P2P Good or Bad Deal?

Best Crowdestor Project- Warehouse Daugavpils

The Crowdestor Project Warehouse Daugavpils is a non-Crowdestor managed real estate property on the platform that has a first-rank mortgage.

As the name suggests this property is a warehouse. A total of 150,000 was invested into the project. As per the property evaluation provided, the warehouse was worth 860,000 in Nov, 2018. So, the LTV was about only 17.4%. The borrower intended to use the money to upgrade the warehouse. The low LTV might be tempting, but what is its worth now? Is it still a good project to invest in? Lets examine.

1. Property Type
The property is a warehouse which is not very liquid and has been noted in project description. But on the other hand, it supposedly has a cashflow from rentals as per evoestate– a real estate aggregator website. Crowdestor however makes no mention of cashflow. But since the borrower has been paying interests on-time, we can presume they have sufficient income to pay interest.

2. Location
The warehouse is located in Daugavapils. It is noted in the project description that the demand for warehouses is bleak. Selling this would take 6-12 months on average.

3. Mortgage Type
This warehouse has first rank mortgage, which is a positive.

4. Current Evaluation
Since we already know that this warehouse will be difficult to sell, I will assume the worst case scenario. Lets check the Latvian cadastre register.

As per the cadastre, the warehouse is valued at 1.4 million euros! This makes the current LTV a mere 10.7%. I guess the borrower indeed carried out renovation works resulting in increased value. And usually, cadastre value is considered the absolute minimum value for property sales (unless Covid has changed the real estate dynamics).

This project is available at a discount on Secondary Market often and since it is a good buy, it quickly disappears even when the discount is just 1%. It is one of the rare projects on Crowdestor that has paid on time, is backed by property and is relatively safe. It is better than similar projects on Estateguru because it gives higher interest rate of 12.8% (compared to 10-11% on Estateguru) and has very low LTV (compared to 50-60% LTV on Estateguru).

DisclaimerI am not a real estate expert nor a financial advisor. This is my personal opinion and I can be very well be wrong.

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