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My Distribution and Profit
The available loan volume on Mintos keeps growing, and the high demand for investors’ money keeps pushing interest rates up. I’ve managed to raise my average interest rate to 12.18% while also allocating part of my portfolio to lower-risk originators like EBV and Mikro Kapital, which is great.
But… The crazier this party gets, the clearer it becomes that it can’t go on forever. Best case scenario, the market would prove its viability enough to draw in institutional capital, causing interest rates to go down, but probably promoting self-regulation (fair lending practices).
Otherwise, personal debt would increase to a point where all governments would have to implement harsher lending restrictions. Worst case scenario, those restrictions would come too late, and the bubble would burst.
For this exact reason I was happy to read the news about Capitalia‘s cooperation with the European Investment Fund. Such steps can allow us to continue earning money without throwing the whole market off balance.
For the first time, 1 of my 51 Grupeer investments went late. I actually see it as a good sign, because perfect performance is suspicious. Aside from that, Grupeer just keeps getting better, with new loan originators and development projects offering full buyback guarantee. I foresee a great future for this platform.
I also earned a few € of referral income from Grupeer, so thank you guys!
No big news here. Old loans being repaid as planned. New loans are mostly recycled projects, and are funded very quickly, causing some cash drag.
Envestio recently hinted that their new cooperation with Meridian Trade Bank might yield new projects. I really wish for that to happen, and for this platform to spread its wings. In the meantime, it’s a nice “side platform” offering high returns.
Crowdestate (and real estate platforms in general)
I joined Crowdestate last August, with the intention of diversifying from high-risk personal loans into more conservative real estate and business loans. So far all of my projects seem to be going according to plan.
Sadly, I’ve become more apprehensive about this type of platform since reading about UK Lendy (not to be confused with Latvian Lenndy). At first everything seemed fine, but gradually more and more of their projects ran late and defaulted. The most worrying part is that their real estate valuations turned out to be optimistic, properties were sold below the loan value and caused loss to investors.
There are several reasons I worry about real estate platforms in particular:
1. With high-interest personal loans, the risk is clear, and that’s the reason they are usually offered with a buyback guarantee. Traditional real estate platforms are supposed to be safer…
2. If valuations can’t be trusted, then the whole system is flawed.
3. Principal is usually not repaid throughout the term of the loan, making it difficult to judge its performance until the final payment date.
Of course, one bad apple example doesn’t necessarily reflect on the entire market. Still, Lendy‘s case emphasises the dangers of shifting real estate prices.
Also, I would really Crowdestate, BulkEstate and EstateGuru to merge into a single platform. They are basically identical anyway, and merging them would improve stability, bring the best aspects of each platform to the other two, and make investors’ lives easier. Over-segmentation is bad for everyone.
This is actually old news, but I only now found out that Fast Invest cancelled its ICO. That’s good, because the ICO wasn’t reaching its goal, and FI was headed towards failure unless it changed course.
I’m happy to see them dropping the overambitious dreams and focusing on loan financing, but not so happy about the way they swept the failure under the rug and changed business models without telling anyone.
The availability of 13% interest loans has increased, but now that you can find better rates / better originators on Mintos, I see no particular reason to invest in FI, and have started withdrawing money. Maybe I’ll stop withdrawing when they finally improve their transparency.
Last and also least, my Lenndy performance is still catastrophic. All their excuses and explanations are meaningless. Other investors are reporting a similar situation. I’ve started withdrawing money, and hope that the situation doesn’t deteriorate further.
That’s it for this month.
I’m preparing another article for the Mintos Tips series, but first I want to hear back from Support about the average net return displayed in the statistics page. I don’t want to mislead you guys with something I’m not sure about.