How to Invest on EstateGuru | Manual Investing vs. EstateGuru Auto Invest
Do you want to invest on EstateGuru but don’t know how?
In my last post, I showed you how to sign up to EstateGuru. By now you might have received multiple emails introducing various new projects on EstateGuru. For a new investor, this might be quite overwhelming.
How do you know if these investments are the right fit for you?
Complex vocabulary and a lot of data might scare you away from investing and earning returns with property-backed investments. In this post, I will show you how I invest on EstateGuru. You will learn how to choose the right projects, diversify your portfolio and automate your investment strategy.
At the end of the day you want your investment to be safe. This guide on how to invest on EstateGuru will teach you everything you need to know to get started.
I have been investing on EstateGuru since the beginning of 2018 and I haven’t had any loss since then. Read my EstateGuru review to find out what I think about the P2P lending platform.
Transfer funds to EstateGuru
After you have verified your EstateGuru account you can transfer funds to EstateGuru. The P2P lending platform offers you three options to transfer money. To view the options, click in the dashboard on transfer funds.
The easiest way to transfer funds to EstateGuru is with a bank transfer. EstateGuru gives you all the important bank information required to transfer money to your EstateGuru account. Make sure to use the correct reference number so EstateGuru can allocate your payments to your account.
Bank transfer to EstateGuru is from many European bank accounts in EUR for free. I use my N26 black account to transfer money to EstateGuru, however, I have also tested this with a Transferwise account. Note that Transferwise might charge you a small fee.
Investors from the Baltic countries might as well use the LHV bank link to transfer money directly from their LHV accounts to EstateGuru. This is the fastest option to transfer funds to your account, as EstateGuru has its accounts with the LHV bank. This option is suitable for investors with an LHV bank (mostly Estonian investors) and that there is a small fee of €3 per transfer.
As a third option, you can also use the money transferring service Trustly to transfer funds to your EstateGuru accounts. This is however connected with a hefty fee. Personally I think that the best option is to avoid this and transfer funds for free via bank transfer.
Note that you don’t need to transfer funds from your Euro account. If you have a European account in other currencies than Euro you can use it as well. Just be aware that EstateGuru’s projects are financed in EUR, so your funds will be exchanged into EUR with a certain currency exchange.
Start investing on EstateGuru
As soon as you transferred funds to EstateGuru, you can start investing into real estate projects. In the beginning, I suggest investing manually to get familiar with the P2P lending platform and their listed projects.
To view currently available projects click on LOANS in the left or top menu.
You will get a list of real estate projects that are still available for investors to invest in. Click on the project to get more information. EstateGuru is giving out all of the data they receive from the borrower to the investors, meaning you have the same information as EstateGuru.
If this is your first investment you should have a closer look at certain metrics.
Here are five questions that you should be able to answer before making up your mind:
1. Is it a stage loan?
Many projects are financed in stages, meaning the developer doesn’t need all the money at once but in stages. There isn’t anything wrong with this, however, EstateGuru lists new stages as new loans. Investing in different stages from one borrower might have a negative impact on your diversification.
If the borrower does not repay one loan, the likelihood that the borrower will have difficulties with other repayments is quite high.
2. What is the LTV?
LTV is the loan amount to the value of the property. The lower the LTV, the lower the risk for the investor. In case the project is secured by a mortgage, EstateGuru can take over the collateral and sell it off to repay our investment. The lower the LTV, the higher the buffer and the higher the chances that you will receive your money back.
So far EstateGuru hasn’t lost any of investor’s money.
3. How long is the loan period?
EstateGuru typically lists loan for a duration of 9 to 24 months. There is currently no option to withdraw your money from EstateGuru before the end of the loan period (or before the borrower repaid the debt). You need therefore to determine for how long you can lock your capital with the P2P lending platform.
4. How is the project secured?
Most of the projects are secured by a first-rank mortgage. Sometimes there are some real estate loans, secured by a second rank mortgage. I myself don’t invest in those loans unless the LTV is very low and interest very high.
Note that the real estate project can be secured by any land or property and not necessarily the land, the real estate is built on.
5. What is the borrower’s experience with similar projects?
Every investor should have a look at the borrower tab before investing in one project. You will find here additional information about the borrower.
Ideally, you are looking for borrowers that already successfully repaid loans financed through EstateGuru.
I typically don’t invest in real estate projects with lower interest as 10% per year and a longer loan period as 12 months. I also don’t tend to invest in loans with an LTV over 60%.
If I am not sure whether to invest, I also look at the country where the project is financed. You can certainly make your own research about the company that might help you to make an educated choice.
Personally, I rather invest in loans from the Baltics as EstateGuru has already a good track record with the debt collection. I suggest watching my video interview with the debt manager that I conducted in August 2019 to get an idea of how they evaluate the risk of real estate projects.
When you have decided to invest, you need to insert the investment amount, confirm the terms and conditions with your password and sign the loan agreement.
As soon as the loan gets fully funded, you will be notified via email and your investment will start generating interest.
Note that the minimum investment into one project is €50.
If you are just starting out, I suggest to first diversify your investment across multiple projects to gain trust with the platform and decrease the risk of default.
Use the EstateGuru Auto Invest
If your goal is to create a passive income with P2P lending, meaning you don’t want to invest manually you can also set up the Auto Invest that will invest for you based on the following criteria:
1. Investment amount
3. Loan type
These three criteria are available for investors that invest less than €250 into one project. Advanced settings are only available for those investors that reach the mentioned threshold.
EstateGuru’s advanced Auto Invest allows you to set up additional criteria such as
- type of security
- stage loan
When I visited the EstateGuru office in Tallinn this summer, I asked around and most of the employees that invest on EstateGuru invest manually. In fact, I believe that only 40% of all investors on EstateGuru use the Auto Invest.
Note that you need to have enough funds on your account to activate the Auto Invest, if you don’t it will keep the status pending.
Do you prefer to watch a video instead?
Learn how to invest on EstateGuru starting from 3:18
How to invest as a beginner
If you are just starting out with EstateGuru I would start slow. Transfer a smaller amount of money (I usually transfer at least €500) to get familiar with the platform.
- Start investing manually with the lowest amount (€50) and look at the earlier mentioned metrics.
- Invest in real estate projects secured by a first-rank mortgage.
- I would also suggest investing first into projects, where the borrower already has some track record with EstateGuru. Not that it’s a k.o. criteria but it might help to decrease the risk.
Investing on EstateGuru is quite easy. If you haven’t registered yet, you can do so with the following link, which will activate a 0,5% cashback bonus on your portfolio size during the first 90 days after registration.
Use the EstateGuru referral code to increase your returns and get an additional bonus.