Manual Investing on EstateGuru

S4F PlatformGuides EstateGuru @ Savings4Freedom
Learn how to start investing manually on EstateGuru, making sure you are aware of the key aspects that impact risk & return when evaluating open loans.

In case you want to explore how to open an EstateGuru account, check the article How to Open a EstateGuru Account before reading this one.

As soon you register into EstateGuru, you start receiving email notifications for every new project presented for funding on the platform. For a new investor, this could be scary.
The best possible way to get familiar with the platform is start investing manually on EstateGuru.

Start Investing Manually on EstateGuru

When you transfer funds to EstateGuru, you can start investing manually to get familiar with the P2P platform and projects information. In order to view available projects click on Primary Market in the left or top menus.

EstateGuru Manual Investing @ Savings4Freedom
Investing Manually on EstateGuru

By clicking there you will access the complete list of loans available for investment. Once you click in one of the projects, you will be able to access additional details that help you evaluating the investment opportunity and risk. You must be aware that EstateGuru provides a significant amount of information regarding the borrower and the level of transparency is among the best in the P2P industry.

EstateGuru Platform Project @ Savings4Freedom
Key Aspects that Impact Risk & Return

Now is time to go over some key aspects that will impact the risk and return of the project.

A – Loan Type?

First assess the type of loan offered: development loan, bridge loan or business loan. If you want to learn more about each loan type, check the post EstateGuru: Loan Risk Analysis.

B – Loan by Stages?

Many developers face the challenge in which the current value of their development object does not enable them to raise the capital that is needed to complete the development object entirely. As EstateGuru only lends against the current value of the collateral not the future value, then for development loans we often make use of the stage financing method.

Dedicate special attention to verify if the loan is presented as one of the project funding stages. This means that EstateGuru agreed with the borrower to provide funds in tranches, not funding the entire project at once. The impact of this approach for you is that you need to verify if you are investing on the same borrower in different loan stages, reducing your diversification allocation. This becomes a risk for you in the case the borrower faces difficulties with repayments.

C – Interest Rate?

Depending on the project characteristics the annual interest rate can range between 8% and 14%. Is the interest rate fixed? Yes, the interest rate paid by the borrower is fixed throughout the loan period. Make sure you check the payment frequency and make sure the interest rate is adjusted to the risk associated with the loan type.

D – What is the LTV?

The loan-to-value (LTV) ratio is a metric used in commercial real estate construction to compare the financing of a project (as offered by a loan) with the cost of building the project. The presented LTV represents an LTV figure that EstateGuru’s team is willing to offer for this particular project as a maximum. The lower the LTV, the lower the risk for the investor.

E – How Long is the Loan Period?

Consider for how long you want to keep your funds invested, but be aware that Borrowers are able to repay the loan earlier or extend the loan period. In case of repayment of a loan, the remaining balance of the administration fee must be fully paid simultaneously with the repayment of the loan. Before a loan is extended, EstateGuru will ask the reasons behind the decision and if the reasons are acceptable, the borrower is required to pay a fee to update the contract.

Make sure you check the payment schedule: bullet repayment schedule means that loan interest is being paid periodically and principal amount is being paid at the end of the loan period. Full bullet schedule indicated that both interest and principal are being paid at the end of the loan period.

F – How is the Loan Secured?

Simply stated, EstateGuru does not guarantee your loans. But all loans are backed with a mortgage. Once the loan is fully invested, the borrower has to go to the notary office and enter into an agreement with the Security Agent to create a mortgage. The mortgage will then be registered at the Land Register (with the Security Agent as mortgagee on behalf of the investors). The Security Agent is a separate limited liability company whose primary purpose is to hold securities for the benefit of investors making investments via EstateGuru. The name of the entity is EstateGuru Tagatisagent OÜ. The entity is controlled by the leading Baltic law office of Triniti.

G – Where will the loan be invested?

Diversification is viewed as one of the key levers investors have to reduce and mitigate risk. By spreading your investments across different countries, you have the best chance of successfully riding the natural highs and lows of investing. 

Additional Step – Check Borrower’s Experience

Ensure that you take a look into the tab Borrower available on the project page. There you will be able to find additional information that will make clear the borrower loan record in EstateGuru. In an ideal world, you will find borrowers with multiple successfully repaid loans previously financed through the platform.

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 received all relevant documentation for your record.

Remember that the minimum investment into one project is €50. If you are starting your investments, make sure to diversify your investment across multiple projects to gain trust with the platform and decrease the risks of default.

Do you want to automate your EstateGuru investments? Check the post on How to Use the EstateGuru Auto Invest.

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