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2018-08-12 16:35

An investment with more than 10% return per year

While saving accounts hardly reach a 1% return (many banks offer 0.01%), savers are looking for other investments to avoid to loose money because of price inflation. Peer-to-peer (P2P) platforms are multiplying. EstateGuru is one of them.

EstateGuru connects people looking to borrow money with those looking to invest money. The company claims more than 50 million euros lent and more than 10,000 investors. The financed projects are related exclusively to real estate, the property serving as collateral (hoping the valuation is right and the value won't drop). This may be, for example, a bridge loan between a purchase of real estate and the resale of another property. The rates announced to investors by the platform are high: more than 12% per year on average since 2014. Even if the recent returns are lower, around 11%, they appear very attractive.
But that means that the borrower has to pay an even higher rate. In fact, EstateGuru is active especially in Baltic countries where personal credit rates are high (22% in Estonia), very far from the rates in France for example, where we can see promotions around 3%. It's quite amazing as the currency is the same, the euro. But a resident of Estonia could not take advantage of a loan in France... Also, despite significant remuneration, Baltic banks are paranoid and refuse many credit applications.
EstateGuru allows you to invest automatically in projects selected on the base of various criteria, otherwise the investment is manual. For some small projects automatic investment is the only way to benefit as the possibility is going away fast. In automatic mode, it is possible to choose the term, the interest rate and so on, but unfortunately not the country where the property is located. Until invested the money is "sleeping" (but can be withdrew anytime). In addition to the financing process which takes few days (process during which the money does not yield anything either), the lent money is blocked during the variable duration of time according to the project length: 12 months, 18 months, etc. If the platform takes care of borrower's default following the legal steps, the financial guarantee is almost non-existent in case of bank's default (LHV, the Estonian bank we don't like...). On the other hand, if EstateGuru goes bankrupt, the client's money is recoverable as the intermediary has no right to touch it.
We have met satisfied users of the platform, but that does not bode well for its future outcome: our presentation of EstateGuru's activity is not an incentive to invest in it. But, if you wish to do so, this affiliate EstateGuru link will allow you to get a 0.50% additional bonus on investments made up to 90 days after having registered. The user interface of the website is available in English, German and Baltic languages. Investments are possible from 50€ and there is no charge for operations.

There are many peer-to-peer loan platforms on the Web: Estonian (Bondora, Iuvo...), Latvian (Mintos, Twino...), British (Zopa, Assetz Capital...), French (Lendix, Credit.fr...), etc. We gave the example of EstateGuru because it offers a balanced combination of return rate and risk management. Other platforms may target borrowers from other countries, consumer loans without any real estate collateral and so on. The risk often looks greater while the rate doesn't seem proportionate (even though 12% is often the promoted rate). The interfaces are not always user-friendly for the beginner, but it is possible to automate the management, or even to completely outsource (almost as a saving account), at the cost of less attractive rate than in manual mode where some users can reach more than 20% return. Some of them use third-party software robots to find the best opportunities in real time - so the best deals may escape the un-equipped beginner.
On some of these platforms, it is possible to resell investments with a premium or discount on a so-called second market place, with or without transaction fees. Some platforms also offer a buy-back guarantee in the event of borrower's default, but read the terms and do not forget that this guarantee only works if the platform doesn't default itself!
We underline that this article is not an incentive to invest. If you do though, only put the money you can afford to lose!

Update for Estonian e-residents: Using an Estonian service to invest in Estonia could help an e-resident Estonian company to get the link with Estonia that the Estonian banks request to open a business account. Some P2P investment services told us they agree to work with e-residents' companies: EstateGuru, Bondora and Iuvo. Some of them want the investors to have a bank account in Europe. Contact them for more information.


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