A Guide To Setting Up The Custom Strategy

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Investment Strategies, the next evolution of Auto Invest, provides users with three different strategies for automated investment on the Estateguru platform. While the Balanced and Conservative options are already set up to cater to the more adventurous and risk averse investors respectively, the Custom option allows for the finetuning of parameters to more precisely reflect your investment style. In this guide we’ll take a more in depth look at the Custom Strategy and how to set it up.

Select The Custom Strategy

To select the custom strategy, you’ll need to login to your account and navigate to the ‘Invest page’ and click on ‘My Strategy’, as seen in the picture below.

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Select the Custom Strategy by clicking on View details, as seen below.

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It’s now up to you to customise the parameters that will determine which projects your funds will be automatically invested into. We’ll take a look at each parameter in more detail below.

Customise Your Parameters

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General Settings

Interest rate: Use the slider to select the the minimum interest you’d like to receive from the loans you fund. All loans returning less interest than your setting will be excluded. So if you select 10%, your funds will be invested only in loans offering that interest rate or higher.

Loan Period: Use the slider to determine the repayment period of the loans you wish to finance. Any loan with a longer repayment period than the period you specify will be excluded.

Countries: Here you can select the countries into which you would like to automatically invest. The Estateguru platform publishes projects from Estonia, Finland, Germany, Latvia, Lithuania, Netherlands, Portugal, Spain, Sweden, and the UK. If you would prefer not to invest in any of these markets, untick the box next to the relevant country it in the drop down menu.

Loan Type: Estateguru provides borrowers with the option to choose between a Bridge loan, Business loan, or Development loan. You can choose if you’d like to fund one, two, or all of these loan types, by ticking the boxes next to the option/s you prefer.

Loan Types

Repayment Type: This setting will determine the repayment schedules of the loans you’d like to invest in. You can choose between investing in all loans, full bullet loans (a bullet loan is a loan that requires a large payment at the end of the term), bullet loans (including annuity) or only bullet loans .

LTV: The LTV or loan to value ratio is a measure of the value of a loan as a percentage of the real estate collateral’s value. In general, the lower the LTV ratio, the lower the risk. You can select a maximum percentage here. If a project on the platform has a projected LTV (for all stages of the project) higher than your threshold, it will be excluded.

For more background on LTV and what it means, check out Understanding Stage Loans and Cumulative Loan to Value Ratios.

Max exposure to a single loan: This setting determines the maximum amount that will be invested into a single loan. Please note that if the available funds in your account are less than the sum stipulated here, they will not be invested, but instead classified as pending until additional funds are added.

Security: Here you can select between investing in projects secured by a first-rank mortgage and those secured by a second rank mortgage. Holders of a first rank mortgage will have first rights to the proceeds in cases where the collateral is auctioned off following a default. A second rank mortgage entitles you to proceeds from the sale, only after the first rank lenders have been paid what they are owed.

For more information on First and Second Rank Mortgages, read our guide on Understanding Debt Ranking And Loan Security.

Include Refinancing loans: Here you can choose whether you’d like to invest in refinancing loans on the platform. Refinancing occurs when an existing debt obligation is replaced by a new one, with different terms and a different interest rate. This only applies to the refinancing of loans that were originally issued by Estateguru and not the refinancing of loans originally issued by banks or other financial institutions.

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Stage Loans

Include Stage Loans: If you select yes here, Investment Strategies will be enabled to invest in the same project at different stages in its development. Please note that selecting no will not exclude projects that include stage loans, but instead ensure that you only invest in one stage per project.

Exposure Per Project: If you’ve chosen to invest in stage loans, you can use this setting to determine the total amount you wish to invest in a project in its entirety. Investment Strategies will not invest more than the amount defined in any single project.

Borrower

Exposure Per Borrower: In cases where one borrower is seeking funds for multiple projects, this setting will limit the total amount invested in that borrower, across all the loans they are seeking. You can choose to invest in all of a single borrower’s loans or define an amount over which no additional funds will be invested.

Funds Allocation

Invest In Currently Open Loans: If you select yes here, as soon as your strategy is activated and funds are available, Investment Strategies will begin investing into open loans that fit your criteria, even if they were published before you enabled Investment Strategies. If you select no, only suitable loans that are published after you enable Investment Strategies will be funded.

Invest all funds available: Selecting yes will enable the investment of all the funds you have made available, even when the amount falls below the amount set to be invested in one loan. Alternately, you can choose an amount to keep uninvested.

Once you’ve finished tweaking the parameters to create your custom strategy, you can see an overview of how many loans would have met your criteria over the previous six months, a prediction of how many will meet your criteria in the next month, and how much you can expect to invest over that time. You’ll find it slightly lower down the page (see image below).

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Activate Your Custom Strategy

To activate the strategy, read the terms and conditions and indicate your acceptance thereof by checking the box. Then simply click apply strategy and enter your password into the field that appears. Provided you’ve enabled Investment Strategies and there are funds in your account, you’re all set up. If you haven’t, the strategy will be registered as pending until you do.

If you’re ever wondering why you haven’t automatically invested in a particular project, you will see the reason/s displayed on the right hand side of the project’s page.