I actively invested in real estate peer-to-peer lending through EstateGuru, building a portfolio of 20 projects over time. I was attracted by very high interest rates (up to 12% annually), and for months it seemed like a perfect money-making machine: the first 15 projects all returned to normal, with average interest rates of 9.5%, including fees and other costs.

Then came the cold shoulder.

Attracted by the higher interest rates, I added five projects from Germany to my wallet for the first time (the others are spread across Finland, Lithuania, and Estonia).
All five defaulted due to the bankruptcy of their developers. Was I unlucky? No, practically all the German projects on the platform met the same fate.
After three years of legal proceedings, the situation is a black hole: funds are frozen, and there's absolutely no certainty as to when, or even if, I'll ever recover my invested capital, nor how much.

The real drama is the impact on overall returns. The trapped capital and latent losses of these five projects have literally eaten up all the net gains accumulated from the other fifteen projects.

Is the risk worth it?
My answer can only be NO. Let me explain.
When you make this type of investment and the project fails, you have no decision-making power; you're last in line. If a bank is involved (almost always), it holds a first mortgage and takes the lion's share of what's left of the property, leaving us small retail investors with the crumbs, if any.
Another aspect to consider is the total lack of a real safety net. The loaned money ends up in an SPV (special purpose vehicle) created specifically for the specific transaction, often six months old and with no real assets that can be seized in court.
Finally, let's also consider dead time, meaning the money that often sits idle for months at zero yield, waiting for a new project to reinvest in, thus reducing the annual return.

In short, don't be fooled by advertisements touting 10-16% returns (as I've been seeing recently) on paper. It's not a brilliant reward for bypassing the traditional market, but rather the right price to pay for putting yourself at the back of the creditors' queue, taking on risks no one else wanted to take on.

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