What is peer to peer exactly? What does p2p real estate lending in this context mean? How does it work and how safe is my investment? How high is the return of investment and how long do I have to invest my money for?
Preface
For those of you who have never heard of p2p or peer to peer, let me briefly explain what it is. The bottom line is that a private person lends money to another private person. For this purpose, certain platforms mediate the loans without a bank being involved. Thus, people can borrow money outside the traditional system and are more independent of banks. As an investor, you then have the option of deciding who you want to lend your money to.
The advantage with p2p real estate is that the loans are secured by mortgages on the land and property. If a loan defaults, they can usually assume that you will still get your money, although it may take a little time. This may require going to court or something similar.
One important key figure is the LTV – loan to value. This figure is expressed as a percentage. The ratio expresses the relationship of the loan amount to the market value of a property. If the LTV is 50%, it means the following. If the value of a property is 1 million Dollar, only a loan of 500,000 Dollar will be given. This means the following. The smaller the ratio, the higher the security of the investment.
There are first-ranking and second-ranking loans. If a borrower can no longer pay his installments and becomes insolvent, then the existing assets are paid out to the lenders. The property is sold and the proceeds are first used to serve all lenders of a
p2p Real Estate – Platforms
I would like to introduce you to the largest p2p real estate platforms in Europe. They are active in different countries and cover a wide spectrum in Europe. You as an investor have the possibility to choose what suits you best. Depending on how risk-averse or fearful you are, there are different providers.
I see this type of investment as very promising. Since I am looking for a high yield, I try to invest more money in platforms with higher interest rates. I try to use the
1. Exporo
Exporo was founded in Hamburg in 2014. Since then, the company has been growing steadily and now it has over 200 employees all over Europe. It has its headquarters in Hamburg’s Hafencity. Exporo is Germany’s leading platform in the p2p real estate sector. Here you can invest your money in existing properties – like an owner.
In addition, you can participate in projects for the construction of new residential buildings or for the renovation of commercial properties.
Until 15.09.2020 Exporo has realized 342 projects and mediated € 649 million. Supported by almost 30,000 investors, an average effective
Advantages
- Projects in Germany, Austria, France and the Netherlands
- Earn Miles with Miles & More
- Trading place for existing properties
- Investment period 1 to 10 years
- New: invest from 1€
- Personal advisor by phone
Disadvantages
- Not such a large selection of projects
- Many investments only possible from 500€
- No automatic investment
- Site only in German
Through the merger with Zinsland in 2019 Exporo became – by far – the largest platform in Germany. Since both companies were based in Hamburg, the merger was relatively easy. Now they are the largest p2p real estate platform in Europe. They are growing steadily and are now also active in Germany’s neighboring countries.
2. EstateGuru
EstateGuru was founded in 2014 in Tallinn, Estonia. Their marketplace for short-term, real estate secured loans is already active in 7 countries and more are to follow. This gives investors the opportunity to diversify their investments and minimize risk. The countries Estonia, Latvia and Lithuania make up the main part of the projects. However, there are also projects in Finland, Germany, Portugal and Spain.
Since its founding, EstateGuru has already granted 237 million Euros in loans (as of Sept. 15, 2020). During the same period, almost 18 million Euros were paid out to investors. A total of 1,724 loans have been funded with a
Advantages
- High yield 11.69%
- 7 countries
- No loan default so far
- Investment period 12 – 60 months
- Auto Invest available
- Secondary market for sale
Disadvantages
- Investment from 50€
- Auto Invest – better setting from 250€ per investment
EstateGuru has big plans. They are aiming for an IPO in the next 5 to 10 years. To do this, they are raising money to continue to grow. This is the only way they can survive in a competitive market environment. The Baltic countries are at the forefront of p2p lending in Europe. It is hardly surprising that EstateGuru is in 2nd place.
3. Housers
Housers was founded in 2016 in Spain and it already expanded in 2017. Branches were established in Italy and Portugal and Housers is now active in 3 countries. You can invest in different types of loans on the platform.
For example, there are properties for rent or development loans. In addition, there is a rating for each loan, which can be used to assess the risk.
Until Sept. 15, 2020, Housers had granted 117 million Euros in loans. On average, Housers paid out
Advantages
- High average return with 8.66
- 3 countries
- Investment period 12 – 60 months
- Rating system for the loans
Disadvantages
- Real estate market in Southern Europe may not be so stable
- No automatic investment
- Investment from 50 Euros
Housers is widely established in the south of Europe. If you would like to invest there, Housers is the right address. There are always projects available to invest in. Today, for example, there are 3 properties and one of them is in Spain, one in Portugal and the other in Italy.
4. Bergfürst
The p2p real estate platform Bergfürst was one of the first of its kind to launch back in 2011. After some problems around 2015, however, it is now doing well again. As an investor, you can achieve yields of between 5 and 7.5 percent from as little as 10 Euros.
Since the p2p platform is active in several countries, they have a wide variety of options. For example, there are properties in Germany, Luxembourg, Austria and Spain.
Until September 2020, 110 million Euros had been invested by more than 70,000 people. In the process, 82 projects were financed. With an investment period of 12 to 60 months, the loans are relatively short. In most cases, however, the loans are repaid earlier.
Advantages
- Invest from 10€
- Objects in many countries
- Interest rates between 5 – 7,5%
- Secondary market available
- Investment period 12 – 60 months
- Auto Invest with up to 5.3% return over 6.5 years
Disadvantages
- Loans do not show LTV (loan-to-value)
- No valuation system
- Page not very transparent
- Site only in German
Although Bergfürst has been around for a very long time, they only have a market share of 12% in Germany. However, they can still secure 2nd place behind the market leader Exporo. Especially since this p2p real estate platform is listed in Germany, this may have advantages for you as an investor.
5. CrowdProperty
Like many platforms, CrowdProperty was founded in 2014. The company is headquartered in Birmingham UK. Their projects are spread all over the UK and have been 100% repaid so far. Thus, they create trust among investors and the number of their properties is constantly increasing.
CrowdProperty is a founding member and the only p2p real estate platform of Innovate Finance 36H Group. The 36H Group succeeds the peer to peer Finance Association.
The company had £92 million pounds worth of loans until September 2020. This makes them the largest platform in the UK at the moment. The average LTV reaches 60% and the interest rate is around 8% for investors.
Advantages
- 100% of loans repaid
- Up to 8% interest
- Investment period 12 – 60 months
- Auto Invest available
- Over 10,000 investors
Disadvantages
- Development UK with Brexit questionable
- Exchange rate risk
- Investment possible from £500 pound
- Bank account in UK necessary
CrowdProperty is widely positioned in the UK and so you have a wide choice if you want to invest your money there. With the different options that can be found there, you have the chance to get good interest rates.
6. Kuflink
In 2011, the company started as Alpha Bridging. This was followed in 2016 by a change of name to Kuflink Bridging. With this, the peer to peer platform was also born. The company is headquartered in Kent, England. The properties are mainly in the Greater London area or in the southeast of England. Also Kuflink has a rating system and a auto invest with different terms.
Until Sept. 15, 2020, loans totaling £89 million have been granted. Thereby, 88 projects with a volume of £44.0 million pounds are currently open. Of these, the share of residential properties is approximately 80%. The LTV is 55% on average and the
Advantages
- High yield 13.2%
- Low LTV
- Investment period 12 – 60 months
- Auto Invest with 3 variants available
- Secondary market
Disadvantages
- Investment possible from £100 pounds
- Development UK with Brexit questionable
- Exchange rate risk
In recent years, the development has been very positive, but now we have to wait and see how the Brexit will affect it. Kuflink is one of two major p2p real estate platforms in the UK. Therefore, if you plan to invest in the UK, you should definitely take a look at Kuflink.
Conclusion on the subject of p2p real estate
The longer I look into this topic, the more I realize what great opportunities an investment in peer to peer loans offers. Especially an investment in p2p real estate has additional protection through the mortgage. So your investments are not only secured by the platform itself, but also by a real property.
Now it is up to you. If the topic of p2p is interesting for you, then take a look at the sites. Then you just have to decide where and how much to invest. Nevertheless, I would like to point out the following.
Attention – p2p loans are risky!
Please be aware that loans might not be repaid and you may lose your investment. Even mortgages on the real estate can not fully protect you if the borrower or the platform is insolvent.
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This article is not an investment advice, it is only our personal opinion. We report here only on our personal experiences and findings as private investors. Thus, my texts serve solely to impart knowledge and do not constitute an invitation to buy or sell investment products. For further information please refer to the disclaimer.