Local identity code or Social Security Number);
- Contact Information (Phone number and address);
- Residency information;
- Bank information.
While these details are pretty standard when you sign up for any crowdfunding platform, you can deposit funds on your Crowdestate investment account via a bank transfer and start investing within two days.
Making Your First Investment
Once you’ve deposited funds into your investment platform, it’s now time to start making investments. The platform only publishes real estate projects that’s have been carefully and expertly vetted by Crowdestate experts. Again, the platform offers a plethora of details about the projects to help you make a sound investment decision and choose a project that perfectly suits your needs.
All you have to do is click on the project and access detailed information about the project. In short, the greatest thing about using Crowdestate as your investment platform is that it offers a hefty amount of project information to make it easier for you to make the best investment decision.
Here is a summary of how to invest via Crowdestate:
- Create your account with your email address or Facebook account
- Get verified – Use the link sent to your email to verify your account. You should also submit proof of identity and other documentation (as outlined above) to open an investment account.
- Deposit funds to your investment account – You can deposit funds to your account via bank transfer.
- Browse for Investments – Go to the platform’s marketplace and browse for a suitable project. You can alternatively use the auto-invest feature to invest in the projects automatically.
- Exit Investments – You can exit the project at the end of the loan period or by selling your investment in the secondary market.
As a real estate crowdfunding platform, Crowdestate mainly offers investors the chance to invest in viable real estate projects across Europe. But that’s not all; you can also invest in mortgage loans, as well as corporate finance. Here is a complete list:
Real Estate – These are projects such as residential, office, retail, and healthcare buildings.
Mortgage Loans – These loans fall into two categories: first-rate mortgages that are guaranteed by physical assets and those that have personal guarantees.
Corporate Finance – These are meant to finance business deals through working capital, investment capital or bridge financing.
Types of Capital Raised in Crowdestate
Four main types of capital that can be raised in Crowdestate include:
- Equity – These are funds that can help you own part of the real estate project. You’ll benefit from the profits that are generated by the project both in the short term and long term.
- Mezzanine – This is a hybrid of equity and secured loan and is generally less risky than equity.
- Unsecured Loan – These types of loans tend to be riskier but they offer higher returns.
- Secured Loans – These types of loans are backed by collateral (security). They offer low returns but are relatively safer.
These details are offered on each project to make it easier for you to decide what to go with.
Given that the projects published on Crowdestate are highly lucrative and are funded pretty quickly, Crowdestate will notify you via email whenever projects go live on the platform. This is to ensure that you do not miss these opportunities.
Generally, around 7 to 8 new projects will be posted on the platform monthly. You should, therefore, be on the constant lookout so that you do not miss on a lucrative investment opportunity.
What Kind of Rate can you Expect?
The average rate of return that you can expect by investing via Crowdestate is 17.74%. The fact that the platform offers several projects gives you the chance to choose projects that suit your needs and risk tolerance.
Unfortunately, you can sometimes lack projects to invest in, which can be disadvantageous if you have funds that you want to invest in. As a result, you may not maximize your investment potential.
Setting Up Auto-Invest
The best way to make sure that you do not miss out on lucrative investment opportunities that suit your profile is by setting up the auto-invest feature. By activating the auto-invest function, you’ll be sure to automatically invest in new projects that fit your criteria, in fact, before manual investors get the chance to invest in them.
As shown in the picture below, it’s quite easy to set up the auto-invest function.
I personally do not use Autoinvest, because I like to hand pick the investments on Crowdestate myself.
Using the Secondary Market
As I mentioned earlier, it’s impossible to exit the loan agreement once you’ve invested your funds on a given project. But to make it easier for you, Crowdestate offers a secondary market to allow you to trade your investment to other investors.
This is a great way of ensuring not just liquidity but also the flexibility to exit investments whenever you wish and as quickly as possible.
What are the Risks of Using Crowdestate?
As with all types of P2P investments, some risks that come with investing in Crowdestate include:
Interest Rate Risk – There’s the possibility that the interest rates could fluctuate and negatively affect your investments.
Platform Risk – There’s the likelihood of Crowdestate failing and this can adversely affect investors.
Lack of Sustainable Liquidity in the Secondary Market – It can sometimes be difficult to exit your investment in the secondary market due to a lack of sustainable liquidity.
Default Risk – There’s the probability that borrowers might fail to pay back the money as agreed and this can affect investors given that the platform doesn’t offer buyback guarantee.
Security Risks – There’s the possibility of your information being compromised on the internet, especially if Crowdestate gets hacked.
So Is It Safe to Invest through Crowdestate
The simplest answer to this question is yes. You should not avoid using this excellent platform just because of the risks. Although the platform is always doing everything to mitigate these risks, you should also play your part in minimizing these risks by:
- Taking time to research the borrower;
- Diversifying your investments on various projects;
- Tracking your investments and performance;
- Investing your funds in small portions.
And What Happens if Crowdestate Goes Out of Business?
As I’ve noted above, Crowdestate is doing everything possible to ensure that the platform is safe at all times. For this reason, the platform legally separates its assets from investors’ assets. In other words, your investments are held on Special Purpose Vehicle (SPV) to ensure that your investments will not be lost even if Crowdestate goes bankrupt.
It’s important to note that not all projects on the platform have a buyback guarantee. While other projects have a buyback guarantee, others do not have a buyback guarantee. It’s, therefore, important to check if the project that you want to invest in has a buyback guarantee.
On the other hand, most loans on the platform are secured through first-rank mortgages (physical security) or personal guarantees. Better still; the default rate on the platform is at an impressive 0%.
Like most P2P platforms, Crowdestate does not charge investors any form of fee. It is free to use the platform.
Crowdestate Ease of Use
Crowdestate’s website is designed in a very pleasant way to ensure that you enjoy navigating through the platform. Despite the lengthy investment descriptions, it’s very easy to navigate the platform even on your mobile phone. Again, the platform offers impeccable support to users through phone, 24/7 live chat, email, and the platform’s Facebook page.
In terms of languages, the platform is available in languages such as English, German, Estonian, Spanish, Italian, and Russian.
- The platform offers many projects with higher returns;
- There’s the availability of a secondary market (ease of exit);
- Availability of the auto-invest feature;
- The platform has never experienced defaults.
- There’s no buyback guarantee on most projects;
- A small portion of the projects pay monthly interests;
- High yield projects tend to fill up fast.
Conclusion – Should You Invest?
So far, there is not a single reason to point out that Crowdestate is not an excellent crowdfunding platform to try out, if you are looking to diversify your portfolio. If you’ve been looking for a crowdfunding platform that offers viable real estate projects and is easy to use, Crowdestate might be your best option.
But before investing your money in any of the projects, just take your time and do your research and only invest in projects that you’re comfortable with.
Save for its lack of buyback guarantee, this platform has one of the best track records in the P2P industry and you should seriously consider it if you’re looking for a robust platform that allows you to invest in real estate, without doing much, thanks to its auto-invest feature.
Crowdestate referral code
Start investing in real-estate at Crowdestate platform today and earn passive income!
Click here to register – https://financefreedom.eu/crowdestate/
My experience with Crowdestate
I started investing at Crowdestate on 19.09.2018, when I deposited 500€ to the account.
So far I have had 0 problems with the platform and the deposited money is working hard. Crowdestate displays me that I have an average expected returns of 13,54%. Which is pretty great.
The only problem in my mind is that Crowdestate has a 100 euro investment minimum.
My Crowdestate portfolio – https://financefreedom.eu/crowdestate-portfolio/
Where else to invest?
For those looking for other similar peer to peer platforms to invest, you may want to read some of my other reviews. There are many peer to peer lending and investing platforms currently available, and you can diversify your interest income by using several of them simultaneously, just like I do.
Please share your opinion
What do you think about Crowdestate? Do they have a solid background for you to invest your money into their projects?