CrowdEstate funds real estate projects through the investor crowd. Märt Meerits an associate at Crowdestate, explains what is CrowdEstate and what is its competitive advantage compared to other platforms.
What is Crowdestate?
Crowdestate is a 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 bring to our investors extensive background information, risk level, SWOT, business plans and financial models combined with a low 100 euro minimum investment – all of this makes investing into real estate quick, easy and affordable to everyone.
Real estate is not an easy asset for the retail investor to access, because of the high entry points, focused risk and time needed for due diligence. How is Crowdestate solving this problem?
For most of us, investing into real estate means taking out a huge mortgage and buying a home, or needing large sums of money to buy an apartment to rent out. Crowdestate is changing the way we invest into real estate.
First and above all, Crowdestate delivers pre-vetted projects for crowdfinancing, where anyone can participate with as low as 100 euros. Our team has experience in both finance and real estate development and thoroughly evaluates each aspect of every project. Our focus has been on properties in countries where we are either present or that are located nearby (currently Baltics and Scandinavia). The end result is a thoroughly evaluated project for which we always prepare a comprehensive brief for our platform. All investors can read the brief, and decide, which projects they would like to include in their portfolio.
Can you describe Crowd Estate in numbers?
- The average ROI for investors on the platform based on exited projects today is 29.59%
- The number of defaults – 0
- The number of successful exits – 11 YTD
- The number of users – over 15 000 and rising
- The amount of capital raised for projects – 17.5 million euros
- Active since 2014
- Total number of projects – 37
Who are the people behind this innovation, can you tell us more about them?
Crowdestate was established by Mr. Loit Linnupold in 2014, knowing that the local retail investors did not have access to real estate as an asset class, either because of the large sums required, or due to the active role investors generally assumed in the development process. Crowdestate as fintech company resolved it by providing investor aggregation and supply of projects with lead investors (developers). Currently we are a team of 6 people, excluding legal and IT (sourced from partner companies).
Is Crowdestate a crowd funding or a crowd investing platform?
We really do not see a big difference between the two – developers can apply for funding, and simultaneously – investors can participate in investing.
What are the risks to investing on Crowdestate, and how is Crowdestate mitigating these risks?
Investing into real estate is like investing in any other asset class – with each having their particular risk factors. Crowdestate mitigates this risk with our competent team that performs a thorough due diligence on each project starting from an analysis on the company seeking funding, the purpose of the funding as well as full analysis on the proposed project – the location, its potential, competition, capital structure and budget. Throughout the process our team determines if the project is viable, and if we can offer it to our investors. If we do not believe in the success of the project, we will not present it to our investors.
Peer to peer lending and equity based investing is a flourishing industry, what are some investors benefits found on Crowdestate that are unique to the platform?
First and utmost – access to real estate as an asset class. Most peer-to-peer lending platforms are construed on anonymous, diversified portfolio investments into unsecured private loans, hence there is very little control over the borrowers financial health and behavior. We offer projects that can be individually assessed – this allows both retail (small injections into many projects) and institutional (clear investment reasoning, large injections) players to participate.
Has there already been an exit from a CrowdEstate investing offer? What are the reasons behind this success?
We have exited in total from 11 projects out of 37, with an actual cash yield of 29.6%.
The high number of exits can be attributed to our due diligence process. Our team carefully reviews each project starting from an analysis on the company seeking funding, the purpose of the funding as well as full analysis on the proposed project – the location, its potential, competition, capital structure and budget. If the project is not viable, we will not open it on our platform.
In which countries is Crowdestate present? Will there be more in the future?
We are currently operating in Estonia, but we undertake projects also in Finland and Latvia. We are an international platform, and not only investors can come to us from all over the world, but also companies seeking for funding.
What advice do you have for new Investors on Crowdestate?
Start small, invest regularly, gain trust by time
What are the new products and innovations that investors can expect from Crowdestate in the near future?
We are just now finishing an update in our services – enabling smaller projects backed with a mortgage to come to us for funding. Our system enables a fast and easy interaction of project owners with us. The mortgage lending option also brings with it a reverse interest auction (for the determination of market interest rate for a particular project). We are also considering to open a Secondary Market for investments within this year- enabling investors to exchange their investments for cash with other investors.
How should investors discern between all the p2p investing opportunities that exist today? What should be their key selection criteria when it comes to peer to peer investing decisions?
We always suggest our investors to learn about all possible p2p investment options to find the one best suitable for them. There are many different platforms available today, so it can be overwhelming. So, before investing, one should make it clear to themselves about what kind of risk they are willing to take (secured vs unsecured projects), what is the maximum investment term they would like to have (from a few days to a few years), and overall, what they would like to invest in (private loans, car loans, loans to companies, loans into real estate etc).
So, we suggest to learn as much as possible about the different options and only then to choose the suitable one for the investor. And of course, investigate the success rate vs defaults of the platform to better assess the risks.
cTo learn more about CrowdEstate please visit : CrowdEstate.eu
We thank Märt Meerits for the interview.