EstateGuru employee investment journey – Part 1: Endrik Eller

Hi, I’m Endrik and I’m an investor.

During the last two weeks, I have lost about 35% of the value of my stock portfolio. Around 30% has also vanished from my startup investments. Legendary investor Warren Buffet said his main investment rule was: “Don’t lose capital”. According to that, I have failed heavily. Although I am a big fan of Mr Buffet, I don’t see the current situation too dramatically. 

I have been more or less actively investing since 2015. I did experiment with various instruments before this, but it was then when I realised it’s not a sustainable strategy to always be “all in”. And that’s when I started to take action and define my investment thesis, expectations and diversify my portfolio. I started by setting aside €50 per month and made my first investments on a p2p lending site called Bondora (formerly isepankur.ee). During the last five years, I have grown my portfolio to €100k which is diversified between various asset classes. By now it’s pretty obvious that the global economy will face a serious downturn in the upcoming quarters. It’s hard to predict the length of the depression as big countries are still at the beginning of the curve. Things might change quickly. But It’s still an obvious time to check if my portfolio is ready for what is about to come. Here is my plan:

I like real estate and I like to do hands-on, direct investments. About 50% of my portfolio is in residential real estate. For now, I’d avoid being stuck with a single rental unit as its vacancy might be an issue. Therefore I have diversified my residential portfolio between several units and co-invest with other investors. Everything that generates immediate cash flow is king – forget everything else for now. I expect a temporary decrease in cash flows here but I don’t plan to sell anything.

About 15% of my portfolio is in publicly traded stocks. As the stocks have already fallen – I can’t reduce my position there. If we see some clarity in the global economy – I will keep investing here proportionally to the portfolio. However, growth stocks might not grow for a while and dividend stocks might cut dividends, therefore having some cash flow instruments in your portfolio is essential. How else will you get “gunpowder” for when you need it right;) 

I have around 10% allocated to startup investments which I plan to hold and observe for the next six months. There are some jumpy times ahead for sure and I don’t want to have more exposure here. The remaining 25% of my portfolio is divided between property-backed loans and cash. My EstateGuru portfolio is the only instrument that hasn’t seen any decline in value yet. I’m sure we will see an increase of late loans there, but Estateguru has proven to do a good job with recovering loans. And let’s face it, it’s part of the business that some companies have trouble paying back their loans. I’m not worried about that as I have diversified my EstateGuru portfolio between 50+ different loans and they all are backed by a mortgage. My current average return is 13.65% but I expect this to grow as the platform has increased their interest rates a bit. In addition, EstateGuru loans are also geographically diversified and I can sell my claims in the secondary market if more liquidity is needed. I plan to keep around 15-20% of my investments here during the crisis as it offers steady cash flows and decent liquidity if needed.

Disclaimer – I have invested with EstateGuru since 2016 and for the past 10 months I’m also a contractor who manages the IT/Product Development at the company. I can assure you that we will do our best to keep our investors and borrowers happy during the tough times! Peace!