Crowdestate exit

No, nothing is wrong with Crowdestate, the reason why I’m exiting (for now) is that I need to cash out some part of my portfolio for expenses related to my new home. Currently I need to cash out the second 10% for the down payment + something in the range of 20-25K for the kitchen + other furniture. This means that I had to take a long hard look at what is in my portfolio.

The first 10% for the down payment came from the sales of my 12m2 rental apartment – the price was good, I didn’t enjoy dealing with it and I got a very good exit point with good returns. Then I’ve had a year to earn money (the more money I earned, the less I had to take out from my portfolio), but being home with a small baby there’s only so much you can work.

This brought me to having to look over my P2P portfolio. The stocks I own I do not want to touch – even though there are some positions that I could sell with significant profit, then stocks are not a very high part of my portfolio and I’d prefer to reduce my P2P exposure.

Long story short, my top 3 positions are Mintos, Omaraha and Crowdestate. Out of those three Mintos is most flexible so exiting that was not reasonable (if I need more cash suddenly it’s easiest to get it from there). Omaraha I’m exiting naturally since the interest rates are just that low, so you cannot give out loans that would satisfy my expectation. This leaves Crowdestate, which is most open to market risk (in my opinion), and locking in the returns there seemed reasonable.

So for the last three days I’ve been playing around with selling my portfolio on the secondary market. I must say, it’s actually been… surprisingly easy? I was prepared to have some projects that maybe wouldn’t sell all that well or having to wait much longer for sales to happen, but it was surprisingly quick.

I also didn’t get greedy with the pricing – I did have a price offer that gave the person buying the piece a close-to-expected return of the project, and I locked in slightly-above what was expected on almost all the projects. This is reasonable in the sense that as most projects I own have run for a while, there’s enough info to see whether the risk of failure has increased or decreased as time’s gone on.

Currently I only have a handful of projects left, most of them ending very soon, so it was reasonable to wait them out. My new home should be ready in October, and then my finances can balance out again and I’ll be able to see what and how I’ll add back from CE. Overall, I was pleasantly surprised at the ease of exit (the majority of the pieces were bought by bots though, only a few by hand, so keep that in mind when pricing things).

Mintos portfolio 2,5 years

Since Mintos has once again opened up their refer-a-friend and more people are looking for info on Mintos experiences, then I thought I’d do an update on my Mintos portfolio. For the first two years Mintos was mostly a small part of my P2P investments. Solid, but there were other alternatives I preferred (Omaraha at the time).

As time went on, Omaraha became less attractive due to lower returns and Mintos much more interesting due to cashback being offered. Since I sold my rental apartment and needed an option to invest the money short term, then for the last 6 months Mintos has been the biggest part of my portfolio.

This is the chart of my interest returns across two years – you can clearly see the *bump* from when I added in the money from the sales of the apartment and when I started to trade more actively on the secondary market (cashback being offered also offered bigger volumes for the secondary market).

mintosinterest

This as stated is interest returns – interest + late fees. This chart does not show cashback returns, which aren’t really repeatable at this point – since no campaigns are running, but cashback has effectively helped this year’s Mintos returns hover at about a 20% return. Cashback rewards + secondary market profits together are almost as big combined as all of my interest returns.

Overall, I’d say Mintos has definitely surprised me in a positive way when it comes to their growth rate and the pace at which they add loan originators. While I can’t keep my portfolio at this level for much longer since I need to cash out from some investments, but I feel comfortable having a significant amount of money invested with them.

Overall the only small issues I have with them are 1) it’s still somewhat slow to deposit money (some hassle with them switching providers as well), 2) maybe sometimes slow on updates (such as Eurocent case) and 3) somewhat difficult to assess originators for an investor (I only invest in a handful of the 40) and 4) at times customer service struggles with more complex questions. Most of these are fixable issues though.

Other than that, they’re more transparent than most P2P portals, sharing relevant info (yearly report) which should interest all investors, and as they are profitable I feel that a lot of risks are mitigated by that. No big issues so far over the 2,5 years I’ve invested with them.

 

 

Portfolio update june 2018

It’s been a long while since I’ve done a portfolio update and a lot has changed, so I thought I’d share! Definitely some huge changes within the last year in terms of asset classes and I’ve had to make many changes to be more liquid to be ready to finance my new home (which will hopefully be finished in October).

Real estate is now pretty much gone from my portfolio. If you remember, I owned a small 12m2 dorm room style apartment in Northern Tallinn, which offered reasonable returns, but was also the most illiquid investment in my portfolio. Due to ridiculous price growth and lack of time and enthusiasm to manage the property, I sold it at the start of the year, cashing out a solid 20%+ yearly return, so overall not bad. Any exposure I have towards real estate now is real estate fund stocks and crowdfunding projects.

The rest of my portfolio is currently divided up between the stock market and P2P investments, with stock market investments totalling 25% of my investments and P2P investments 74%. The missing 1% is random trivia not worth mentioning here.

Stock investments are mostly single stocks from the baltic stock market, a total of 83.5% of stock investments or a total of 21% of portfolio, and some index fund investments, which total 16.5% or a total of a bit over 4% of total portfolio.

From the Baltic market positions which are bigger (more than 5% of total portfolio) are TKM (Tallinna Kaubamaja) and SAB (┼áiauliu bankas), some smaller positions are in LHV (LHV bank), Tallink and the just-IPO’d Tallinna Sadam and a few tiny positions of SAF, TEL, APG, Merko, Eften. This is the lazy money I keep in my portfolio, mostly to buy and keep forever.

For index positions, these are currently much smaller than usually since I’m waiting for my home purchase to be finalised to finally start building an international portfolio, so it’s half invested into the third pension pillar (LHV Indeks pluss) and the rest is in a convenience index investing product that I’ve left ticking for tax reasons, kasvukonto (has a bit of EXSA, VAL, SPYW).

Social lending and crowdfunding are currently the core of my portfolio due to their high liquidity and current high returns. After years of testing through many different sites, I’ve kept only three among my investments, maybe will add a fourth when more finances free up or these shrink up (as Omaraha is currently).

Biggest portion of P2P investments are via Mintos, which is currently a whopping 40% of my portfolio, mostly due to the cashback and super fast secondary market. This is where my new home’s furniture money is currently earning interest.

Second biggest position, which has however been shrinking is Omaraha. Due to lower loan volumes and drops in interest rates, the effective returns are way below what they were even last year, and I’ve been slowly transferring money out to stop if from just sitting there. Will see how it goes. Currently at 24.5% of portfolio and slowly decreasing.

Last position is my higher risk part of the portfolio, investments into real estate developments mostly, which is Crowdestate. This houses a bit less than 10% of my total portfolio, however growth isn’t particularly fast since there aren’t too many projects. This is about the level I intend to keep this investment at.

There you go, current overview! At the end of the year I will have to liquidate some investments due to high expenses associated with hope purchasing, but hopefully once I sell the current home I’ll be able to patch up the damage and have a chance to add some new assets.

 

Crowdestate – still overrun by investors

While some other P2P portals have to work to get more investors to come on board, then Crowdestate is struggling with a different issue – there is just too much money to be used and not enough projects available. While this is also not a good problem to have for a site – if investors get too frustrated they will leave the site since they cannot employ their capital, then it’s great fuel for potential growth.

However, from the investor’s point of view it is rather annoying. Having enough money is good in the sense that projects get filled – it hardly ever happens that your money gets booked and then returned later (having earned no interest while booked), and if a project does fail there are some fundamental reasons why investors do not find it attractive.

The downside of having that much money however is that it’s quite impossible to actually get into most projects by hand. The current setup is that autoinvest has priority over manual investments, and autoinvest is not capped the same way pre-booking is (you can invest however much you want via autoinvest).

This means that most projects that are smaller than 500K are pretty much set to be filled by autoinvest. More people will start using the strategy that I do – when I see a project that I like I temporarily turn on autoinvest – and there will be even less of a chance to manage to invest by hand. In that sense it’s good – no more wasted time waiting by the computer and clicking refresh and cursing when the page refused to load.

So, there isn’t that much reason to log on when projects go live anymore. Another reason to log on could be the secondary market, but within about a week of development bots were built to trade on the secondary market, so it’s impossible to buy anything manually (unless the returns are pretty low) or for some reason all the people who run bots run out of money (which will probably not happen). So the secondary market did provide an easier way to exit, but the purchasing function is unusable for a regular investor.

All in all this means, that there isn’t much to do. If you see a project the best way to manage to invest is to set up autoinvest (and remember to turn it off later), and go enjoy the warm summer weather. Definitely a much more passive and less time restricted investment than it used to be. Now, if there were a few more projects :)

Omaraha loan volumes and interest rates

For a significant amount of time Omaraha was one of the P2P lending sites that offered highest returns. This was largely due to the way their auction system worked – investor could essentially bid how much money they were willing to invest into a loan and at which rate. The system started filling the loans from bottom up (lowest to highest rate) and then the person taking out the loan got an average rate based off those.

This meant that if you kept an eye on how the loans got financed you could get into loans at ridiculously high interest rates while the borrower could still get a reasonable total rate. Best example of this is probably in the 7- and 10-year loans which have been removed by now, where investors were rather shy to commit, meaning you could get into loans at the max rate allowed – 60% gross (48%net for investor). This was also possible for 5-yr loans.

or

All good things must come to an end though, and the 7-yr and 10-yr loans were removed (largely due to the total rates failing to comply with the legal max interest rate limits) and the cap for max interest rates was also brought down, so you could no longer make autobidders with such insane rates. Good for the borrowers, sad for the investors.

Current situation

Somewhat as a result of those changes the average interest rates started to come down. A section of borrowers disappeared from site (those who got higher rate loans, but were no longer able to), and since the site itself had become much more popular among investors and the total available cash number kept increasing (up to 1mil at times), which started to push down the average rates.

As a result the drop has actually been rather immense. Another contributor has probably been the fact that Omaraha has elected to be less of a black box – before you had to take the time to figure out the interest rates yourself, now, however they show you the maximum rates that offer a chance to get into loans. Today’s stats:

rates

As it stands, since the buyback rate offered (used to be at 80% for a long time) has started to slide back closer to 60%, then clearly the squeeze is two-fold both less security in buyback and lower interest rates. Since they’re also reduced the max amount per loan that an investor can contribute, this makes previous strategies much harder to use as well (it’s no longer as efficient to “ladder” interest rates for separate autobidders).

As a result Omaraha has dropped to somewhere in the middle of the pack when it comes to returns with one significant downside – lack of a secondary market, which means making an exit is much more difficult than on some other sites. As a result, for the first time in two years I’ve actually taken out some money since it started to build up too much.