Stocks crashing down and housing loan interest going up are not things we want to see. As I have written before, according to financial theory, interests and stocks are negatively correlated because of the discounting factor, so the effect has been entirely predictable.
This portfolio report will be my last for now because I have resigned from the Country Manager’s position and am busy paving the way for my successor. If you are wondering why, the reason is simple: growth, projects and new things make me tick. I feel that I have given everything that I have to give as a Country Manager. I have taken Estateguru Finland from point A to B, and now it is time for someone with different competencies to take the company from B to C, which is an even bigger challenge in absolute monetary terms. I want to make one thing clear: I love Estateguru as a company, employer and most of all, I love the team. It’s just time for me to move forward. I will continue as an external consultant through my law firm and help Estateguru in every way I can.
Back to the subject. I have felt the stock volatility in my own portfolio, but as I have mentioned before, I have a large portion of my portfolio in cash. I have not sold anything following the start of the war. Nor have I bought anything. This is because I have doubted the stock market for a while, and I feel that a correctional movement is a good thing. Also, I have a significant investment in startups and Estateguru loans, and neither has been significantly affected by the war. I feel that the current situation only proves the efficacy of my strategy of having uncorrelated products in my portfolio. Why, you ask? Because I want to make money no matter the market situation. Also, having decent amounts of cash in the portfolio also enables me to keep risk at a decent level (the overall volatility of the portfolio stays low because only a small part of the portfolio fluctuates), and additionally, I can start buying when others are panicking.
Let’s start the actual portfolio report:
In my last portfolio report (you can find it here) I had 331 loans in my Estateguru portfolio, of which 14 were 4-15 days late, 3 were 16-30 days late, 15 were 31-60 days late and 3 were 60 days plus late. And most importantly: 11 loans were in default and 2 were partially recovered. Also, there were 209 repaid loans.
Now, a few months later, there are 358 loans in my portfolio. 268 are repaid loans. 13 loans are 4-15 days late, 6 are 16-30 days late, 10 loans are 31-60 days late and 15 loans are 60+ days late. Also, there are 14 defaulted, and 3 partially recovered loans. I now have a total of 44 late loans in my portfolio compared to 35 in April. Also, the number of repaid loans has increased from 209 loans in April to 268 loans in August.
The recovery of the portfolio is the result of many things. For starters, we have been able to recover several default cases and late loans with the help of our risk department. For example, in Finland (a market I happen to know very well for obvious reasons), we were able to resolve the €810 000 ST Capital Oy case and got the principal and interest back. Also, both the Finnish Nordic Energy Homes projects were sold through public auction at the end of May (Tavitie) and beginning of June (Mankkaa). The principals were about €1,95 M (Tavitie) and from that our investors will receive the principal back plus some interest. From the Mankkaa case (principal €1,5 M), our investors will get the full principal amount back, plus interest, plus the penalty interest. So everything in full. A fun fact that underlines our conservatism in the valuations: when we financed Mankkaa with €1,5 M, the valuation was €2,5 M, as we used the lowest valuation that was provided to us by several independent evaluators, as we wanted to be sure about the conservative valuation. In the bailiff’s public auction, the land plot was sold for €3,55 M(!). And yes, that’s a plot of land in Espoo, Finland. There was a lot of demand and there were 14 different companies participating in the auction. The money from the Mankkaa project was repaid to investors on the 15th of August, 2022. All in all, it was a very profitable project for our investors. Also, the purchase price has been paid to the bailiff for the Tavitie project, and we’re expecting repayment in about 4 weeks.
The actualized return is on a good level and beating inflation in Finland, which is great.
The earnings in July (the last full month) were 314.64 €. I am pretty happy that I have a steady cash-flow of about €400 per month. Sometimes I tend to play with the compound interest calculators online, just to see how the compound effect will increase the income in the future years. And just one thing to remember: those calculators usually use yearly compound interest. In Estateguru’s loans, principals and interests are coming back monthly, which makes the compounding effect even more rapid.
Here you can see a few noteworthy things: I don’t choose my loans manually but I let ‘Auto Invest’ choose for me. Therefore, I have the most exposure in Estonia. Also, there is more exposure in development loans than other loan types. I think this is because there are more development loans in the market, and I have not excluded investments in the different stages of a development project.
Now is the time to say goodbye from my side! Or as we say at Estateguru: there are no goodbyes, only see-you-laters!
Feel free to contact me on LinkedIn.