Even though the majority of the people in the UK opted for Brexit and the subsequent drop of 6% of GBP’s value against the Euro, the EU remains attractive for UK investors. When it comes to investing outside the UK, there is a growing sentiment that UK investors should still reap the financial advantages from investing in the EU, especially now when so many financial institutions are adopting technological innovation. Here, choosing the right country and the best platform is the key. We reviewed some of the most popular regional platforms and instruments to simplify your choice.
EstateGuru is one of the most advanced real property dedicated crowdfunding investment platform in Europe. Founded in 2014, it offers to finance short-term, property-backed loans with an average annual return of 11.76%. You can start investing for as low as €50.
The platform provides reliable security for their loans, keeping their average LTV near 60%, and the maximum LTV at 75%.
EstateGuru earns from pooling together debt, and they only take fees upon successful funding, which accounts for about 80% of their revenue. The success fees typically vary from 2.5% to 4%, and their annual administration fee ranges from 0.5% to 1%.
EstateGuru doesn’t have a buyback guarantee, but don’t let that deter you. Even though there have been a few loan defaults, they are backed by collateral, making them one of the few P2P platforms to offer collaterals instead of buybacks. EstateGuru has since sold the collateral and recovered their investors’ investment with interest. For hands-off investing, they also have an auto-invest feature, but it is restricted for small portfolios.
One of the most significant aspects of the platform is its diverse and large amount of loans available. Currently, it operates in five countries, with more to come in the future. The projects featured can either be development, bridge, or business loans.
If you need to exit fast, you can sell your claim on the secondary market for a 2% fee. As of June 2020, they have introduced a €1 withdrawal fee.
Quanloop is not quite a platform, and it is not related to p2p. It is a European investment fund, launched at the beginning of 2020, that is offering high-yield interest revenue to investors typically residing in crowdfunding platforms. Quanloop can be fairly called a real discovery of the twenties: the investor is offered to lend their 1 euro to the fund for a day, and earn up to 15.7% APR.
The investment fund has reinvented the model of refinancing. They buy short-money from the investors and sell it further as long-money to their partners, the professional leasing and factoring companies; itself, making a profit from the spread.
Diversification is integrated into the initial offering. The investor is limited from silly mistakes by spreading the risk: the low-risk plan brings up to 8.9% secured under LTV<55%, the medium- risk offers up to 13% guaranteed under LTV<85% and the high-risk plan offers up to 25% with or without guarantees. The average interest revenue ripples between 12 and 15%, depending on your final portfolio setup.
The money of investors is secured by real cash; since Quanloop offers 10% real-cash guarantee called ‘underwriting reserve’, it reduces the overall LTV by 10%. The Quanloop own capital in the bank covers each credit-project that gets financed via Quanloop.
The most significant yet useful feature is inflation-safe investing. Quanloop covers the inflation loss every month. The loss is calculated based on the Eurostat official data and is repaid directly to the investor’s bank account as cashback.
Even though the fund is relatively young, its service and support are outstanding, and real investors reviews are very positive.
Probably the most popular P2P platform in Europe – it gives investors a way to invest in debt by buying a share of it. Mintos acts as a loan aggregator, meaning they offer loans from all over the world issued by different loan originators (LO). The loans get restructured and sold as parts through the Mintos platform, thus applying the refinancing business model.
The vast range of loans available offers an excellent opportunity to diversify your portfolio, even staying within the same platform. Their auto-invest tool allows hands-off management. And their secondary market allows investors to trade their loans promptly, although for a decent 0.85% fee.
The current average annual interest rate offered to investors is 12.25% for a diversified portfolio and average of 12.60% for high yield.
Mintos does not give a guarantee. Their shields near loan agreements demonstrate the loan operator’s readiness to buy back the loan partly, in case it fails to repay the principal or the interest during 60 days. The most significant risk comes from loan originator bankruptcy. It is the case when you are highly unlikely to recover your investment. Furthermore, investors have recently brought up that their funds are in “Recovery” due to defaults of loan originators and suspension of lending companies.
Another P2P platform from Latvia and growing more confidence in investors due to the recent losing trust in Mintos. Formerly, Peerberry served solely one group of loan originators that belonged to Aventus Group. But now, similar to Mintos, they serve a broad audience of loan originators while having Aventus group as their primary client with a whopping share of 66% of all the loans.
It offers automated investments for stable interest returns, as well as manual ones for individuals who prefer to have more control over their portfolio. Peerberry offers investors an average annual investment return of 10.12% with as little as €10 minimum investment capital.
Peerberry does not offer any guarantee, but the loan originators do. Hence, the buyback guarantee is only operable as long as the lending company stays in business. So if a loan originator becomes insolvent in 60-days, investors’ buyback guarantee is virtually gone. Also,
Peerberry does not have a secondary market, which means there is no way to exit early. But of course, most of the loans on PeerBerry are short-term; therefore, they do not feel that they need that option. However, they are considering it in the future.
Profitus offers to invest in property-backed real estate debt projects. Their loan agreement is backed by mortgages and is being provided as shared collateral while allowing you to invest by lending to a borrower via their platform.
Investors can start investing with as little as €50 with the average return of interest at 9% per annum.
Mortgage-backed investment always has a lower risk but with a lower APR in earning. Yet, a real-estate mortgage as security is still preferable for investors who are more risk-averse and are looking for a stable and secure income. Moreover, any claim can be processed through without going to a court – making it faster and more beneficial for the investor.
Colectual was created in 2015 as a crowdlending platform to fund small and medium businesses. It focuses on sustainable development and corporate social responsibility – having had the potential to become a real unicorn among regional crowdlending platforms, Colectual has been the fastest-growing crowdlending platform in Spain.
Investors can start from €100 and earn an average annual return of about 5.80%, which is––to be honest––considerably less than what other platforms offer these days. However, more than 100 projects have been funded with more than 6 million Euros. They currently have around 2000 active investors, which confers confidence in their business model.
Colectual initially charged its investors an annual fee of 1% for portfolio management but has since decided to remove it to become a zero-commission platform like many of the leading platforms in Europe.
The platform does not have a secondary market nor a buyback guarantee, or even an auto- invest feature. Hence, investors bear the burden to exercise judgement on the business’s potential to succeed.
All of the deposits and withdrawals can be made via bank transfer or with a debit/credit card, and their multi-platform website.
Housers is a real estate crowdfunding platform dedicated to Spanish, Italian, and Portuguese properties. This Pan-European investment platform is a stark contrast to investing in the real estate platforms mentioned earlier. Everyone in Europe can take part in and invest on the platform. Housers has about 122,000 users with a cumulative investment of 117 million Euros.
You can start investing with as low as €50 by adding funds using a wire transfer or a card. Differently from most of the platforms, Housers investors may use credit cards. The average APR the platform offers its investors is 8.66% annually.
Housers introduces a mix of equity projects and development loans. The equity model involves property shared ownership with revenue from its letting during a period of up to ten years. The development loan model is typically short-term, between 12 and 36 months, a bullet-type or interest-only debt.
Equity investors become the co-owners of the property, while the mortgage typically covers the development loans. Thus, offering each risk-investor their instrument.
Investors are not charged anything for investing and earning. Housers makes money by pricing 10% from the profits earned by developers on their projects and other fees for advising, analysing and claiming credit rights.
The platform has a secondary market so investors can sell their claims during the ongoing term. It does not, however, offer auto-invest functionality.
For investors who aspire to invest their money in environmental and socially responsible projects, GoParity is their best chance. GoParity is a P2P lending platform where investors co- finance a cause they care about, such as sustainable projects with zero bankruptcy. Investors can start with a minimum investment of 20 euros, with an average annual return of 7%. Despite the medium ROI, investors can still rest assured that their money is being utilised for sustainable environmental projects. From solar panel installations to reforestation projects – a significant share of the projects they fund have a CO2 capture potential, so investors can be sure that they are committed to reducing the effects of climate change.
GoParity has 7000 investors with over 200,000 Euros invested, and they claim to none of their promoters got insolvent.
A bank transfer or credit cards deposits are accepted to make investments more accessible for investors. The platform has an auto-invest tool – meaning, the investors don’t have to invest and compete with others to fund new projects manually.
They do not offer a buyback guarantee, but they do have a secondary market where investors can sell their loan parts in a project for a 1,5% fee.
Investors are not charged anything for investing or withdrawing; however, they do take 1% if investors withdraw capital after the initial top-up but no investing.
Walliance is an Italian real-estate crowdfunding portal that allows small businesses to raise capital for their projects without resorting to banks. The minimum investment, however, is €500, which is a lot higher than the platforms mentioned in this article. Investors can pick from a variety of projects available; effectively diversifying their investment and diminishing risks. Their terms do not exceed 36 months, and their average return ranges from 9% to 12%. Investors exit once the projects are completed, and the company will be put into liquidation to distribute both profit share and invested capital to investors.
Although investors are not offered a guarantee on the investment, investors can still participate assured by the regulatory measures taken to safeguard investors, and the scrutiny put onto the
companies before showcasing them onto the platform and due diligence. Companies must pass the review of two evaluation committees before their operations are published.
Raizers is a property crowdfunding investment platform that allows individuals to take part in buy-to-let properties, development projects along with green energy production and business equity through lending to real estate developers.
Starting their operations in 2015, Raizers now has more than 45 million euros invested with an average return of 10% annually, and they have their projects expanded to Switzerland, Belgium and Luxembourg.
Their minimum investment amount starts from €1,000. No projects have gone bankrupt so far, and every project goes through a full company audit before being published. Most of the projects they propose are property-backed and have low LTV ratios. For each selected project, Raizers organises a fundraising campaign in the form of a bond.
Investors can invest via a wire transfer or by card. Sadly, there is no secondary market to exit early.
October is a Pan-European crowdfunding platform founded in 2014 that allows individuals and institutions to invest in small and medium-sized businesses. Investors can lend to companies from France, Italy, Spain and The Netherlands. They can start as low as 20 Euros and a maximum of 2000 Euros for individuals. They can choose which project to lend to, and it is entirely free for investors.
October offer rates of up to 9.9% annually and interests are paid out monthly, which can be reinvested if the investor wishes. The loan terms vary from 6 months up to 60 months. The investment projects are asset-backed and can be diversified over 50 loans in small amounts.
Only 2.34% of the loans have defaulted so far, and October handles the recoveries from loan defaults themselves. In the event of insolvency, Lemon Way, a French payment platform service will ensure that repayments continue.
We suggest investors research into each and every one of the European platforms before investing. Check your goals and interests and see which platform aligns to your interest at best. Of course, the list is not exhaustive, and many new platforms are emerging. See which one offers you secured and stable income you need.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.