The day has come for me to do the Crowdestor review. My favorite platform to invest in peer to peer lending could not be missing in my blog.
In my opinion Crowdestor is the best peer to peer lending platform. I’ve only been investing in it for 7 months, but it’s completely captivated me.
Its high returns, new projects released every week and the ease of use of its website makes Crowdestor platform the top 1 of my peer to peer portfolio.
There is a reason why it is the company that is growing the most in my peer to peer lending portfolio.
If you don’t know what peer to peer lending is (also known as p2p or crowdlending), I recommend you take a look at my guide to invest in peer to peer lending.
Well, let’s start with my analysis!
What is Crowdestor?
Crowdestor is a p2p platform that allows investors to invest in loans from companies across Europe. These loans help companies get financing in order to develop their projects.
They define themselves as a business crowdfunding platform, as you can see in the image above.
By the way they operate, I would not define them as a crowdfunding platform, but as a p2p lending platform. This is because Crowdestor offers loans with a term and interest rate agreed at the beginning of the loan.
As I explain in my article about investing in peer to peer lending, the main difference between crowdfunding and p2p is that in crowdfunding you buy a participation of a project, and the project has to succeed for you to make money.
On the other hand, in peer to peer lending you lend the money for a certain period of time at a fixed interest rate. Therefore, the investor does not need the project to succeed to make money.
Although there are people who consider Crowdestor real a estate crowdfunding company, I see them as a peer-to-peer lending.
Crowdestor was founded in Tallinn(Estonia) in 2018. The main countries where it operates are Latvia, Estonia, Germany and the United Kingdom, since the borrower companies belong to the European Union.
Advantages and Disadvantages of Crowdestor
The main advantages of Crowdestor are:
- High returns: their projects give up to 26% per year
- Many new projects each month
- Buyback guarantee with Crowdestor buyback fund
- Short-term loans: 3 to 24 months
- Easy-to-use platform
- Very diverse projects: investments can be diversified
- Big growth: there are many new investors and companies every month
Crowdestor’s main advantage is the high yield offered by its loans. You can get up to 26% annual return.
Due to the large number of new loans funded every month, it is very easy to invest in Crowdestor.
The disadvantages are:
- No Long Track Record: it has been operating for a year and a half
- Secondary market not available: they are working on it
- No auto invest: it should be available soon
The longer a company has been operating, the easier it is to analyse its behaviour and results. Since the company started operating in 2018, it does not have a long history.
It is important to note that for now Crowdestor’s performance is very good, and its results are exceptional.
Auto invest feature is not yet available. As a result, investors have to invest in Crowdestor manually. This is not a big problem since there are new projects in Crowdestor coming out almost every day, so you always have opportunities to invest in.
It is also true that the projects with high returns are filled quickly, so you need to pay attention if you want to invest on them.
The good news is they’re working on having auto invest feature available soon.
I hope we can soon enjoy the comforts of auto invest!
The secondary market allows the investors to buy and sell loans from other investors.
This increases the liquidity for investors who want to sell their loans, and the available loans for investors who are looking for investment opportunities.
Crowdestor doesn’t have a secondary market yet. Consequently, if you need to recover the capital invested you have to wait for the loan to finish. Therefore liquidity is low.
Crowdestor is also working on this feature, and they hope to have it active by 2020.
How to start investing in Crowdestor
I’m sure you’re wondering how you can invest in Crowdestor. Let me tell you that opening an account and starting to invest in Crowestor is very easy:
- Sign up via this link
- Fill in your personal data
- Add your bank account for depositing and withdrawing money
- Upload your ID or passport
- Wait 1-2 days for them to review the information provided
- Make a bank transfer and start investing
Now you have your Crowdestor account, ole!
It is important to note the minimum investment in a loan is 50 euros. Other peer to peer lending platforms have a higher minimum investment (100 euros, 200 euros, etc).
I also want to highlight that all investments in loans are in euros.
On the loans page, you can see all the active loans.
Each loan gives you all the information you need, such as the target amount of money, interest rate, type of loan, location, LTV (loan to value) and the number of investors.
The image above corresponds to a loan I recently invested in. An annual return of 19% during 2 years? Yeah! 🙂
Crowdestor also gives you many details about the borrower and how they intend to use the money lent.
In this case we see that the company focuses on real estate business, and this specific project is for acquiring and developing a real estate object in Riga.
It also tells you when the interest payments and loan repayment will happen, and it gives you details about the security used as collateral.
Risks of investing in Crowdestor
If you are going to invest in Crowdestor, it is important to know the risks of peer to peer investments. When you make an investment in a loan, there is a risk of not getting your capital back.
That’s why it’s important to know the risks associated with each project you invest in, so you can try to reduce them.
To reduce the risk, it is important that you invest in secured loans.
Secured loans means that in case the borrower is unable to return the money, the collateral used as security will be sold in order to pay back the investors.
The value of the guarantee is always greater than the amount of money borrowed. This ratio is known as Loan to Value, and it’s typically abbreviated as LTV.
At Crowdestor all loans are secured.
Buyback Fund – Buyback Guarantee
Another way to reduce risk is to invest in loans that offer buyback.
When a loan has buyback guarantee, it means that if the borrower does not repay the money, the loan originator will pay the investors, and then it will negotiate with the borrower to recover the capital.
If a loan is secured by a collateral and the loan originator offers buyback, the investor is doubly protected.
At Crowdestor all loans are guaranteed by the buyback fund.
The buyback fund is a fund that Crowdestor will use to return the money to investors when a project defaults. Since it was created in 2019, for now its funds are not very large (currently 212,000 euros).
In case there are multiple defaults the buyback fund will not be able to cover all the investors money, so the investors will have to wait for the sale of the security used as collateral.
The buyback fund and the loan security are the two mechanisms the investor has to protect his/her invested money.
Crowdestor’s buyback guarantee reduces the risk of you losing your capital.
Is Crowdestor safe?
When you invest, it’s important to make sure your money is in “good hands.”
That’s why I apply a check list to the peer to peer platforms on which I invest:
- The company is officially registered in the country where it is based
- I’ve been able to withdraw money without problems
- There is no mention of scam on internet
- Annual financial reports make sense
- The platform has a support team and it helps to resolve investors’ queries
- You can see details about the borrower on the loans
- I have confirmed with a borrower that their loan with Crowdestor exists
- The company has attended the 2019 P2P Conference in Riga or it is a member of the ECN (European Crowdfunding Network)
In my analysis, Crowdestor met all of the above requirements, so for me it is safe.
The only pending point is for me to get access to Crowdestor annual financial reports. Since Crowdestor was founded in 2018, it has not yet released its 2019 annual financial report.
When you are going to invest in a loan you need to put your pin code, which you defined when you signed up. This adds an extra layer of safety to your investments.
After half a year investing in Crowdestor, I couldn’t be happier.
On the graph you can see I have obtained a return above 0.8% every month.
This result is even better when you consider that some projects start paying interest in the seventh month. Due to this reason, the returns will be even higher in the future.
If you want to know more about my investments performance, take a look at my latest portfolio update.
Whenever I talk to other Crowdestor investors, their opinions are on the same page as mine: everyone is very happy with Crowdestor.
Crowdestor does not offer any bonus for registering on its platform.
I think it’s normal, since the 25% returns you can get with the loans are all the bonus you as an investor need 🙂
Crowdestor is in my opinion the best peer to peer lending platform.That’s why I recommend you to include it in your investment portfolio.
6% of my portfolio is invested in Crowdestor, and every month I add money to this investing platform.
Do you want to make money investing in Crowdestor?
More posts about peer to peer lending
If you want to learn more about peer to peer lending and the p2p companies to invest in, take a look at below posts:
- Guide to invest in peer to peer lending
- Estateguru review
- Analysis of Bulkestate, a real estate crowdfunding platform
- Investment portfolio analysis in April 2020
This analysis is entirely based on my opinion and personal experience.