BitOfProperty is an Estonian crowdfunding real estate platform that gives investors the opportunity to purchase shares in an apartment building and to earn a passive income from the monthly rent generated. The minimum investment sum is just €50 and investors gain an average of 6.4 percent per year for a period of three years.
BitOfProperty in Numbers
When evaluating any sort of crowdfunding platform, we would always suggest that investors take a look at the company's performance and track record. Even though past performance does not guarantee future results, this helps investors create a measured opinion about a company.
|Investor's earnings:||+ €20,000|
|Total loan value:||+ €303,250|
|Number of investors:||+ 500|
|Loss of investor's money:||0%|
|Average portfolio size:||€2,492|
|Latest financial report:|
When we first wrotethis overview of BitofProperty at the end of 2019, the site did not have a dedicated statistics page. This has changed and as of April 2020 you will be able to see the new BitofProperty output numbers directly from the website.
The overall amount of supported ventures, as well as the number of active participants, is still relatively low compared to larger platforms.
If you are interested in more detail than what you will find in our BitofProperty analysis or on the BitofProperty website, you may contact Karl Vään, the platform's CEO, and he will be able to provide you with more details.
It's important to mention that BitOfProperty is a start-up company. The official founding year is 2017, but the idea of building an innovative crowdfunding real estate platform was born in 2015. More about that later.
Amount of Investors
Currently, the platform has more than 500 registered investors with an average portfolio size of around €2,500. Sadly, we were unable to find a significant stat: how many of these registered investors actually invest in BitOfProperty.
Earnings of Creditors
To date, investors have gained more than €22,000 in passive income and no one has lost any capital. Pretty good, isn't it?
So, how's BifOfPropery's rating on the P2P Market?
BitOfProperty figures can not really be compared to numbers from other websites like Mintos, PeerBerry or EstateGuru. All of the sites follow a very different business model.
When you compare BifOfPropery's statistics to other platforms, you will probably conclude that the company has a very short investment history and a much smaller investor base, which makes investing more risky.
However, we suggest that we keep reading our review of BitOfProperty as the platform offers something unique to their platform.
Promo BitOfProperty Code
If you're looking for a promo code that will give you some extra cash to invest with BitOfProperty, we will disappoint you now. At present, the crowdfunding real estate platform does not offer a sign-up or cash backbonus to new investors.
Nonetheless, the platform offers regular promotion campaigns to active investors.
BitOfProperty does not currently run any successful cashback campaigns.
We've heard rumors that, in the future, BitOfProperty might deliver a €10 referral bonus to new investors. If this rumor turns out to be true, we'll update our BitOfProperty review accordingly to make sure you get your bonus.
Either way, a sign-up bonus is just this: a bonus. The average investor in BitOfProperty invests in the long term, which should also be your target when you enter the platform.
BitOfProperty’s Requirements for New Users
You can create an account on BitOfProperty from anywhere, but you need to comply with the Know Your Customer (KYC) requirements.
The sign-up process is simple, but the authentication of new users requires more time as the platform gathers information about you, including your citizenship, bank details and a digital copy of your ID.
Once your profile has been checked, you will be able to deposit funds to the website.
Risks and Return
We know what you're thinking: how much do I earn with BitOfProperty and is investing here worth the risk?
Before we get to risk assessment, it's important to understand how BitOfProperty operates because it's very different from other P2P real estate lending platforms like Bulkestate, Crowdestate and EstateGuru.
How is BitOfProperty working?
Many P2P real estate investors are familiar with platforms that help construct development projects, be they via BitOfProperty or via a competing platform like Bulkestate, EstateGuru or Crowdestate.
BitOfProperty operates differently from the others, so let's look at how it works and compare it briefly to other P2P lending platforms...
Concerning the Platform
Thanks to BitOfProperty, investors are buying shares in an apartment building or individual apartments. This is comparable to the buying of shares of a company on the stock market. BitOfProperty investors earn passive income from the rent of their tenants.
In the meantime, Bulkestate gives its investors the opportunity to purchase properties with a group discount. In this case, investors are buying completed real estate.
Finally, EstateGuru and Crowdestate allow investors to make returns during the construction phase.
How do I buy BitOfProperty shares?
There are two ways in which investors can buy shares in an apartment building operated by BitOfProperty.
1. Buy Shares During the Initial Offering
When the owner of the property decides to sell some of their assets, BitOfProperty conducts due diligence, technical tests and lists the real estate on the website.
Investors can acquire shares of the property, starting from €50 per share. The property is listed on the registry until one of the following two conditions has been met:
- The goal of funding is achieved
- Time for the funding aim has expired
Investors who own shares will receive monthly rental income throughout the investment term, and will then also be entitled to capital gain when the property is sold (assuming the price of the property has increased).
Remember, you only start earning monthly rental income if the property is leased. Usually this is the case after one month of acquisition of the property.
2. Buy Your Shares on the Marketplace
The average investment term is three years. If you want to exit the investment, you can list your shares on the marketplace. Many investors will buy your stock and you will transfer your money back to your account.
How risky is my investment on BitOfProperty?
Buying shares on BitOfProperty involves a variety of risks. BitOfProperty does not guarantee any minimum returns and, as with any P2P lending platform, you can lose all of your investments.
Here are two risks that are most likely to affect your return:
- Properties are not rented: If this occurs, you will not earn any monthly rental income.
- Market prices are falling: In this case, the annual return and the exit price of the property are likely to be affected. In which case, the value of your shares will decrease.
In addition to these risks, you should consider external factors, such as regulations within the real estate industry.
How much does it cost to invest in BitOfProperty?
Although investors do not have to pay any fees to invest on most of the P2P lending platforms, this is not the case with BitOfProperty. The following fee structure should be known to all potential investors:
- Arrangement Fee: 2-4 percent of the purchase amount
- Safety Arrangement Fee: EUR 300
- Administration Fee: 10% of monthly rent (no charge during vacancy period)
- Success Fee: 15% of investment capital gains
According to the latest information from BitOfProperty, the organization is changing its fee structure. We will update our BitOfProperty review to keep the data correct, but, as an added precaution, make sure you check their terms and conditions before you sign up.
How's my investment secured?
BitOfProperty cooperates with LMP Security Agent (a third-party law firm) which manages collateral for the benefit of BitOfProperty investors.
It means that the money of creditors is covered by a mortgage. The law firm also guarantees that all legal arrangements are signed in accordance with national and European legislation. In the unlikely event that BitOfProperty is out of business, the law firm has all the transcripts of the investor's shares to ensure that they are able to recover their funds.
Additional Security Layer for Smart Contracts
BitOfProperty has introduced blockchain technology, also known as ethereum, which helps to make the entire process more open and transparent. This technology is unique to this platform, and the use of it helps boost investor money security.
All investments are registered in the blockchain (ethereum). Property is tokenized, which essentially means that all investments made by BitOfProperty are reported on an anonymous public account. Consumers have access to this report and data showing how much money investors invest, but the anonymity of the document ensures that all investors' names are withheld.
The smart contract (or token) includes: the amount of the investment, the property code and in the future it will have the investment agreement. The token you receive is a legally binding document authorised by the Estonian authorities.
Contracts are publicly available so that, if anything happens to the site, investors can still claim their money.
As tokenization is not the primary function of the website, BitOfProperty has not made too much effort to make it more user-friendly. Also, a lot of investors don't understand how it works.
We figured it would be worthwhile to mention this, as it increases the transparency and security of your investment.
Is BitOfProperty secure?
As BitOfProperty is a rather new P2P platform, we have conducted extensive due diligence on their business model and the company's members. Notice that there is no guarantee that the information we have found is correct, but we believe it will help you shape your opinion on BitOfProperty.
Here's what we found when we conducted our background check:
Who's leading the team?
The CEO and co-founder is Karl Vään, a 26-year-old. According to his LinkedIn profile, he started working with the company in July 2017. Before BifOfProperty, Karl worked for two years as a back-office administrator for Tarcona (Gunvor Services), which is active in the shipping and logistics industry.
We've found two interviews with Karl, where he's talking about how he founded the company:
We highly recommend that potential investors watch his YouTube interview to better understand how BitOfProperty operates.
The second co-founder is Taavi Pettai, who has worked with the company since July 2016. Previously, he worked as project manager for CKT OÖ, about which we didn't find any details. Taavi is Karl's brother-in-law, too.
There was another co-founder -Timo Kaus - who was Taavi's university colleague, but he's no longer involved in the project. Karl announced that Timo had left the project to seek a variety of opportunities.
Alongside the creators, we find other team members on the website of BitofProperty:
- Majid Iashgarian who helped build the backend of the website, which is the program that runs in the background.
- Abid Qureshi who helped to develop the frontend of the application, which is what you see in your browser.
- Wanderson Jackson, who helped build the user experience.
Other team members include Christopher Aw as well as Pimsai Chichareon, who are advisors to Singaporean and Japanese companies providing funding for BitofProperty.
From the investor's point of view, we should expect more people to work with the company, as there is no mention of people responsible for the business side, such as risk assessment or property management.
We asked BitOfProperty if they were outsourced to property management and risk assessment, and they told us that the second co-founder was in charge of property management and due diligence. Taavi has more than 10 years of experience in real estate and studied civil engineering at Tallinn Technology University.
Who owns the company?
BitofProperty was established back in 2015 with a capital of only €2,500. Originally founded under the name Unreal Estate OÜ, the company was later renamed BitOfProperty OÜ.
BitofProperty is supported by the Japanese investment firm LIFULL Co. , Ltd., and the Singapore-based start-up incubator Spaze Ventures. Nevertheless, there are a few more angel investors involved with BitOfProperty.
There is no public information available on the number of shares of each holder.
According to the details we've found on the website. The business should be based in Narva Mnt 7b, Room 515 Tallinn, Estonia, which is a shopping center and an office building in the middle of Tallinn. Sadly, we were unable to validate this info, as the Google Street View did not show any company logo in front of the entrance.
According to the Estonian business register, the company is registered at a different address - Harjumaa, Tallinn, Küti 1/1, 10415 - which is an apartment building in the suburbs of Tallinn.
After watching a video interview with Karl, we found that the company's head office is in fact in Singapore and that it has only a subsidiary company in Estonia.
We asked Karl for further explanation. Karl informed us that at the present the Singaporean firm, BitOfProperty Pte Ltd (201718544E), is a holding company and there is no activity going on there. BitOfProperty has no representative office in Asia.
The address of the company in Tallinn has recently been changed, but the data on their website has not been revised. Karl verified that the correct address was Küti 1/1, Tallinn, 10415, Estonia.
Terms & Conditions - Anything worth mentioning?
BitOfProperty does not currently have an individual investment agreement. Both terms and conditions are described on the BitOfProperty website under the terms and conditions. As mentioned earlier, there are certain fees that you should certainly bear in mind when purchasing BitOfProperty shares. Although these fees would soon change, we could not find anything about the costs in the FAQ section of the website.
Creditors should be advised that in the event that the security agent has to sell the mortgage in order to repay the investors, fees of up to €10,000 will be deducted from the overall liquidation sum.
Apart from that, we haven't found any odd clauses. Do be mindful, however, that the terms and conditions can change in the future. Yet, while we are very experienced when it comes to sifting through P2P network contracts, we are not offering legal services. So, we still advise that every investor reads and accepts the terms and conditions of any platform prior to investing funds.
Do investors have access to individual investment agreements?
The investment agreement is already part of the terms and conditions. There are no particular deals that investors can see at the moment.
To what degree can the platform cover early withdrawals?
As you might have found, BitOfProperty does not buy back any claims. You need to sell your market share and another investor needs to buy it if you want to stop investing in BitOfProperty. There is no guarantee that you will find a buyer, or that you will sell your share at the price you bought it.
BitOfProperty has not yet issued any financial reports for the year 2019. As soon as we receive this information, we will share it with you in this analysis of BitOfProperty.
Deposit of Capital
Notice that even though BitOfProperty uses blockchain technology, you still need to deposit money in euros.
There are no cryptocurrencies involved in BitOfProperty. Investors simply deposit money to the Estonian bank account platform and then add money to the investor profile.
Currently, a bank transfer is the only option for transferring funds to BitOfProperty, although we have been told that it will also be possible to deposit funds via a debit card in the future.
The purchase of shares with BitOfProperty is very intuitive. All you need to do is top up your wallet so that you can actually pay for your shares.
Similar to other real estate sites, all assets as well as individual projects can be viewed on BitOfProperty.
As we write this analysis, only four investment projects are eligible. Each project comes with a comprehensive description of the project. You can see all the information you need, as well as the finances of the individual project.
Every project has a section with shares available for purchase. As you can see, there are not many investors selling their shares at discounted or premium prices.
You can simply click the Buy Share button, enter the amount of the shares and the price per share and complete the transaction.
You need to be a confirmed investor with enough money in your wallet to do this.
Apart from being able to buy shares, you can also sell them on the marketplace. You can also monitor your purchase and sale orders from your dashboard.
BitOfProperty also gives you the opportunity to see all your transactions.
Apart from that, there are no other features. BitOfProperty gives you a very basic function that you can use to purchase and exchange real estate shares. It is worth noting, however, that the platform is still very young and that further features are likely to be developed as demand from investors increases.
BitOfProperty also gives you the opportunity to show all your transactions.
As mentioned above, there are two ways you can withdraw your investment:
1. You wait until the property is sold to another owner. The average investment term is approximately three years. If an asset is sold with a capital gain, the shares will also increase in value.
2. You may sell your shares on the secondary market. Other investors have the option of buying them, and you will be able to withdraw your capital.
There is no other way to access your investmens, which means that BitOfProperty is more valuable to long-term investors than to investors with short-term investment strategies and high liquidity needs.
If you're looking for high liquidity, take a look at Bondora's Go and Grow or Mintos' Invest and Access. You can also use platforms such as Robocash or PeerBerry that allow you to invest in short-term loans.
Customer Support Program
We've tested customer support for BitOfProperty twice, and so far we've always received answers to our questions within one to three business days. BitOfProperty gives you the choice to leave a message to them through their live chat or simply send an email to Karl at [email protected]
Karl is also the CEO, and he knows the company inside and outside. His answers are always on point - we never had to follow up for further clarification.
BitOfProperty is a young start-up that will need to prove their idea in oder to attract more investors to their website. Only time will tell how they will be able to expand in the future.
Essentially, this is a very small network, with Karl and Taavi leading daily operations. We can imagine that it's a lot of work for just two people. Creating a team of professionals who will be able to help with the expansion is going to be crucial in the next few months.
BitOfProperty aims to address the following three challenges in the real estate market:
1. High requirement of money
Investors who want to be part of the market need to take a huge risk and invest a lot of capital.
On average, real estate investors need at least six months to sell their property.
3. Time-intensive investment
Due diligence, management and contact with tenants is very time-consuming for many real estate investors.
We definitely see a good potential for BitOfProperty to thrive on the pan-European market. Especially during periods when investors have no interest in savings accounts.
BitOfProperty offers a new way to invest money in mortgage backed assets while collecting passive rental income.
The platform shall take over the following tasks:
- Search for tenants and due diligence
- Legal documents
- Collection and delivery of rent
- Tenant interactions
- Maintenance and repair jobs
- Property sales systems
In addition, the platform also provides investors with a functioning network, enhanced with blockchain technology, which allows them to purchase and sell shares through a decentralized system.
BitOfProperty follows a very different business model from other more common real estate platforms.
We believe that this platform is suitable for investors who are keen to try out new platforms with innovative features. It's also a safe way to diversify your portfolio of assets.
Nonetheless, you should bear in mind that this is a start-up. Diversification inside the framework is also not very strong, as there are currently only four projects open.
BitOfProperty main features and highlights
- Crowdfuding Real Estate
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