Estateguru Review 2023: Has Expansion Failed?

Estateguru is one of the biggest market leaders for short-term and mortgage-backed real estate loans in Europe. More than 155,000 investors have registered on the platform since 2013, funding more than €700 M in loans.

Due to its proven track record and flawless performance throughout many years, the platform has always been an integral part of my personal P2P portfolio for many years. 

However, the platform’s increasing performance issues since 2022 are striking, especially in new markets such as Germany. In this Estateguru review you will find out about the risks that come along with investing on the Estonian platform and whether an investment in 2023 is worthwhile.

All the information that are covered in this Estateguru review are based on my own personal experiences with the platform for the past 5+ years. Please make sure to do your own due diligence before investing on any platform. More information can be found in the Disclaimer.

Further analyses of other platforms can be found on my P2P Platform Review page.

Last Update: May 2023

Estateguru Overview

Before we get started, here is a quick summary with the most important information about Estateguru.

About Estateguru

Estateguru is an Estonian P2P platform, founded in October 2013, where retail investors can fund mortgage-backed real estate loans from different European countries, while earning an average return of 11%.

The vision of Estateguru is to become the leading European marketplace for short-term and mortgage-backed real estate loans.

The Origin Story

Marek Pärtel is an Estonian businessman who has extensive knowledge in the real estate industry both as an investor and as a project developer. Having witnessed first-hand time and time again that financing from banks was proceeding very slowly or was not being approved despite sufficient collateral, he then came up with the idea of founding an alternative marketplace for real estate loans.

Together with his two partners, Kaspar Kaljuvee (CRO) and Marko Arro (CFO), he then founded the Estonian company “Estateguru OÜ”.

Who owns Estateguru?

More than 70% of the shares are currently owned by the three Estateguru founders Marek Pärtel, Kaspar Kaljuvee and Marko Arro. Other shareholders are:

• Joao Monteiro: 8.8% (Angel Investor; Pinto Ventures)
• Speedinvest VC: 7.42%
• Helmes OÜ: 4.26% (Estonian software development company)
• Seedrs investors: 3.06%.

The remainder is divided between individual employee shares and smaller private and angel investors.

Estateguru Management

Estateguru is lead by CEO Mihkel Stamm. He has been working for Estateguru in the role as COO since January 2017. In January 2023 he took over the CEO position from Marek Pärtel who was transitioning to the chairman position.

After receiving a masters degree in Psychology, Mihkel worked his way up on the coroporate ladder while being in several positions in the finance and banking industry. 

Business Model & Finances

Throughout the process of due diligence, investors should also have a look at the business model of a P2P platform as well as the overall financial situation. How does the company earn money? Does the platform operate profitably? And how well is the company positioned financially? In the following paragraphs of this Estateguru review, you can follow-up on those questions.

How does Estateguru earn money?

Estateguru reached a turnover of €7.12 M in 2021. According to the numbers of the audited annual report, the platform generated a large part of its revenue through brokerage and commission fees from borrowers.

• The Commission Fee: The commission fee at Estateguru is between 2.5% and 4% of the loan amount.
• Management Fee: The management fee contributed with €357,537 to revenue in 2021.
• Other Revenue: The remaining revenue amounts to €278,271.

In 2020, Estateguru has also started to monetize through investors. This includes a 3% transaction fee from trading on the secondary market, a monthly inactive-account fee of €10 (if no active loans are in the portfolio) as well as a €1 withdrawal fee.

Is Estateguru profitable?

Estateguru hasn’t been profitable for the past three years. Last year’s annual report stated a loss of €2.18 M.

Sign Up and Bonus

On Estateguru, both natural and legal persons can register on the plaform. The only requirements are a minimum age of 18 and a European bank account. Funds are transferred directly to Lemonway, which is the platform’s partner bank that ensures a proper segregation of funds.

The registration process at Estateguru is very simple and intuitive. After opening an account via email, the KYC and AML questionnaires must be filled out. This is followed by the verification of identity and the declaration of tax residence.

Bonus for New Investors

If you are interested in signing up on Estateguru, you will receive a cashback bonus of 0.5% if you register via this link.

Investing on Estateguru

How does Estateguru work and what should investors know and consider when investing on the plaform? In the following sections of my Estateguru review you will find all the necessary information that you need.

Loan Offering on Estateguru

On Estateguru, investors can invest in three different types of loans:

• Development loans: these are loans used to finance either the planning process of a property or the development/construction of the property itself.
• Bridge loans: Also known as interim financing, these often short-term loans are used to bridge temporary liquidity bottlenecks. As a rule, these loans are usually redeemed by another loan after a short term.
• Business loans: these loans are used to support the day-to-day operations of a business, which may include, but are not limited to, business expansion, the purchase of equipment and goods, or to cover outstanding obligations.

Currently, Estateguru offers loan financing in eight different countries. In addition to the Baltic countries, these include Finland, Germany, Spain, Portugal and Sweden.

Costs and Fees

Most services for investors are free of charge on Estateguru. The few exceptions include a 3% transaction fee when selling loans through the secondary market, a monthly inactive-account fee of €10 (if there are no active loans in the portfolio) and a €1 withdrawal fee. Deposits as well as investing into loans are free of charge for investors.

The full price list can be reviewed on this page.

Expected Returns on Estateguru

The historical return on Estateguru is 10.9%. However, my personal return after 4+ years is only 7.9%, which is lower than what the platform advertises. The loan defaults on Estateguru, which increased heavily in 2022, had a particularly negative impact.

Here is an overview of my personal returns achieved on Estateguru throughout the last few years.

Auto Invest

Investors have three different ways on how to invest on the platform:

• Manual loan selection on the primary market
• Manual loan selection on the secondary market
• Automated investing on the primary market

With the Estateguru Auto Invest feature, investors have the option to set predefined criteria for their loan selection, thus passively managing the investment. Possible configuration criteria include:

• Investment amount: From 50 euros (but with limited filtering options)
• Interest rate: 8% to +11%
• Loan period: Up to 60 months
• Loan-to-value: Up to 75%
• Collateralization: First-rank or second-rank mortgage
• Borrower country: Estonia, Latvia, Lithuania, Finland, Germany, Spain, Portugal, Sweden

The full Auto Invest selection options can only be used with a minimum investment amount of €250 per loan. For those who have less money available on Estateguru, it is recommended to select loans manually first to achieve better diversification.

Liquidity

The average loan term is around 12 months, which is an average length for this loan segment. Those who need more liquidity can use the secondary market on Estateguru (3% transaction fee) or the instant exit option (for 35% discount). If this doesn’t offer enough liquidity for you, then you should look for other P2P platforms.

Estateguru Forum

If you have questions about Estateguru, other platforms or different p2p-related topics, you can join the re:think P2P Community on Facebook and engage in discussions with more than 1,000 other private retail investors.

Estateguru Taxes

In general, interest income generated by loan financing is considered investment income and must be reported as such on the tax declaration. Unlike other P2P platforms, Estateguru does not withhold taxes on interest income.

Through the dashboard, investors can download an extract of the tax report for the given year, where the corresponding income is listed.

Estateguru Risks

Investors should look very carefully at the potential risk factors when evaluating a P2P platform in order to weigh them before making a potential investment. Here is what investors need to know about potential Estateguru risks.

Corona Crisis / Covid-19 Pandemic

Estateguru is one of the better platforms to come out from the Corona pandemic. The company reacted promptly to the events, initiated measures, implemented them right away and also informed investors immediately about new developments.

The platform responded in blog posts, webinars or Q&A sessions to the most important concerns of investors. The statements have been clearly articulated and potential risks were clearly addressed instead of playing them down.

“We have not suffered a capital loss since 2014 and the average return on loans collected is 10.4%. We expect partial capital losses in some loan cases this year due to the economic situation, but if the portfolio is properly diversified, this would not significantly affect the overall performance of investment returns.”

Measures implemented during the Corona pandemic included:

• Cost reduction of 30%: In particular IT expenses and investment costs for expansion.
• Adjustment of terms and conditions: Extension of loan terms and adjustment of repayment terms.
• Due Diligence: Adjustment of risk assessment for new projects. Increased focus on residential properties in more urban areas and growth regions, with financially strong borrowers and liquid collateral.
• Observation: Cautious approach before offering new loans to the platform. 

As a result, Estateguru has been able to grow its outstanding portfolio from €93.3 M (April 2020) to €113.8 M (December 2020) in just half a year. To put this in perspective, by the end of 2021 the portfolio under management was already at €208.8 M.

War in Ukraine

At first glance, the war in Ukraine had no direct impact on Estateguru. Developments in the various borrower countries, which do not include Ukraine or Russia, were largely stable. In addition, there were also no operational restrictions for the Estonia-based platform.

In specially conducted stress tests, the platform concluded that property valuations in all markets would have to fall by approximately 45% for there to be a visible impact on the performance among investors.

“Our team executes regular stress tests and according to our current estimates the real estate markets in all of the countries in which we operate would need to go down an average of at least 45% before our investors’ portfolios are affected.”

Increasing Loan Defaults 

The platform has increasingly struggled with loan defaults since 2022. These include in particular the markets in Germany and Finland. In February 2023, more than 35% of the outstanding portfolio have been in the process of recovery. In Germany alone, this figure reached its peak at 85%. A disaster for the platform, which has set a major focus for its growth in Germany.

Meanwhile, the platform has communicated an internal investigation regarding potential violations of the 2020/2021 German team members.

We should also note that we are currently investigating possible violations of our internal regulations by some of our German employees in 2020 and 2021.

In September 2022, the platform communicated that loan financing decisions cannot be made exclusively by the Germany team.

Is Estateguru Safe?

In a nutshell, Estateguru can be described as a safe platform.

• The platform holds credit financing licenses in all borrower countries where they are required.
• The platform cooperates with Lemon Way as a payment processor, which ensures segregation of funds.
• The platform is seeking to obtain the European Crowdfunding Service Provider (ECSP) license.

Nevertheless, investors should also pay attention to a few security-related issues: For example, there is no deposit insurance for the funds invested on Estateguru, credit defaults can lead to a loss of capital in case of default, and the economic stability of the platform can also have a negative impact on investors.

Pros & Cons

In this section I have listed the most important advantages and disadvantages of Estateguru.

Advantages

• Strong Shareholders: Estateguru is funded and supported by strong partners. The likelihood of being let down in this growth environment seems extremely low.
• Track Record: Estateguru has established itself as a Europe’s leading marketplace for short-term and mortgage-backed real estate loans since 2014.
• Strong Collateral: A large proportion of loans come with a first-rank mortgage, which is why investors are also the first to benefit from a sale in a worst-case scenario. In addition, the average LTV of 65% provides a good risk buffer.
• Community Support: Estateguru enjoys great support among P2P investors. In my community voting, the platform achieved the second place twice in a row.

Disadvantages

• Lower Return: My personal return after 4+ years is only 7.9%, which is off the advertised return between 10% and 12%.
• Conflict of Interest: Some procets on Estateguru, which are yet to be fully repaid, have had an involvement from Estateguru management.
• Liquidity: On one hand, there is a 3% transaction fee for investors on the secondary market, on the other hand the secondary market is not particularly liquid in times of crisis. The solution with EstateGuru Instant Exit can only be used with a 35% discount.
• Guideline Violations: Estateguru investigates possible violations of German team members from 2020/2021. This doesn’t reflect well on the company as a whole.

Estateguru Alternatives

Real estate platforms have a good tradition in Estonia. An Estateguru alternative that has a similar business model is the platform Bulkestate. A slightly different approach, but also active in the real estate sector, would be ReInvest24.

You can find other Estateguru alternatives on the P2P Platform Comparison page.

Estateguru Community Feedback

Estateguru was one of the most popular P2P platforms among German investors for a long time. Both in 2021 (4.12 points) and 2022 (4.14 points), Estateguru achieved an above-average result and the second place in both recent community votings. However, due to the weak development of the loan portfolio, Estateguru was severely punished in the 2023 community voting. In the end, the Esttonian platform only managed a score of 2.63 from 130 votes.

The most popular platforms in 2023 have been Esketit, Robocash, PeerBerry, LANDE and Income Marketplace.

Estateguru Review Summary

If you want to diversify your P2P portfolio with mortgage-backed real estate loans, there is almost no way around Estateguru. In recent years, the company has established itself as the leading marketplace for short-term and strongly collateralized real estate loans in Europe, thanks to a clear vision and consistent actions.

The set-up and the framework of the platform offers a good opportunity for maintaining and also expanding the market share in the coming years. However, the company will need to get hold off their issues in growth markets such as Germany, which have upset many investors.

The recovery of defaulted loans will show whether Estateguru can not only collect money, but also recover it through legal actions.

For conservative investors, it is advisable to invest only in the Baltic credit markets until further notice. Then the return, which lags somewhat behind the advertised prospects, should also be much more realistic to achieve.

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