Analysis of EvoEstate
Published January 15, 2020
I started using EvoEstate in August 2019, attracted by its innovative and original business model. And I have to say that so far I am really satisfied: there are many diverse projects, on top of a double-layer due-diligence process of all projects: the first carried out by the platform of origin and a second by EvoEstate.
EvoEstate is the first aggregator of Real Estate Crowdfunding in Europe – from various platforms, not from several developers. It provides access to real estate investment opportunities from more than 10 countries and about 20 platforms, making cross-border investments smoothly and without the need to open multiple accounts. All projects are described in English, which is not the case with many of the platforms, as well as most documents. The EvoEstate service is completely free for investors and EvoEstate makes money by charging a commission to partner platforms.
In addition to being the first aggregator of real estate crowdfunding, there are some additional features that make EvoEstate particularly attractive and differentiate them from other players in real estate crowdfunding:
- Skin in the game: the founders of EvoEstate invest their personal capital (a minimum of EUR 1,000) in selected projects (in the “Skin in the game” section). In December, the amount invested in that section exceeded EUR 80,000;
- It provides access to various geographic markets: for example, although many Spanish platforms restrict the investment of non-residents, with EvoEstate it’s possible. Also, EvoEstate aggregates private real estate investment funds’ deals which usually have high minimum investments (50-125K EUR), or platforms with a very high minimum (e.g. Rendity with 500 EUR), thus allowing EvoEstate users a minimum investment of just 50 EUR.
- Autoinvest, unlike many of the competitors that only allow manual investing, plus a 24-hour Autoinvest free cancellation feature;
- Secondary market: Even if one of the originating platforms doesn’t have a secondary market, EvoEstate offers it allowing liquidity.
For platforms where I already had an account (Bricktarter, Housers, Reinvest24, Inveslar, Bulkestate or Crowdestor), I continue to invest directly on each platform. At the moment, I use EvoEstate only to diversify into new platforms without having to open additional accounts: Nordstreet, Bergfurst, Urbanitae, Norbalta, Rendity or Re-Lender. Since I started using EvoEstate, I have invested in all the opportunities offered by “new” platforms (always between 100 and 150 Euros per opportunity). My strategy is to keep investing in every project. Check my portfolio analysis for the latest updates.
- Platform Type: Crowdfunding property (aggregator).
- Start: 2019, Estonia, with Gustas Germanavicius as CEO and Audrius Visniauskas as CIO.
- Modalities: Investment opportunities are classified into two sections or categories: those with skin in the game (where the founders of EvoEstate invest their personal capital), and those where they don’t with an explanation of the reasons and risks. Depending on the nature of investments, there are three types:
- Buy to Let: Although they offer the lowest returns on the platform, it’s the most stable of the three types. Investing in buy to let is like owning a small part of a property. With the lowest risk, investors can expect 3-6% of annual returns as well as capital appreciation with time. Capital appreciation is generated by the increased value of the property which usually depending on the location ranges between 2-4% annually. Such investment can yield investors a total of 10% annual returns, but you have to be patient and keep the property until the duration of the project. Most of the buy-to-let investments have a duration up to 5 years, but the originators do not disclose the exact dates, as they intend to sell when they will be able to generate the highest capital appreciation. The best part is, with investing in buy to let that you don’t have to limit yourself with just one property but have small bits of property across all of Europe without having the hassle of managing it.
- Fixed-interest loans: lending capital to real estate development companies and receiving collateral (usually real estate) as a guarantee. Investors can expect to earn 8-13% interest annually investing in fixed-interest loans, but loans involve higher risks compared to the buy to let projects.
- Equity: Highest-risk as well as highest-reward investment. With this type of investment, investors are like business co-owner, therefore investors can expect to earn between 14-30% annually. However, as a business owner, investors don’t only participate in the gains but also in losses, therefore there is a risk that investors could even lose principal. Equity projects also range by their subcategory, on EvoEstate common equity projects are developments, which work like development loans, but investing you participate not only in the upside but also in the potential downside, however, the expected returns are much greater. Additionally, they offer auction products, where a property has been bought in an auction for a below-market price and private investment funds’ deals.
- Originators: All projects are offered by a wide range of 18 originators: https://evoestate.com/loan-originators/. Since April 2020, it is possible to track all investments and their status in the updated originators page, which includes risk ratings for originators on an “A+” to “D” scale. The rating does not analyze individual investment opportunities, but rather the environment in which investments are structured. The rating is based on actual data and the evaluation methodology is divided into three main classes: operating environment, risk appetite and financial profile. The EvoEstate Rating will be updated every two years, with the next update scheduled for October 2020.
- Geographic focus: Spain, Lithuania, Germany, Italy, Austria, Ireland, the Netherlands, Latvia, Estonia, including the United States, and the list continues to grow.
- Currencies: Euro
- Return rates: Very variable due the great range of projects. Between 4% and 22%. As with other real estate platforms, it may take over a year to reach the platform’s maximum potential (XIRR).
- Investment flow / Cash Drag: Really active, with about 10 new projects per month (5.8 in my case because it don’t invest in platforms where I have already an account).
- Minimum investment (per loan): 50 euros. In addition EvoEstate aggregates private real estate investment funds’ deals which usually have high minimum investments (50-125K EUR), or platforms with a very high minimum (e.g. Rendity with 1000 EUR), thus allowing EvoEstate users a minimum investment of just 50 EUR.
- Payment modality: Monthly normally.
- Terms: It depends on the type of the project. Usually 12 months for fixed-interest and equity, or more years for But to let
- Defaults: The platform is very recent, so there are so far no delayed or defaulted loans. You can check the updated default rates and delays for all platforms on my last portfolio analysis.
- Buyback: None, like for other real estate crowdfunding platforms.
- AutoInvest: It allows investors to setup multiple investment strategies for each country, originator or type of deal individually. In addition, EvoEstate offers 24-hour auto-invest free cancellation, which is quite a unique feature, i.e. if investors don’t like the investment, they can cancel it without any fees.Secondary market: Released in January 2020. Interestingly, it doesn’t matter whether or not the associated platform has secondary market. Even in those cases, EvoEstate offers secondary market and people can have liquidity. EvoEstate charges no fees to the investors for Secondary Market transactions. Reportedly, 50% of Secondary market orders without premiums are being executed within 24 hours. Investors can choose whether they want to sell investments with discounts or premiums. This allows to either sell the investment faster or slower but earning the profit. EvoEstate announces a Margin trading feature coming soon.Interface / Tools: Really complete and intuitive website, with numerous statistics on your investments, AutoInvest, secondary market, etc.
- Taxes: EvoEstate does not withhold any taxes, except for private individuals who are Estonia’s residents. EvoEstate partners (except Housers) don’t withhold any taxes on EvoEstate, therefore investors get net returns. All of this in details can be seen at a tax report that is distributed to the investors by EvoEstate.
- Customer Support: The 2-3 times I’ve contacted them, they have responded within 24 hours, always satisfactorily and professionally.
- Languages: English.
- Welcome promotion: Register with this LINK to receive 0.5% of the amount invested during the first six months.