I tried to make the comparator as simple and intuitive as possible. The first table covers general characteristics of each platform, while the second focuses on the returns (TIR and monthly annualized return).
Click here to see the whole document.
Explanation of the table
- Divided intothree sections/ Categories. From top to bottom: real estate crowdfunding platforms, P2B crowdlending , and P2P crowdlending. The idea is to compare within each section and not between different categories, since being quite different investment products, they are not really comparable.
- 17 fieldsof information for each platform. The color code (red-orange-green-dark green) facilitates visual comparison of the different platforms within the same section / category.
- For each platform there is adata sheetwith more details for each field (and additional fields) that can be accessed by clicking on the links.
Definitions for each field
| Type | RS:Real estate Crowdfunding: Platforms engaged in the participatory financing of real estate projects.
P2B:Crowdlending to companies (Peer to Business loans – P2B): Platforms that specialize in lending to companies, without a financial institution involved. P2P: Crowdlending between individuals (Peer to Peer loans – P2P): Platforms that specialize in financing individuals without a financial institution involved. We can find two sub-categories: P2P:Platforms of large loan companies (one originator only). P2P-MP:Crowdlending Marketplaces, which are like aggregators of loans, i.e. platforms that bring together several loans issued by different entities (originators). |
| Mode / #Ori | Mod:Investment modalities available in real estate crowdfunding:–Sav:Savings (renovate-sell-rent; horizon of usually 24 to 60 months);
–In:Investment (rehabilitation / construction and sale; One year usually); –ML:Mortgage Loan: Loans guaranteed by a mortgage. #Ori:Number of originators (issuers of loans) in crowdlending platforms. The greater number of originators, the better because of the ability to diversify. The Marketplaces typically offer loans from various originators. |
| Start | Year that the platform or originator were established. The earlier, the better. |
| Origin | Country where the platform was established. |
| Countries | Countries where the platform supports projects or loans. The more countries, the better. |
| Currency | Currencies in which the platform allows to invest, EUR (Euro), PNL (Polish zlotys), etc. The more currencies, the better. |
| XIRR (%) | Internal rate of return (XIRR): It is the interest rate or return obtained with a specific platform. That is, the percentage of profit or loss that an investment will have for the amounts that have not been withdrawn from the project. It takes into account the cash flow (which is not necessarily periodic), the reinvestment of the interest earned, commissions, defaults, delays … and bonuses. To this profitability, one has to discount the taxes to be paid. |
| Cash Drag | Defined as the money that remains without being invested in a platform due to lack of loans or projects, without offering any performance and causing a decrease in profitability. It is a problem that arises from time to time on some platforms, usually temporarily, for a few days or maybe weeks. Often it is not a total lack of supply, but it only affects loans of certain particularly attractive characteristics (above a certain interest or term), causing the AutoInvest not to invest all the available capital.In real estate crowdfunding platforms and P2B crowdlending, since the number of projects is usually lower, I used as reference the approximate number of new projects each month to measure the degree of activity of the platform. The lower the number of projects, the longer it will take to invest any amount, leaving money uninvested, which would be equivalent to a Drag Cash. |
| Min (€) | Minimum amount to invest in a project or loan. |
| Payment | Payment modality(sorted from lowest to highest appeal):
/ :Combination of several methods of payment ():When a payment modality (the one in parentheses) is much less common than the other. |
| Term | Loan term(approximate), in days (d) or months (m). In this case, it is not so easy to define what term length is better, since it will depend on our strategy (short, medium or long-term) and our need for liquidity. In my opinion, the ideal is a platform that provides with the entire range (i.e. short, medium and long-term projects), followed by only short-term projects, only medium-term, and last only long-term . |
| Defaults | Default rate / Delinquency Rate:Defined as the ratio between the value of doubtful loans and the value of the total loan portfolio. On platforms with 100% Buyback loans, the percentage of defaults is 0%. Often platforms offering loans/projects of different categories/grades (from A + to D) provide default rates for each category. Overall, the better the grade, fewer defaults and vice versa.* Mintos offers loans with and without Buyback, but only provides the combined percentage of defaults. The right thing would be to provide data exclusively for loans without Buyback. |
| Buyback | Buyback guarantee:Buyback loans come with the commitment (from the originator or platform) to pay the investor the capital invested (and often also the interest) in case of defaults or delays. The Buyback is activated if, after a period of time, the borrower has not made the repayment of the loan and there is therefore a delay. This period depends on the platform, originator or loan characteristics, but it is usually 30 or 60 days (just 3 in the case of Fast Invest). It is important to note that the Buyback or Repurchase Guarantee does not imply an absolute protection of the investment in the case of bankruptcy of the originator. In general, platforms that do not offer Buyback usually compensate for this either with a higher gross return (which may result in a higher net return even if there are defaults) or by offering some other type of guarantee or collateral (such as mortgage loans).* In Envestio, all projects have either a guaranteed debt of a minimum of 90%, or one has to wait to recover the debt from the borrower.
** The period to activate the Buyback with Fast Invest is only 3 days, compared to 30 or 60 days in the rest of platforms. *** There are platforms that offer loans without Buyback. |
| Auto | AutoInvest (function to invest automatically):Key investment mode for many platforms that allows us to predefine a number of parameters of the loans or projects (term, interest rate, amount to invest, origin …) so that the system will invest for us, following our criteria and indefinitely, so that our intervention is no longer needed to continue generating benefits.* On some platforms, such as DoFinance or Robocash, there is only the option AutoInvest and no manual option investment. |
| 2nd Mark | Secondary market:The secondary market is the place to sell and buy loans between users of the platform. It is particularly needed on platforms that offer long-term loans, offering two major advantages: 1) provides a mechanism to quickly sell our shares in a loan or loans in case we need the money, increasing the liquidity of the platform; 2) to find good investment opportunities (sometimes through AutoInvest), often better than the primary market.Some platforms make up for the absence of a secondary market by offering the option that the platform will buy back your shares, sometimes applying somepenalty or extra cost. |
| ñ | If the platform is available in Spanish |
| Bonus | Welcome Bonus:Some platforms offer welcome promotions for new customers to encourage new subscriptions. They tend to be either a cash bonus or additional interest for a defined period. This blog contains links to these welcome bonus. If you click on any of the links and decide to invest in any products or services I may earn a commission. You may receive a small bonus for using my links. It’s a win-win situation.
* Some platforms offer at specific times a bonus or plus in the profitability by increasing the balance (Swaper), investing in certain originators (Mintos), investments in loans above a certain amount (Flender, Housers, EstateGuru), or for any investment during a defined period of time (Housers). In some cases, these plus can increase very considerably the return rate of the platform. |
Comparator of return rates:
Click here to see the whole document.
- The XIRR is calculated in the last month shown on the table (in bold the best XIRR per category).
- Best returns of each month by category in blue. Negative monthly returns in red. Shaded cells indicate extreme returns due to specific short-term bonuses.
- All returns are calculated tax-free to facilitate comparison, even in cases where the platform withholds taxes.
- XIRR, especially for real estate crowdfunding platforms and P2B crowdlending have not yet reached yet the maximum potential of each platform, so there is still room for improvement, unlike P2P platforms that reach their full potential in 2-3 months maximum.
- Mintos profitability broken down by currency is presented at the bottom of the table (pale grey). The combined category (all currencies – dark grey) offers monthly returns taking into account the effect of the exchange rate (i.e. depending on the exchange rate of each currency each month).
- * Indicates platforms on which I’ve been investing since before January 2018 (Housers: September 2016; Inveslar: December 2016 Privalore: March 2017). The previous monthly returns are available in the monthly analysis).
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