Crowdestor – Pros & Cons
- High Returns – returns of 14% – 36% on secured assets with good LTV’s.
- Interesting Diverse Loans – loaning on items like crypto mining farms, boiler mass houses & hotel renovations.
- Euro Currency Loans – Good for Europeans, or good for other countries for currency diversification.
- Smaller Company – with shorter track record, launched in 2017 Crowdestor are still proving themselves.
- No Secondary Market – Once you’re into a loan, you’re in for the duration.
- Not Regulated – No regulation by an agency like the FCA so you need to get to know and trust the team you are working with.
Easy 16%+ Annual Returns Available Investing In Loans On Secured Assets Like Renovated Hotels, Biomass Boiler Houses and Apartment Buildings! – Crowdestor Review
What is Crowdestor?
Crowdestor is a smaller size, Tallinn – Estonia based Peer to Peer lender offering a good selection of Euro currency based loans.
Providing loans mostly to businesses on a selection of interesting assets from apartment buildings & grocery stores, to biomass boiler houses & fleets of gas powered trucks.
Offering annual returns of up to 36% on secured loans, Crowdestor have an interesting take on Peer to Peer lending. Plus offer some of the best rates in the business for secured lending.
Crowdestor’s loan flow is not like Mintos or some of the short term lending platforms out there, so it’s hard to diversify into a lot of different loans. This means you will need to do due diligence on each loan you decide to invest in in order to ensure you are comfortable with the asset value provided and the terms available for the loan.
That being said, Crowdestor have a very good reputation and history (although short) with the European Peer to Peer lending community. Their loans are presented as some of the better asset secured loans where borrowers appear to be vetted well by Crowdestor with in-depth due diligence. Even in some instances putting members of Crowdestor’s team on the board of the borrowing corporation.
So far, Crowdestor have had no defaults. I’m sure eventually some will occur. At which point we will get to see how well their recovery process goes.
My experience with Crowdestor so far has been good. I’ve only been investing with them for a few months and I started out small with €5,000.00 distributed between just 5 loans.
Although Crowdestor are a viable investment option for very high returns. Lending out larger amounts of capital will take a reasonable knowledge of asset valuation and understanding of corporate accounts and credit risks to ensure the safety of your capital and your comfort with the investment. Or, as in my case, I have just done a lot of research on the company and also watched how others lend through Crowdestor in the past (reading blogs etc.). I’ve been watching them since they began in 2017 and I have to say they seem to be one of the better Euro lenders, although obviously higher risk. So I base most of my lending with Crowdestor on the trust I see others have put in their origination team. If you decided to invest with Crowdestor, be sure to do your own due diligence.
Crowdestor “say” they are doing OK. They keep advertising jobs for programmers etc. I did have one of my loans pay back about €1088 Euros last week, however another 2 loans (Renewable Energy 1 & 2) which should have paid back on August 12th & 16th respectively have been delayed now until October. The positive thing I guess is that at least Crowdestor are still communicating well. It seems overall that Crowdestor have many loans which are delayed, so I’m not sure how this is going to go long term, but again at least they are still trying to make it work. Crowdestor made the decision to pause all repayments from borrowers (and to investors, without asking, which upset a few of them as you can imagine) for 90 days when the pandemic originally hit to give them breathing space. They have also delayed repayments from some borrowers even further so that will obviously affect things. You’ll note in the screenshot of my loan listings below there are several other loans coming due in the next few weeks.
My Crowdestor Strategy
As Crowdestor don’t have any option for early withdrawal (except selling some of the loans at a large 20% discount, which I’m not willing to do), I’ll be riding out the COVID-19 downturn with them until things stabilize. They have been very professional so far so I hope loans will be paid back eventually and Crowdestor will stay in business as they do offer some great returns under normal market conditions.
The Obvious Investor – Easy-Info Table© – Crowdestor Review
Overall Rating*: (3.4 / 5)
Who can invest: Loan Currencies: €
Estimated Return: Up to 36%+ depending on loans you choose.
Target Annual Return
My Calculated XIRR: 16.08%
Risk Rating*: 7/10 - Medium-High
Early Exit: No secondary market. Loan term typically less than 12 months.
Min. Investment: €100
Deposit Funds: Bank SEPA Transfer.
Typically Available in 24 - 48 hours.
Manual Invest: Yes (only option)
Lending To: Borrowers, directly.
Loan Types: Business bridging and development loans. Capital equipment loans.
Loan Security: Yes, usually asset security and Director guarantees.
Provision Fund: Buyback Fund - (see review for further information).
Loans Amortize: Some fully amortize.
Some interest only.
Time to Invest: Dependent on investor.
Time to Mange: Medium - loans are all manual invest.
Lender Fees: No.
Payments Received: Monthly.
Amount Lent: €2 million+-
Number of Investors: 1000+
Loan/Dflt Stats: No defaults to date.
Location: Tallinn, Estonia
Telephone: +371 2733 3274
Cashback**: None Currently.
Check For New Offers >>
How to Sign Up**: Sign Up Here!
Crowdestor Review – Overview
Crowdestor’s Peer to Peer lending business was incorporated in December 2017 in Tallinn, Estonia by Janis Timma (current CEO). The central office and working team are based in the heart of the Baltic States in Riga, Latvia.
Crowdestor have funded around 50 projects listed on their website. All of these projects were repaid as agreed, on time so far (one project was repaid early by the borrower). Crowdestor boast that there have been no defaults to date. In fact, this is not surprising as a single default when a company is so young with so few loans would cause doubts among their investors, so my feeling is that they would use their own money to pay off loans rather than accept a default. Even if the buyback fund didn’t fully cover the loan.
This is actually a positive reason to be investing with the company early, and their loans in general are for less than 1 year so the term risk is minimal.
You can see a list of all completed projects on there website here under “Investments”.
Crowdestor are not regulated by an agency like the FCA in the UK, however Crowdestor works under the jurisdiction of Estonian law which is friendly to Peer to Peer lenders in general. Evidenced by the number of lenders popping up in that area.
Signup Process – Crowdestor Review
Opening an account with Crowdestor is fairly easy. Just the usual ID and anti-money laundering checks.
You’ll need to upload a copy on an ID document such as your passport or ID card, and (sometimes) also a document with your current address on it.
Any person from just about any country who is 18 years old or over and has an active bank account in one of the European Union or EEA banks can signup with Crowdestor. Assuming they can pass the ID & anti-money laundering checks. If you don’t currently have a Euro bank account, take a look at this post I did on Currency Exchange and Moving Money which might give you a few ideas.
Deposits & Withdrawals
Deposits are made by bank transfer from a Euro based bank account (SEPA transfer).
Typically deposits are in your Crowdestor account the next working day, worst case 2 days.
Withdrawals are directly to an EU bank and can typically take 2 – 3 business days.
Once you’ve told Crowdestor’s website how much you want to deposit, they will send you over their bank details.
Time to Become Invested – Crowdestor Review
Crowdestor Peer to Peer loans are all self-select manual investments. No auto-invest accounts. So loans must be selected and invested into individually.
When you choose “Invest” from the main screen menu, you can see a list of loans and their availability. This includes loans that are already fully funded, loans that have funding availability, and upcoming loans. As well as loans which have already been repaid. You’ll notice in the screenshot below there are two loans with countdown timers.
Crowdestor announce their loans a few days before and then set the timers. Their loans are in such high demand that most are gone very soon after they become available, especially the loans with high rates and low LTV’s.
Available Loans – Crowdestor Review
As you can see in the screenshot above, there are currently only two loans available for investment (or will be available once they go live). One of the loans is Riga, Latvia, and the other is in Moscow, Russia.
Now let’s face it, if you are not from, or are not used to investing in these locations. These loans could look a little scary at first glance. I felt the same.
The more I research them though, the safer I feel. These investments are not the same as investing in Landbay or RateSetter. They are obviously higher risk, but in the same light you are getting paid for that risk at 14% and 20.7% respectively, instead of 3%-5%.
On the other hand, you’re investing in secured assets which is probably a lot lower risk than some of the unsecured business loans that I’ve seen on some of the platforms in the UK.
If you would like to see what Crowdestor considers to be a high-risk loan (reflected by the return rate), then take a look at this (one of Crowdestor’s first loans):
36% return and a 3 month loan period! Interestingly enough, the loan was all paid back on time! If I see something like this again, I’m going for it!
Who are we lending to?
Crowdestor is a true Peer to Peer lending platform.
Lenders are lending directly to borrowers who are typically small to medium size European & Slavic businesses.
Loan agreements are directly between the lender and the borrower. Crowdestor just acts as a middle man, managing loans, payments and debt collection etc.
Loan Security – Crowdestor Review
There is a huge amount of information available on most of the loans. Crowdestor doesn’t give a lot of detail though until the loan comes live. So, because Crowdestor loans can get filled up quite quickly, you have to be on the ball when the loan goes live.
I typically have one browser tab open with the main view so I can see how quickly it’s filling up. And one tab with the loan detail so I can read about it and make a decision on if I should invest in it or not. It’s actually quite exciting!
Here are a couple of screenshots of loan detail. This is only a small amount, there are probably another 4 screens of loan information. I don’t want to crowd the review with too many screenshots, but you get the idea.
Crowdestor also make available for download some of the documents which were used for making the lending decision.
Some Crowdestor loans amortize, meaning you receive capital and interest payments every month. When loans amortize, it reduces loan risk compared to a non-amortizing loan, in which nothing is received until the end of the loan period, or only interest is received monthly and then the capital repaid at the end of the loan period.
Many Crowdestor loans are interest only, with interest paid monthly and the capital being repaid at the end of the loan period.
Some loans don’t pay anything for the first several months, and then pay what is called a “bullet payment” (AKA balloon payment) at that time. These kind of terms are often given to enable the business to get the project off the grown without having to shell out loan payments.
This of course increases the risk for lenders, but that’s why we are getting the huge interest rates 🙂
It’s easy to see if loans amortize and the terms from the detail on the loans listing screen where it is clearly marked.
Selling Loans and Withdrawing Capital
No secondary market with Crowdestor so once you buy a loan you’re in for the term. The good news is that terms are typically 1 to 6 months and rarely go over 12 months so you’re never “that” far away from your capital.
Diversification – Crowdestor Review
Because Crowdestor loans are all self-select loans, diversification is a manual process.
As mentioned previously, although Crowdestor loans are very well secured and their loan flow is not huge. So if you have a lot of capital to invest, you’re going to end up with more than you would probably like to have in each loan.
Best to make sure you do due diligence to a level your comfortable with before investing any of your hard-earned capital. Or, as I do, make sure you are comfortable with how Crowdestor does it’s due diligence and its team members. This is speculation remember, it’s not like a bank so don’t invest anything you can’t afford to lose. Not likely, but be careful out there.
In Febuary 2019 Crowdestor introduced a “buyback guarantee fund“. With EURO lenders, buyback guarantees are in place of provision funds in the UK.
Crowdestors fund is aimed at compensating its investors in the event of a default. The fund will be stronger the longer Crowdestor goes without a default.
I still believe the most important thing is for Crowdestor to keep up the due diligence and close contact relationships with the borrower. Such as putting a team member on their board.
Here is information on the buyback fund from Crowdestor’s website.
Tax Free IFISA Account – Crowdestor Review
No tax free account options with Crowdestor.
Website – Crowdestor Review
Crowdestor’s website is relativity easy to use. Everything makes sense and is easy to access.
All of the account information is right there in front of you on the main account screen. All laid out in a manner which is self explanatory.
It’s easy to see a listing of the projects you’re invested in.
Summary – Crowdestor Review
Overall I think Crowdestor’s Peer to Peer loans are a good option for diversification with high rates achievable if you take the time to do due diligence on each loan and get comfortable with their team.
Although Crowdestor loans seem very risky at first glance, all of Crowdestor’s loans are secured by assets. Typically with good LTV’s (Loan to Value ratios). So even if you were to make a mistake on a loan, you would likely still get your capital back. It just might take a while if it has to go through a long legal situation.
I will be adding more capital to my Crowdestor account as soon as I decide to buy a new batch of euros.
I’ll see how the lending goes as I learn more about Crowdestor. I will increase the amounts as and when I feel comfortable in doing so.
Thumbs Up Points for Crowdestor
High Returns – returns of 14% – 36% on secured assets with good LTV’s.
Interesting Diverse Loans – loaning on items like crypto mining farms, boiler mass houses, hotel renovations and and private yacht rental companies is out of the norm for Peer to Peer lending. This enables you to diversify away from the typical bricks & mortar assets.
Buyback Fund – The newly-introduced buyback fund should help in the event of a default.
No Defaults to Date – It’s only been 2 years since since Crowdestor were formed, however their loans are typically short term so the fact that none have defaulted yet goes into the plus box.
Good Loan Flow – Not lots of loans, but for a company of this size and the loan quality, there are typically 3 to 7 new loans per month.
Euro Currency Loans – Good for Europeans, or good for other countries for currency diversification.
Thumbs Down Points for Crowdestor
Smaller Company – with shorter track record, launched in 2017 Crowdestor are still proving themselves.
Loans Sell Out Quickly – This is a good thing, and a bad thing. The loans are so popular which means they must be good. However because of this you need to be on the ball to get into them before they are sold out.
No Secondary Market – Once you’re into a loan, you’re in for the duration. Although the duration is typically less than 12 months so you’re never “that” far away from your capital.
Manual Investing Only, No Auto-Invest – time consuming and requires due diligence and speed to get the best loans.
Not Regulated – No regulation by an agency like the FCA so you need to get to know and trust the team you are working with.
Risk Factor – 7/10 – Medium-High
Is Crowdestor Safe? I consider Crowdestor to be in the middle to high area of the risk scale.
Even taking in to consideration that loans are asset secured, they are still a small unregulated company with minimal trading history. Plus such a small loan-book means it’s harder to diversify to minimize risk.
Who Can Invest with Crowdestor
Residents from just about any country who are 18 years old or more, and have an active bank account in one of the European Union or EEA banks can signup with Crowdestor. Contact Crowdestor for further information.
Offers & Signup Links**
No cashback offers currently with Crowdestor.
Similar Lenders to Crowdestor
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