UPDATE 8 APRIL 2020: it seems that Grupeer might be a scam. I strongly advise against putting in any new money into this platform. More information can be found here. There is are preparations for a lawsuit. You can participate here.
I’ve never been a big fan of peer to peer lending as an investment tool, until I discovered platforms like Grupeer and Mintos. In the past, I’ve tried a little bit of crowdlending on Dutch platforms but I don’t like the low returns, with the only potential being downwards. Then on top of that, the loans are very illiquid, meaning I can’t access my money for several years.
That has changed with platforms like Grupeer. This Grupeer review article is about my first months of experience on the platform.
What is Grupeer?
Grupeer is an online peer to peer lending investment platform. Now that’s a mouthful isn’t it? In the next paragraph I’ll explain what peer to peer lending actually is, but first let’s look at who Grupeer are.
Grupeer is a company based in Latvia, providing a way for individual investors to invest in high yield loans. As of today, they have funded over 48 million euros in loans, with an average interest rate of over 13%. Yes, you’ve read that right. More than 13% in today’s market.
Now that sounds like something that might be too good to be true, and maybe it is. At face value, 13% sounds fantastic, but please note that there are risks involved making loans like this!
Grupeer offers three types of investments:
- Business loans
- Development loans
- Stability fund (this product is still under development)
How Does Peer to Peer Lending Work?
In short, peer to peer lending is a form of crowdfunding capital. Both individuals and business can take out loans from banks, however, that might not always be possible.
Perhaps the bank is too expensive, or the organisation looking to borrow money isn’t credit worthy. In those cases, peer to peer lending could be a way to access capital, however, I wouldn’t want to invest in such company!
Crowdlending can also be very interesting when banks are not interested in a loan due to the small size. You have to imagine banks being large organisations with lots of processes and due diligence before they can give you a loan. For smaller loans, it might not be worth that to them. That is where peer to peer lending can be of use.
And then of course there are companies that fund their lending activities via peer to peer platforms. This happens on platforms like Grupeer and Mintos. These companies are making loans to consumers and businesses, and then sell these loans to “the crowd” a.k.a. the investor, or you, to fund their operations.
Available Loans on Grupeer
Grupeer has quite some loans available. As I’ve mentioned in the intro, they are offering both business loans (loan deals) as well as development loans.
It looks to me as if the Grupeer platform is mainly focusing on business loans. On their platform, they call this menu simply “Loan Deals”. Under loan deals you’ll find loans ranging from 10% to 15% interest rates.
The average duration of these loans is somewhat around 12 months. This, to me, is on the upper side of what I call reasonable from a liquidity perspective. There are loans available with a duration of say three months, however these are scarce.
All loans are protected by a buy back guarantee. Some of the loans also offer additional security in the form of collateral.
Via the menu you can also jump to the development projects page. In this part of the Grupeer platform, you can invest in loans made to real estate developers. They are on the platform looking for capital to develop property, and you can loan them money.
I find that these loans typically have a higher interest rate and longer duration than the regular business loans you can invest in using Grupeer. I don’t like loans with a long duration. However, I have invested in quite a few development loans that came onto the market with a duration under 12 months.
You can signup to Grupeer using this link. It is at no extra cost to you, but it helps me run my blog a little bit more efficiently.
Grupeer Interest Rate
The average interest rate on the platform is almost 13.5%. Most loans are in the 10-15% category.
Grupeer Auto Invest Feature
Grupeer offers an auto invest feature that you can use to automate your peer to peer investments.
The tool is pretty flexible, you can put in many rules to create the logic you need. I find it very convenient to invest using the Grupeer auto invest feature because I like to be hands-off.
Buy Back Guarantee
All business loans are protected by a buy back guarantee, which promises the investor to buy back the loan if the borrower doesn’t pay within 60 days after the loan matures. This means of course the carrying costs of your investment will be higher.
This is because the loan will stop yielding interest, and only be paid back after 60 days. However, I feel very comfortable with the idea that if a borrower defaults, I will get my money back after 60 days.
Often, Grupeer offers cashback deals when you invest in their loans. An example would be that they give you an instant 1% cashback on your investment.
This means that when you invest 100 euros into a loan, Grupeer credits your account with 1 euro in cash.
Now I don’t recommend putting in 100 euros per loan, but still, it’s a nice idea. Of course, these cashback bonuses also work on lower investments.
Grupeer Secondary Market
Unfortunately, no secondary market is available as of July 2019. However, Grupeer has mentioned on their site that they are working on this feature.
A secondary market is a place where you can sell loans you’ve made. This can come in handy when you’ve invested money for a longer term, and decide you want to liquidate your investments to take cash out.
Currently, Grupeer doesn’t have a working secondary market. Mintos for example, does have one that is very active.
My Personal Investment Strategy
Personally, I like to invest in Grupeer loans with the following rules in mind:
- Liquidity: I want loans with a short duration
- Return: I want to be rewarded for the risk I take
- Diversification: I want to be in as many loans as possible, using the smallest investment possible
- Automation: I don’t want to manage thousands of super small loans manually
Rule number 4 means I will only use the Grupeer auto invest. I will not make any manual investments. When I just started out on the platform I have made some manual investments, but I don’t like them.
That’s why I’ve created the following auto invest rules:
As you can see, I’ve created seven rules. The auto invest goes through them one-by-one, triggering as soon as one of them finds a loan.
This means I try to invest in projects with <6 months left first, then <7 months, all the way up to 12 months maximum. That strategy follows my rule number 1 – liquidity.
I’ve put the auto invest strategy to only invest in loans that are yielding 10% and up. Maybe Grupeer offers loans that yield less than 10%, but I don’t want these loans. I need returns to justify the risks of crowdlending.
Then, in the auto invest settings I’ve put in that I want to invest 10 euros per project, and nothing more than that. This is to make sure the losses are minimal when projects go bust.
I do like Grupeer and I would like to recommend them to anyone looking to get into peer to peer lending. This is because of their ease of use with the auto invest settings. There’s not much that can go wrong if you put the right conditions in.
However, there are a few minor things I’d like to see fixed. For example, I would definitely dig a secondary market to make my investments even more liquid.