Guest article by David
My first investment on a P2P platform is now 5 years her: I co-financed a real estate project in Frankfurt am Main through Exporo * (100 euros welcome bonus for you!) and received the repayment including the interest at the end of the term to the exact day. A perfect start to P2P crowd investing. Meanwhile I have on 20 different P2P platforms in around 250 real estate projects invested. The following graphic gives an overview of when I was or still am active on which platforms:
Diversification by country
By country, based on the location of the platform, the distribution of investments over the last 5 years is as follows (in the chronological order of the first investment):
- Germany: Exporo *, Reacapital *, Zinsland, Bergfürst *, Engel & Völkers *
- United Kingdom: Lendy (meanwhile insolvent), propertymoose, Fundingsecure (meanwhile insolvent), property partner
- Estonia: Crowdestate*, Estateguru*, Evoestate*
- Spain: Housers*
- Austria: Dagobertinvest *
- France: Weeximmo, Fundimmo, Clubfunding, Homunity, Wiseed
- USA: Reality
If you enjoy it, you can compare the current graphics and the listing of the platforms with those from 2 years ago. But here, too, you can see directly what has happened in the last 2 years: 4 platforms were added (Homunity, Wiseed, Realt, Evoestate) and I said goodbye to 6 platforms (Exporo, Crowdestate, Housers, Bergfürst, Weeximmo, Wiseed).
Why did I stop my activity on some platforms?
Exporo, mountain prince: The interest rates of 5-6% at Exporo and 6-7% at Bergfürst were too low compared to the risk of total failure. And in fact, at least one project developer with several projects at Exporo went bankrupt and in one case there was a repayment of the capital of 2.6% and no interest. I calculate such “total failures” on every platform, but a risk premium (interest rate) of less than 7% is not appropriate for me.
Crowdestate, Housers, Wiseed: After many projects had failed, I no longer had great confidence in the due diligence review of the financing options on offer. At Crowdestate and Housers, some of my past investments are still in negotiations and bankruptcy proceedings. Fortunately, I’m only in the running with small amounts, but some of them are more than 2 years overdue.
Weeximmo: New projects were rarely offered and I found the communication with the investors (both in the customer area of the website and directly with customer service via email) to be unprofessional and incomplete. Crowdinvesting seems to be just a sideline for the operator.
I am currently active on the following 7 platforms (the expected return on my investments is given in brackets):
What about the expected and actual return?
Perhaps the most exciting question: On average, the approx. 250 project participations across all 20 platforms have one, regardless of their current status expected return from 9,2%. Losses due to failures are not included in these values. The projects that have already ended have a actual annual return from 8,2% generated, taking losses into account. The 1.0% loss of return corresponds (luckily) to my calculated loss due to defaults of 1%. Anyone wondering how I get this 1% can take a look at this article. Incidentally, I expect an annual return of 9.6% for the investments that are currently still ongoing.
What plans for the future?
Real estate investments on P2P platforms will continue to be part of my portfolio. In order to keep the expenditure of time low, I only want to be on in the long term maximum of 5 platforms be active. And I want one expected return of 10% so that the actual return after losses is hopefully 9%.
Dagobertinvest: I will closely monitor my holdings here. It bothers me that the term of many participations is extended again and again because the project developer is not able to make the repayment. Contractually, a 6-month extension is usually legitimate, but very often it is extended several times even after that. For example, a project originally ran for 12 months and was then extended by 6 months in accordance with the contract, but then four more times for 3, 3, 3, and 4 months and I’m still waiting for the repayment. It looks similar with some other projects. It is understandable that there are project delays in the Corona period, only if that extends to elsewhere in many projects is that unsatisfactory for me. Especially since Dagobertinvest is my only platform where I have an expected return of well below 10%. To be honest, the projects in Austria, Switzerland and Germany keep me there – so much for the topic of “home bias”. Let’s see how that develops over the next few months.
Is it even worth the effort?
This is a valid question, especially since the majority of platforms don’t offer auto-invest, but instead require manual investments in individual projects. For me, in addition to (a) the decision in favor of the real estate asset class, in particular (b) the investment horizon of 1-3 years, (c) the expected return of 10% and (d) the diversification across several countries and many issuers ( Project developer) the decisive factors. Some other forms of investment can be invested with significantly less effort and they also offer interesting options, such as equity ETFs or open-ended real estate funds. However, equity ETFs have an investment horizon of 10-15 years and open-ended real estate funds have to be satisfied with far less returns. In the interplay of the four factors mentioned, P2P real estate crowdinvesting is currently a good choice for me.
About the author: David is a passionate investor in P2P crowd platforms and ETFs. Via his website erpscout.de he supports small and medium-sized companies in the selection of the optimal ERP software.
For P2P investors and interested parties: How do you go about choosing your platforms? What are you doing similarly or differently? I’m looking forward to your commentary.