Do you want to start earning passive income through peer-to-peer lending? In this Crowdestor review we’ll go into exactly how you can build up passive income with this great platform.
One of my all-type favorite asset types is Peer-to-Peer lending. It’s about lending money to individuals or companies through online P2P platforms, where you get compensated for the lending of your money by interest.
Peer-to-Peer investing has a high return, can be fully automated (yay!!), and when managed right you’re able to minize the risk.
I’m investing in many different Peer-to-Peer and (real estate) crowdlending websites, because I’m constantly looking to diversify my portfolio and reduce the risk of my investments.
In this Crowdestor review, we will take a detailed look at the platform. Crowdestor is a business crowdfunding platform based in Latvia. I’ve heard great things about them, so I wanted to try out the platform.
Generally in investing, the higher returns you have the more risk you take. Make sure you know the risks associated with peer-to-peer lending to make a fully informed decision!
What Is Crowdestor?
The first thing we’ll be discussing in the Crowdestor review is: what is Crowdestor?
Crowdestor is a business Peer-to-Peer platform based in Latvia. It focuses mostly on business and real estate projects. They’re offering great returns, from 12% all the way up to 36%!
As an investor, no investment fees are charged. The investment fees are paid by the borrowers, as they benefit by being able to get funding for their project. Meaning that for you as an investor, all your money is 100% invested in the project of your choice.
What Is The Average Rate Of Return?
Crowdestor is offering great returns, between 12 and 36%. The rate of return is different for every project that you want to invest in. Meaning that your rate of return can vary a lot, depending on which project you choose to invest in.
Who Can Invest In Crowdestor?
You need to be at least 18 years old, plus you need to have a bank account with a European or EEA bank.
If you don’t have a bank account in any of these countries, it’s not possible to invest. It is possible to open a bank account if you’re not from the region, depending on which exact country you’re from. Your good friend Google would be able to advise you for sure if it’s possible for you to open a bank account within the EU.
How Does Crowdestor Work?
Crowdestor enables you to invest directly in Peer-to-Peer lending projects instead of smaller loans. Meaning that Crowdestor generally has few but large projects that you can invest in.
Since they have larger and fewer projects, it can be harder to diversify your portfolio properly. It might be a good idea to diversify your portfolio and invest in other similar platforms. Be sure to check out this overview of P2P platforms and signup bonuses before you decide to do so!
How to Invest In Crowdestor?
Let’s dive now into how we can actually invest.
The first step is to deposit money on Crowdestor. It’s really easy to do, you just make a money transfer to the IBAN number mentioned and that’s it.
If you don’t have a EUR account, you can use other services like TransferWise to transfer money to your Crowdestor account.
I’ve also tested the withdrawal process they offered, I had my money back within two working days.
Once you have your money available on the platform, you can browse the available deals. Simply click ‘Invest’ and you’ll go to the overview with all available deals. At the time of writing, I just invested in a high-yield project that was fully funded after just 2 days.
Their loans are in such high demand that they are funded very quickly, especially the loans with high returns. Two other projects are going to open for investment soon:
You can have a look at active projects by clicking it, which leads to a page where you can read more details about the project:
On this page, you will find a lot of information about the projects. Like a summary of the project, loan details, and financial details.
It’s all that you need to decide whether or not you want to invest in this specific project.
To actually make your investment when you’ve selected a project, you can go to: ‘Invest in the project’ button. You validate your investment and you’re done!
The minimum investment for each project is 50 EUR.
Crowdestor Review – My Results With Crowdestor
My first returns with Crowdestor are listed now. I invested in several projects, where you can see it’s about real estate as well as business projects they’re offering:
Here is a current overview of my account:
As you can see I’ve already received some interest since I invested in the project and it was perfectly on time. I expect to have a 15.36% return on investment for the money I’ve invested now – which is absolutely great for a Peer-to-Peer investment platform!
I will of course come back to this section regularly and update it as I get more returns and invest more capital in Crowdestor.
What Are The Risks With Investing In Crowdestor?
As with all Peer-to-Peer lending and real estate crowdfunding platform out there, there are risks involved with investing. The main risk is that you have a project that goes to default when the lender cannot pay back the loan anymore. There are many ways to reduce this risk significantly.
The number 1 tip for diversification is to spread your investment among many projects. Even if one project defaults, you won’t notice it that significantly in your yield.
In addition to this, Crowdestor is focusing on their security by providing several assets as security for the loan. For example real estate or money from the borrower. This reduces the risk of you not getting your money back.
In order to further decrease your risk when investing in diverse crowdfunding platforms, I suggest you diversify your investments among multiple platforms. When one platform goes bankrupt, you still have investments in different platforms. I’ve listed the top real estate crowdfunding platforms for you!
Does Crowdestor Have Skin In The Game?
The concept they have in Crowdestor is something referred to as skin in the game. Meaning they act like financers in the project as well, bearing the risk together with the investors on their platform.
Through their skin in the game concept, their priority is to have a successful loan term.
What if the investor is bearing all the risk and the P2P lending platform only gets their fees paid? Their incentive would be to loan as much money as they could, in order to maximize their profit.
With this skin in the game process, they focus on the long term. Besides that, they make sure the interests of the platform and the interests are fully aligned – producing happy platform and happy investors.
I would say this is a win-win scenario.
Does Crowdestor Offer Buyback Guarantee?
Besides that, Crowdestor has a BuyBack Fund. This is a percentage of all the investments that Crowdestor has received.
The buyback fund acts as a backup where they will be able to pay the capital in the case where a loan might default. The maximum amount that they will be able to pay back to investors is the amount in the buyback fund, the rest of the funds is not used for that.
In my opinion, a buyback fund is much more favorable compared to a buyback guarantee. What if few projects default at the same time and the platform is legally obliged to buy back the projects?
The individual projects cause the platform as a whole to perform less. It makes one crack in the window and the buyback fund causes the whole window to break. The worst-case scenario is that the platform defaults. The individual projects have much impact on the platform as a whole with this structure, that the cracks that appear in the glass will cause the whole window to break.
A buyback fund is a great way to manage the risk of a platform because it makes a different pool of money for the default loans. This money is completely separate from the money that is being used to manage the day-to-day operation.s
Another great thing is that you can actually see the amount of the buyback fund, meaning that there is much more transparency for the investors. It is a transparent way to show investors how defaults will be covered.
The status of the buyback fund is very transparently posted on its platform:
This fund is solely created for borrower or loan defaults. When the extra collateral like real estate and cash that borrowers need to provide for every single loan isn’t enough to cover paying back the investors, they will use this buyback fund.
How Does Crowdestor Secure Their Projects?
Besides their skin in the game and their buyback fund, Crowdestors’ projects usually have collateral. Collateral is usually in the form of a building, ownerships in stocks, or cash.
Collateral on a loan reduces the risk of investment greatly.
Does Crowdestor Have An Auto Invest Feature?
No, at this moment in time Crowdestor does not offer an auto invest feature. I would assume it’s because they have fewer and bigger loans, making it less necessary to create an auto invest feature.
On Crowdestor some loans are always available at this moment or shortly after, you never have to wait long. Besides that, you have enough time to look at the project and read about it before you are putting all your money in there.
For the moment I like the fact that there is no auto-invest, it’s a good way to ask feedback from investors. When loans are open for a long period of time, they know that this kind of loan is less desirable compared to loans that are funded within hours.
When an auto-invest feature will be launched, the market dynamics on the platform will change – as many people are investing through the auto-invest tool it is often encouraged to use the auto invest tool.
They informed me that this fall an auto invest feature will become available for the investors, let’s see if it fits the platform when it comes out!
Does Crowdestor Have A Secondary Market?
At this moment in time, Crowdestor doesn’t offer any reselling of your investment through a secondary market. Investors cannot sell their investments to other investors or back to Crowdestor.
The good thing is that loans with Crowdestor are mostly between 6 and 12 months, meaning that it never takes too long before you get your principal repayment.
They informed me that this fall a secondary market will become operational on Crowdestor, where investors can resell their investments once they’re not interested anymore.
Conclusion Crowdestor Review – Should You Invest in Crowdestor?
I was positively surprised when trying Crowdestor, as you may have noticed in this Crowdestor review. The platform is great, provides you with very high-quality deals, and assures a high return.
Their buyback fund is a great way to minimize the risk, as is having skin in the game. When a platform has its own money invested as well, that is a sign of trust for me. They align all interests in order to have long-term success for their platform.
If you’re starting out with Peer-to-Peer investing and you’re looking for great deals, Crowdestor can be your way to go. If you want to minimize the risk through diversification of platforms, I recommend you go directly to the Crowdestor site and sign up!
Read here more about the competitors of Crowdestor:
- Mintos Review – Passive Income Peer-to-Peer Lending
- Grupeer Review – High Returns With Minimal Efforts
- Reinevst24 Review – Real Estate Investing Made Easy
What do you think about Crowdestor after this Crowdestor review?