Definitions

 Beneficial owner

A beneficial owner is:
A natural person who, taking advantage of their influence, makes a transaction, act, action, operation, or step or otherwise exercises control over a transaction, act, action, operation, or step or over another person and in whose
interests or favour or on whose account a transaction or act, action, operation, or step is made;

In the case of companies, a beneficial owner is the natural person who ultimately owns or controls a legal person through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that person, including through bearer shareholdings, or through control via other means. Direct ownership is a manner of exercising control whereby a natural person holds a shareholding of 25 percent plus one share or an ownership interest of more than 25 percent in a company. Indirect ownership is a manner of exercising control whereby a company which is under the control of a natural person holds or multiple companies which are under the control of the same natural person hold a shareholding of 25 per cent plus one share or an ownership interest of more than 25 per cent in a company;

In the case of a trust, civil law partnership, community, or legal arrangement, the beneficial owner is the natural person
who ultimately controls the association via direct or indirect ownership or otherwise and is such associations’: settlor
or person who has handed over property to the asset pool; trustee or manager or possessor of the property; person
ensuring and controlling the preservation of property, where such person has been appointed; or the beneficiary, or
where the beneficiary or beneficiaries have yet to be determined, the class of persons in whose main interest such
association is set up or operates.

 Different types of capital and their meaning

Equity is the capital placed in the company by its owners. The owners are paid the last, after all liabilities have been paid.

Mezzanine is a hybrid capital (subordinated loan or preferred equity) that lies between equity and secured loan. It has a lower risk than equity – mezzanine financing is repaid before equity, but after all bank obligations have been fulfilled. In addition to the usual interest, bonuses that depend on the profitability of the project may be added to the mezzanine capital.

Unsecured loan is a layer of capital between equity and secured loans. They are riskier than secured loans, but also more profitable. Unsecured loans are repaid to the owner of the capital after all secured debts have been repaid.

Secured loan is the safest and thus the least profitable type of capital. The loan is secured against a collateral, which is usually a mortgage on the assets of the company or some other type of collateral. Secured loans are always repaid in the first priority.

 Different types of real estate investment and their meaning

Rental - Investments to projects with available cash flow.

Development - Investments to property development projects (the construction and sale of buildings).

Speculative - Risky early-stage investments to a property where the main parameters of the development project are known, but they can change significantly during the implementation of the project (e.g. the development process of the detailed plan and its duration as well as building rights).


 Family member

Family member means the spouse, or a person considered equivalent to a spouse of a politically exposed
person or local politically exposed person; a child and their spouse, or a person considered equivalent to a
spouse of a politically exposed person or local politically exposed person; a parent of a politically exposed
person or local politically exposed person.

 Local politically exposed person

Local politically exposed person means a person specified above who is or who has been entrusted with
prominent public functions in Estonia, another contracting state of the European Economic Area, or an
institution of the European Union.

 Person known to be close associate

Person known to be close associate means a natural person who is known to be the beneficial owner or to
have joint beneficial ownership of a legal person or a legal arrangement, or any other close business relations,
with a politically exposed person or a local politically exposed person; and a natural person who has sole

 Politically exposed person (PEP)

Politically exposed person (PEP) means a natural person who is or who has been entrusted with prominent public functions including a head of state, head of government, minister, and deputy or assistant minister; a member of parliament or of a similar legislative body, a member of a governing body of a political party, a member of a supreme court, a member of a court of auditors, or of the board of a central bank; an ambassador, a chargé d’affaires, and a high-ranking officer in the armed forces; a member of an administrative,
management, or supervisory body of a state-owned enterprise; a director, deputy director, and member of the board or equivalent function of an international organisation, except middle-ranking or more junior officials.

 Various asset classes and their meaning

Working capital is a capital needed for financing the running operations of a company.

Investment is a capital placed in the development of a company, in particular in its main assets. 

Bridge financing is a temporary short-term financing, usually later replaced by a long-term and more stable financing solution. 

M&A is financing mergers and takeovers of businesses.

 What does annual return mean?

Annual return is the profit on an investment over the course of a year. If a project exceeds a year, the calculation will include a respective coefficient.

 What is LTV?

LTV is an acronym of loan-to-value, which is the ratio of a loan to the value of an asset expressed in percentage terms, or if a property is worth 50,000 euros and the amount of loan is 40,000 euros, then LTV is 40,000 ÷ 50,000 = 80%. 

Maximum LTV on a Crowdestate platform is up to 80%.


 What is SPV?

SPV is a widespread English abbreviation for the term “Special Purpose Vehicle”, which means a company established for a sole purpose.

Crowdestate uses SPV-s to keep its members’ investment properties separated from its own activities. Such an approach ensures the independence, security and transparency of any single investment.

Read more about this from our blog post: Investing in real estate

 What is an interest auction?

Companies seeking funding can use our interest auction functionality to potentially reduce their interest expenses. Interest auction is a Marketplace where Crowdestate has used your loan application and submitted collateral data to set the initial maximum interest rate of your loan. Crowdestate’s investors will be bidding for the winning interest rate throughout the funding campaign and only investors with the lowest interest rate bids can participate in funding your loan. The winning investors and the final loan interest rate are determined upon the completion of the funding campaign.

Example: Crowdestate has allowed the Borrower (Sponsor) to apply for a EUR 450.000 loan with the initial, maximum interest rate of up to 12%. The following bids were received during the funding campaign:

A. EUR 150.000 at 10% interest rate;

B. EUR 200.000 at 10,5% interest rate;

C. EUR 150.000 EUR at 11,2% interest rate;

D. EUR 200.000 EUR at 11,5% interest rate;

E. EUR 100.000 EUR at 12% interest rate;

F. EUR 150.000 EUR at 12% interest rate.

The total amount of loan offers in the amount of EUR 950.000 exceed the Borrower’s maximum loan amount, so the loan amount will be filled with the winning bids, starting from the lowest bids. Bids A and B have the lowest interest rate and will participate for their full amount, EUR 350.000. Bid C will participate in the remaining available amount of EUR 100.000 and EUR 50.000 from that bid will be discarded.

All included bidders will receive the rate the final participating winning bidder was asking, i.e. bidder C-s 11,2%.

 What is capital loss?

Capital loss is a calculated indicator, showing the difference between the current purchase price and the basic amount of an investment.

 What is crowdfunding?

Crowdfunding is an innovative, internet-based method to raise money to finance various projects. The necessary funding is contributed mostly in small amounts and large number of people.

Crowdfunding is used to fund charities, politics, product development and other commercial projects.

Well-known crowdfunding platforms are Kickstarter, Indiegogo and GoFundMe.

 What is crowdinvesting?

Crowdinvesting is specific segment of crowdfunding, where profit-seeking investors are jointly funding business projects or companies.

The revenues or profits earned by the project or company are distributed between investors proportionally to their original investment into the project or company.

Crowdinvesting enables smaller investors to participate in funding large business projects.

Investing

 Can Crowdestate make an investment order for me?

The short answer is: No

Making an investment on Crowdestate platform is only possible if the user has available funds on their investment account. If there are no available funds on the account, or the transferred funds would not reach the account in time, Crowdestate has no technical way to book any amount for any user nor to make an investment order on behalf of a user.

Investments can only be made in the amount of funds available on the investment account at the time of the project.

For security reasons only the actual owner of the investment account can make investments on the platform. Just like no-one else could use your bank account to make transfers, no other person can make actions with any user's investment account - unless the user has granted access to the specific person to their investment account. But it is important to understand that the SMS code that is required to confirm the investment order will only arrive to the mobile phone listed on the investment account.

 How are the investments exited?

Each of our investment opportunity has a specific exit condition. In most cases, it is a specific date somewhere in the future.

Technically, we might use a “30% increase in price” as an exit condition - in such case, the investment is sold immediately if its sales price exceeds the acquisition price by 30%.

For instance, real estate development projects are ending with the sale of the property.

 How can I terminate a loan agreement?

It is not possible to terminate a loan agreement. By investing into the project, you entered into an agreement with us. 

However, it is possible to sell your investment on the marketplace.

 How do I invest?

You should be a registered user to gain access to our investment opportunities. Before investing, you are expected to provide us with necessary information and confirmations required by the law.

As a registered user, you can open one or several investments accounts (for instance, one for your personal holdings and the other for your investment company). All your transactions (investments, distributions, payments etc) will be reflected on your investment account.
You should have sufficient free funds on your investment account to start investing. Funds can be added to your investment account through wire transfer, please always use investment account’s unique reference number to ensure smooth transactions.
Please review investment opportunity before making any investment decisions. Crowdestate’s investment opportunities are of different length, risk profile and return expectations. Please consider the suitability of any investment opportunity to your personal risk tolerance and investment horizon. If the available opportunity does not match with your preferences, please do not invest in it. We are regularly adding new real estate investment opportunities and in time you will find a suitable one.
If you have found a suitable real estate opportunity, please start investing by entering your investment amount and concluding the necessary agreement. At the moment of signing the agreement, Crowdestate will make the reservation in your investment amount on your investment account.
In case the funding campaign is successful (the investment opportunity gets funded before the deadline of the funding campaign), Crowdestate will proceed to concluding the investment transaction. During the settlement process, your investment amount will be debited from your investment account and transferred to the Sponsor.
In case the funding campaign fails (the investment opportunity falls short of full funding before the stated deadline), your investment agreement and the reservation on your investment account are automatically cancelled.

 How is the earned income distributed to investors?

Any income earned from the real estate property is divided proportionally between the participating investors.

Distributed income is credited to Crowdestate members’ investment accounts, where the members have a choice of reinvesting or withdrawing the funds.

 How should I pick a specific investment opportunity?

Crowdestate publishes different real estate, business, and mortgage loan investment opportunities with different risk profiles, time horizons and expected returns.

Each Crowdestate’s member is free to decide what kind of investment opportunities are the best suited to his investment objectives, investment horizon, and risk tolerance.

 Investment minimum and maximum amount

The minimum amount of any single investment is usually EUR 100,00 (one hundred euros), and investments can be made with 100 euro intervals (i.e 100, 200, 500, 1000 euros etc).

Any new investment opportunity opens with a 24 hour prebooking period. This is a period where one investor can make one investment order within the preferred maximum investment amounts. The final investment amount will be determined by the number of prebooking investors. It will remain between 100€ and your submitted maximum investment amount.

Read more about the prebooking system: https://blog.crowdestate.eu/en/2018/new-prebooking-system/


 What are expected returns on my real estate investments?

You can earn money from real estate investments either through regular rental income or real estate appreciation.

Different types of real estate investments have different return expectations, depending on both rental income as well as underlying real estate appreciation.

Commercial real estate might have a net yield of 6 - 9%, while residential real estate might have a net yield of 3 - 4% annually.

Real estate developments have much higher return expectations, but so are the accompanying risks.

Real estate prices are hard to predict, but real estate values have a historically high correlation with inflation and wage growth.

You will find Crowdestate’s financial models and return expectations attached to all our investment opportunities. At the same time, those models reflect Crowdestate’s views and they can not be treated as promises or guarantees. All investment decisions made by Crowdestate’s members should be based on personal views and preferences.

 What does it mean when a project has the status ‘Pending settlement’?

To protect investors, Crowdestate does not transfer funds to the project’s Sponsor until everything regarding the documents is 100% in order. The status ‘Pending settlement’ indicates that some of the details still need confirmation.

 What happens after making an investment?

Nothing very significant happens. An investment portfolio with the loan agreement that is tied to the investment (both parties are included in this agreement) will appear on your account. After this, you only have to wait for the end of the project. After the end of the project, the sum that you invested plus the interest income will be returned to you.

Investors do not have to pay fees for investing.

 Why do you use credit contracts and not something else?

Crowdestate has carried out a thorough analysis to find the most efficient funding model for its investors.

One of the specific features of crowdfunding is the fact, that hundreds and thousands investors could be participating in one single investment opportunity. Equity-based model would fall under the regulation of Securities Market Act and such a crowdfunding campaign would be considered a public issue of securities, which is extremely complex, time consuming and expensive.

Therefore we have decided to use specific, project profitability-related credit contracts, where interest income is generated from real estate income streams.

The loans are redeemed by returning the principal amounts first, and leaving interests to the latter part of the investment period. This allows for the postposing of potential income tax obligations.

The exit revenue earned at the end of the investment period is paid out as an interest payment.

Crowdestate’s funding model and setup ensures investors rights to real estate revenue are equal with the direct ownership, at the same time postponing the income tax obligation to future.

Crowdestate

 Can I become a member?

In order to streamline our KYC procedures and/or to avoid extensive reporting requirements, we don't offer our services to the residents of the following countries: Afghanistan, Albania, American Samoa, Bahamas, Barbados, Belau, Bosnia and Herzegovina, Botswana, Burkina Faso, Burundi, Fiji, Ghana, Guam, Guinea, Guinea-Bissau, Haiti, China, Iraq, Iran, Jamaica, Jordan, Yemen, Cayman Islands, Cambodia, Central African Republic, the Democratic Republic of the Congo, Democratic People's Republic of Korea (DPRK), Lebanon, Libya, South Sudan, Mali, Morocco, Mauritius, Moldova, Myanmar (Burma), Nicaragua, Pakistan, Panama, Philippines, Samoa, Senegal, Somalia, Sudan, Syria, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, US Virgin Islands, Belarus, Vanuatu, Russia, Venezuela, and Zimbabwe.


 Is Crowdestate a regulated financial institution?

Crowdestate AS is a regulated European payment institution, license number 4.1-1/82, operating under the supervision of the Estonian Financial Supervision Authority. According to its payment institution license, Crowdestate has the right to provide its customers with payment execution services, including the transfer of funds to payment accounts opened with Crowdestate (MERAS, Article 3, paragraph 1 point 3).

The real estate crowdfunding services provided by Crowdestate AS have not yet been regulated as the regulation applicable to EU crowdfunding companies will enter into force on November 11, 2021. In accordance with European Union Regulation (EU) 2020/1503, all EU crowdfunding operators must obtain the crowdfunding license from their Financial Supervisory Authority by 10 November 2022.

 Is the return shown on Crowdestate statistics page annual?

This is the actual average return of our exited investments.

 What are Crowdestate's obligations towards it members?

All Crowdestate’s obligations towards its members are defined in the Terms and Conditions and in the SPV management agreements.

Crowdestate makes every effort to ensure the information on each published investment opportunity would be accurate, specific and adequate for making a proficient investment decision.

If the investment opportunity is fully funded, Crowdestate executed the investment on previously published terms and takes good care of it until the exit process has been finished.

Crowdestate collect any revenue earned during the investment period and distributes it proportionally between the participating investors.

Crowdestate compiles regular investment reports on each an every funded investment and shares them with its investors.

 What are my obligations as Crowdestate member?

Crowdestate'i members are obliged to provide Crowdestate with accurate and up to date personal and contact information and be able to prove the origin of invested funds. Members is obliged to get acquainted with contracts he/she is going to sign.

As investors, Crowdestate members are expected to make independent and prudent investment decisions.

 What is Crowdestate?

Crowdestate is new real estate crowdfunding platform, which will radically reshape the ways we are used to invest in real estate.

Crowdestate is providing real estate investors with access to pre-vetted real estate investment opportunities and relevant background information.

Real estate companies or developers can raise flexibly structured and priced funding from fellow Crowdestate members.

Crowdestate ensures smooth investment and fundraising processes and takes care of its members' investments until they are exited.

 Why should I invest to real estate through Crowdestate?

Crowdestate is a crowdfunding platform providing real estate investors access to different investment opportunities which might not be available to them alone.

A thorough due diligence for the projects, our competent team and the low initial investment (starting from 100€) is a convenient way to invest with both smaller and larger amounts. 

Additionally, Crowdestate provides a great way to diversify your investments. We regularly open new projects out of which each investor can choose the most suitable ones to invest in.

Taxation

 Can I deduct capital losses from revenues?
Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.


In Estonia the short answer: no

Explanation by the Tax and Customs Board: income tax liability can be postponed by investing in financial assets (e.g. exchange-traded shares, fund units, etc.) openly traded in EEA states or OECD member countries by using an investment account system. An investment account system does not extend to loan-based activities (e.g. through Crowdestate).

Interest or interest on arrears on a loan are subject to income tax on a gross basis and tax liability for interest income from a loan relationship cannot be postponed through an investment account (reinvesting is not tax-exempt.

Untaxed interest or interest on arrears must be declared in the income tax return and income tax must be paid on the basis of the income tax return. If income tax has been immediately withheld by a bank in Estonia, it will be reflected in your pre-filled tax return.


 How is my investment income taxed?

Crowdestate’s funding model is usually structured in the form of a loan from a member of the platform to a Legal Entity. With this financing model, the Legal Entity will return the principal amount given to them as a loan, and Crowdestate users will have the possibility to earn interest revenue from the loan. 

Currently, Crowdestate does not deduct any taxes from Estonian investment opportunities for foreign investors.

If you are Estonian tax resident then the principal payments are not taxable according to applicable Estonian regulations. However, in the case of private persons, interest payments can be considered as income revenue, which can be taxable according to local laws. 

For Estonian private persons, we have made the taxation process as comfortable as possible, and we deduct the income tax automatically from interest payments. Information about earned interest and the taxation will be relayed to the Estonian Tax and Customs Board. 

NB! Taxation is based on the name and ID code of the person who is listed as the owner of the investment account through which the investment(s) are made.

In other investment opportunities, the tax is being withheld from the interest paid out. Read more about it here: https://blog.crowdestate.eu/en/2020/withholding-tax-and-interest-rates/

If the withholding income tax rate is lower than the investor’s domestic income tax rate, the investor would need to declare the non-taxed part of the income and, if necessary, pay additional income tax.

As taxation is dependent on each individual investor’s tax residency, we advise you to check the local regulations or consult your tax advisor before declaring (or not declaring) income from Crowdestate’s investment opportunities.


 Income tax return

Estonian investment opportunities: No tax is being held on your account. Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

Other investment opportunities: Tax is being withheld from the interest paid out. 

Read more about it here: https://blog.crowdestate.eu/en/2020/withholding-tax-and-interest-rates/

If the withholding income tax rate is lower than the investor’s domestic income tax rate, the investor would need to declare the non-taxed part of the income and, if necessary, pay additional income tax.

You will find the materials necessary for the income tax return by clicking on ‘Overview’ – ‘Reports’. There you can draw up an interest statement as well as a balance statement.

Investors with Estonian tax residency:

Estonian investment opportunities: Only private accounts are subject to income tax.

Other investment opportunities: Same as above.

 Refund of income tax

Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

In Estonia: The refunding of income tax depends on the income tax return for a natural person. If the annual taxable income is less than 6000 euros, the overpaid amount of income tax is returned.

Taxes are calculated in chronological order on all investment accounts and not on each account separately. See table 6.5 for payments to or from your accounts.


 Tax residency document example

Here is an example of Estonian tax residency document and an Italian tax residency document, to get a better understanding of what it should look like. You can get this document from your country's tax office.

 When filling out income tax returns, in which row should I declare the income from buying and selling shares through Crowdestate?

Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

In Estonia: Income from the sale and purchase of Crowdestate shares is declared in row 5.6 – Other taxable income not listed above on which income tax has not been withheld.

 Where can I get the tax residency certificate?

Please contact your country’s tax office to provide you with the needed document.

 Where in the income tax return can I see income declared by Crowdestate?

Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

Crowdestate does not declare income – Sponsors of projects do.

In Estonia: The relevant data is available at 5.1 – Salary and other remuneration.

In the case of foreign projects, you must declare income yourself.


Technical issues

 Can not log in to Crowdestate

We are continuously developing our software and our updates might cause login problems to some users.  This malfunction is caused by the remnants of our older software that has been saved into user's browser cache.

This error can be solved easily by clearing your browser's cache and trying again.

 How can I get a new password?

Our password reminder (actually, reset) messages contain a unique password reset link, that is valid for only 24 hours.

In case you missed our e-mail notification or did not have time to use the link, please order a new password reminder yourself -the process itself is simple and fast.

Go to our website and look for the top-right menu:


The following window will pop-up after clicking on "Forgot your password" link:


Please enter your e-mail address you used when signing up with Crowdestate.

We will send you a new password reset message immediately.

 How quickly does my bank transfer reach my investment account?

Very important! Always use your unique reference number when making a bank transfer. This ensures an automatic transfer of the payment to your investment account. The reference number can be found with the bank transfer details of your investment account.

For Estonian bank transfers, the speed of transfer is determined by the bank you are using.

  • Crowdestate's bank account is with LHV bank. If you also make a transfer from an LHV bank account, the transfer will take a few minutes. And if you used a correct reference number, the receipt of funds to your investment account is automatic. You will receive an e-mail notification of the payment arriving to your investment account.
  • If you are making a payment from any other Estonian bank, the payment will be processed according to SEPA payment rules, usually at least in the morning, noon and evening (3-5x times a day). Once the bank transfer reaches Crowdestate's bank account, the payment to your investment account is automatic, and you will receive an e-mail notification confirming the receipt of funds.

If you wish to make an urgent transfer from an Estonian bank (other than LHV), you may use a payment service like Transferfast.

All European bank transfers should also be processed according to SEPA payment rules described above.

From any other banks around the world, please check the speed and cost of the bank transfer with you local bank. You also have the option to use a payment service like Transferwise for speedy payments.

If you are using a payment service, please ensure that their payment will include your name and the reference number of your investment account. Otherwise we may not be able to identify the payment and will refund it.

 Problems with agreements and SMS messages

Some actions on Crowdestate platform require confirmation via an SMS code that will be sent to your mobile phone number listed on your investment account. The following actions always require confirmation by SMS:

  • Creation of an investment account, and any modifications to it afterwards
  • Investment order

If an SMS code does not arrive to your mobile, please try the following:

  1. Check that the mobile number on your investment account is correct, and includes the international country code (i.e for Estonia it is +372 XXX XXX)
  2. Reload the website in your browser and try performing the desired action again
  3. Restart your mobile phone, and try performing your desired action again

Alternatively, you can now use Google Authenticator to confirm actions. To activate Authenticator, please log in to your user account and find a menu option with your name in the top right corner of the page.

If the beforementioned actions do not have an effect, please contact our customer support via e-mail info@crowdestate.eu or by phone +372 6 599 111

 What should I do if my investment order was unsuccessful?

There may be several reasons why you cannot confirm your investment order. Here are a few of the most common ones with possible solutions:

1) User does not insert the required SMS code in the allocated 3 minutes after the investment order is made.

o Please make your investment order again and be sure to confirm the action with the SMS code within the allowed 3 minutes.

2) Did not receive the SMS code to my mobile

o Please review the topic "Problems with SMS messages"

3) User or Crowdestate related technical issues that disable the platform from operating properly at the time an investment order is being made

o Try using another browser (i.e if you are using Internet Explorer, try Mozilla Firefox etc)

o Contact Crowdestate customer support

4) Some other factor

Once an investor has reached the confirmation stage of the investment order, the user specified amount is booked from their investment account. If confirming the investment order with the SMS code is unsuccessful, the booked amount is returned to the user's investment account within 5-10 minutes.

Verifying

 Company: how to verify?

Go to ‘My Profile’ and choose ‘Verify Identity’. Read the Privacy Policy and accept the Conditions of Use. Then, click the blue ‘Veriff’ button and you will be redirected to the Veriff environment, where you will have to take a picture of yourself and the front and back of the document (and if necessary, a picture of you holding the document).

An illustrated guide is available here: https://blog.crowdestate.eu/en/2018/crowdestate-and-veriff-how-to-verify-your-identity/

After this is done, go to your investment account settings and attach the required document that proves your affiliation with the company – membership of the management board or the right of representation.

 I do not have a webcam

You can also use your tablet or smartphone for verifying.

Another possibility is to use your friend’s computer that is equipped with a webcam.

 I have two user accounts. I could verify one but not the other.

Please write to info@crowdestate.eu, specifying which account is verified and which one is not. We will likely have to merge the accounts and move investments from one account to the other.

 Private person: how to verify?

Go to ‘My Profile’ and choose ‘Verify Identity’. Read the Privacy Policy and accept the Conditions of Use. Then, click the blue ‘Veriff’ button and you will be redirected to the Veriff environment, where you will have to take a picture of yourself and the front and back of the document (and if necessary, a picture of you holding the document). 

An illustrated guide is available here: https://blog.crowdestate.eu/en/2018/crowdestate-and-veriff-how-to-verify-your-identity/

 What happens if I do not verify?

It is not possible to submit an application for investment, and buy or sell shares on the marketplace.

 What to do if the verification failed?
  1. First, make sure that your webcam is not covered with a sticker. In addition, the Veriff environment must be granted access to the webcam.
  2. Make sure that your name stated in ‘My Profile’ matches the name on your document (full name).
  3. Use Google Chrome, Mozilla Firefox or Safari.
  4. If you wear glasses, take the picture without wearing them.
  5. You must take the picture yourself. Do not let anyone else take the picture.
  6. One of the most common reasons for failure is poor picture quality. If possible, use a different device (smartphone, tablet, friend’s computer with a better webcam).

If the verification still fails, please contact support@veriff.com.

.


 Why do I have to verify?

Identification of our users is related to the new anti-money laundering regulations and our plans to apply for a permit from the Financial Supervision Authority of Estonia to operate as a payment institution. 

Pursuant to laws, uploading a document and signing digitally with your ID is unfortunately insufficient; photographs of yourself, your document, and you with the document are necessary.

Please read the following blog post to get a better understanding of why we chose to verify accounts: 

https://blog.crowdestate.eu/en/2018/crowdestate-why-we-chose-to-verify/

Marketplace

 Dividing investments into several separate parts

You can sell your investment as a whole, you cannot divide your investment into smaller parts on the Crowdestate secondary market.

 Expected rate of return on the marketplace

The expected rate of return is calculated on an annual basis. If the project is due to be over in only a couple of months, then the expected rate of return is calculated by an end date of the project.

The average expected rate of return marked on the portfolio page is an expected net profitability or the loss from the purchase has already been included.

The expected rate of return is calculated with an XIRR method, which takes into account both the date and the future cash flow. We will discount all future cash flows with specific dates.

The expected rate of return on the marketplace is calculated every day.


 How can I exit my investments before their maturity?

Crowdfunded investments can be exited before their maturity by selling them on our marketplace to other investors.


 How to buy investments on the marketplace?

First, go to the 'Marketplace' page where you can choose to filter investments by their names, expected rate of return, price, and investment end date.

By clicking on the name of an investment, it directs you to the page that presents the investment but be sure to get acquainted with the investment before making the purchase. To buy an investment, click on the 'Buy' button and you will get directed to this investment sale application page:


If you have a sufficient amount of funds on your investment account, click on 'Buy investment'. Use Google Authenticator or enter the code that you received with a text message to confirm the purchase agreement.

After the purchase is done, you can see your investments on your investment portfolio page.


 How to sell your investments on the marketplace?

Go to your investments portfolio page and look at your active investments. Choose the investment that you would like and press the "Manage your share" button.

On the investment sale application page, set a suitable price for selling your investment to the next investor:


Use Google Authenticator to confirm the agreement or enter the code that you received with a text message.

In case you wish to change your offer, go to your portfolio and press the 'Edit offer' button. Keep in mind that you need to cancel the previous offer before making any changes. You can do that by pressing the 'Cancel sale offer' button.

 How to take your investments off the marketplace?

Under active investments in your portfolio page, choose the investment that you are currently offering on the secondary market, click on the 'Edit offer' button, then, on the next page, click the 'Cancel sale offer' button.


 Income and interest from sold investments

You have to declare the investment profit made on the secondary market at the end of the year, Crowdestate adds the data about the profit to your current interest validation.

The marketplace sales whose interest has not been taxed by income tax must be taxed the same way by the investor as all other transactions.

 Marketplace fee

There is a 2% + VAT transaction fee for selling investments in the secondary market. The fee will be charged to the seller’s account simultaneously to concluding the sales-purchase transaction.

 The expected rate of return is >100% or N/A

For such projects, the system cannot calculate the expected profitability using the XIRR method, as there may be unpaid payments and interests on arrears on the payment schedule of the investment opportunity. We recommend examining such projects in detail.

You can read how expected profitability is calculated HERE.

 What is a Crowdestate marketplace?

A marketplace is a place for you to sell your investments to other investors or buy investments made available by other investors to increase your investment portfolio.

Access the secondary market here:


By clicking on the 'Secondary market', you will see all the investments you can buy:


More detailed information about the secondary market is available at https://blog.crowdestate.eu/en/2018/crowdestate-marketplace/


Investment account

 How can I transfer money from my investment account?

After logging in, go through the ‘Overview’ button to the page of the investment account that you wish to transfer money from.

Click on the green button on the right ‘Make a transfer’.


The money will be transferred to the bank account that you have connected to the investment account. If your bank account information has changed or you would like to transfer money to a different account, go to ‘Overview’ – ‘Settings’ – ‘Change account settings and change bank information’.

 How can I transfer money from one investment account to another?

Log into your Crowdestate account and choose the investment account from which you would like to make a transaction.

On the ‘Overview’ page, click on the green button on the right ‘Make a transfer’.


In the window that appears, choose the button ‘Between accounts’ and determine the investment account and the amount of money that you would like to transfer.



 How do I keep myself informed about my investments?

Crowdestate's members can follow their investment up in their personal investment reports.

You should be logged in to access the information on your investments.

Crowdestate might provide investment-related information by e-mail or other electronic means of communication.

Q&A section allows for asking investment-specific questions and receiving answers from Crowdestate or fellow investors.

 How to add funds to my investment account?

After registering your user account with Crowdestate you can proceed to open one or several investment accounts. Please go to the "Overview" page and select "New account".

After opening the investments account, you can add funds to it by making a wire transfer to Crowdestate's bank account, using your investment account's unique reference number. Specific payment details can be found by clicking "Add funds" button on the "Overview" page.

Clicking "Add funds" displays the required payment information. 

Please pay attention to our investment account's unique reference number, which is required for automatic payment processing.

Beneficiary name:Crowdestate AS
Beneficiary account:EE747700771004404669
Beneficiary bank:LHV
Bank SWIFT:LHVBEE22
Reference number:.....
 Moving investments from one investment account to another

To move investments from one account to another you have to have multiple investment accounts. If you do not have multiple investment accounts yet, then please create a new investment account for yourself.

Go to the portfolio of the investment account from which you would like to move the investment. 

Find the investment and click on ‘Manage shares’.


On the next page click on the blue button on the right ‘Move shares’ (If you do not see this button, then you do not have a second investment account to move your investments to).


Choose the investment account that you wish to move the investment to and click on ‘Move your shares’.


In case you wish to move your investments to a different user account, then please contact us at info@crowdestate.eu.

 Multiple investment accounts: private and business accounts

Every user can have multiple investment accounts, both private and business accounts.

To create an investment account under your company’s name, create a new investment account. You can create a new investment account by clicking on the investment account next to your username and clicking on ‘Add new account’.

Assign ‘Company’ as your account type and enter the information about your company.


 The expected rate of return in the portfolio does not match with the project

The expected profitability in the portfolio is calculated using the XIRR method, where the system takes into account the real payment schedule, rate of return over time, and the time spent (that will be spent) on settling the project. The expected profitability indicated at the investment opportunity does not change in time, it has been entered into the investment opportunity.

Pre-booking

 How long is the pre-booking period?

Pre-booking lasts 24 hours and starts when the project is made public.

Read our blog post to get more information: https://blog.crowdestate.eu/en/2018/new-prebooking-system/

 How many investments can I make during a pre-booking?

Manually - one.

However, when you have set up Autoinvest, and it invested for you, you are able to invest manually as well. 

In case the investments do not cover the total amount needed during the pre-booking period to finance the project, then after 24 hours (the pre-booking period), the project will open again for all investors and they get another opportunity to submit an investment application.

Read our blog post to get more information: https://blog.crowdestate.eu/en/2018/new-prebooking-system/

 How many investors fit in a project?

The maximum number of investors who will be able to pre-book is determined by the sum of the investment project divided by 100.

For example: the investment opportunity amount is €1000, where a maximum of ten investors can invest because the minimum investment amount is €100 (10 × 100 = €1000).

In case this happens, the pre-booking period will end immediately, all investors will get an investment of €100 and the surplus the amount will be refunded.

Read our blog post to get more information: https://blog.crowdestate.eu/en/2018/new-prebooking-system/

 I have several Autoinvests – do they all invest?

During the pre-booking period, only the Autoinvest that has the biggest investment amount will invest.

One investment account = 1 Autoinvest.

 If there are more investments than the project can fit

All investors who have invested money (regardless of the amount) during the pre-booking period are guaranteed a 100-euro share in the project.

In case there are more investments than the project can fit, the investments will be distributed proportionally among the investors, for example:

  • The amount of the investment project is €1000.
  • During the pre-booking period, four investors invest in the amount of €100, €1000, €10 000 and €10 000.
  • The investments will be €100, €100, €400 and €400, and the surplus amounts of money will be returned to investors.

Read our blog post to get more information: https://blog.crowdestate.eu/en/2018/new-prebooking-system/

 Why is the ‘Invest’ button still active, even though the monetary goal of the project is met during the pre-booking period?

Pre-booking always lasts 24 hours, even if the monetary goal of the project should be met in the first hour.

All investors have the opportunity to apply for an investment in the amount of their own choosing within 24 hours. The total amount of the investment depends on the number of investors who wish to invest.

Read our blog post to get more information: https://blog.crowdestate.eu/en/2018/new-prebooking-system/

Fees

 How much is Crowdestate charging as its fees?

Crowdestate might be charging any or all of the following fees that are attributed to either the investor or the sponsor.

Sponsor:

  • A one-time, 4% structuring fee is paid to Crowdestate for finding the investment opportunities, completing due diligence, capital structuring and covering direct costs (such as legal costs, establishment of SPV etc) associated with the transaction.
  • Regular base fee that covers the costs for maintaining the investments, SPV management and accounting etc. Development projects pay fixed monthly fee that is agreed on case-by-case basis.

Investor:

  • Crowdestate is entitled to carry (success fee), if the investment performance exceeds the agreed hurdle rate. Typical success fee is 20% over the 8% per annum hurdle rate. Success fee is paid out at the end of the investment period after the investment has been exited. The fee is calculated into the expected yield, meaning that it is not deducted from the interest payments made to investors.


Fees associated with bank transfers

Generally there are no fees for bank transfers to an investment account from Estonian bank accounts (excl. payments in a foreign currency other than the euro).

Bank transfers from countries other than Estonia could be subject to transfer fees, if any fees apply and the person leaves the fees to be paid by Crowdestate during the transfer. In such cases Crowdestate will deduct the applicable fees from the payment before accruing it to the investment account. For this reason we always suggest to check that the person making the transfer also carries the fees associated with the transfer.

Currently there are no fees for outgoing bank transfers.

Bank transfers in another currency

The official currency for Crowdestate investment accounts is the euro. So, all payments made in a different currency are subject to conversion prior to accrual to the investment account.

All fees related to accepting a payment in other currencies and converting the payments to euros will be deducted from the payment received, taking into account the applicable price list of AS LHV Bank.

Outgoing transfers from an investment account can only be made in euros.

 What are my investment-related expenses with Crowdestate?
Crowdestate membership is free.

There is no investing fee in the primary and secondary markets. There is a 2% + VAT transaction fee for selling investments in the secondary market. The fee will be charged to the seller’s account simultaneously to concluding the sales-purchase transaction.

Any fees payable to the Crowdestate are embedded into the transaction and disclosed in detail within financial models.
In a few cases, investors are expected to cover Crowdestate's direct costs related to bank transactions (international payments etc).
 Why are Crowdestate's fees structured like that?

Crowdestate's fees are structured in a way that would motivate Crowdestate to maximize the value it created for its investors.

Structuring fee covers the costs of finding the investment opportunities, due diligence, setting up SPV-s etc.

Carry motivates Crowdestate to find and offer investment opportunities with above average appreciation potential.

Autoinvest

 How to get Autoinvest?

Log on to your Crowdestate account and go to the 'Overview' page. 

Find Autoinvest and click on 'Create new Autoinvest'.

Obligatory boxes to be filled:



Boxes for both minimum and maximum amounts must include an investment sum, for instance, 100€ – 2500€.


If you wish for Autoinvest to invest a specific amount, mark both boxes with the same investment sum, for instance, 500€ – 500€ – in this case, your investment account must always have 500€ for the investment to be successful.


Choose more specific projects to invest in by clicking on 'Show more'.

By clicking on the information buttons next to capital and real estate investment types, you will find the explanations for these terms.


Click on 'Save', look it over one more time, and then you will receive a text message with a code that you need to insert to verify Autoinvest.

 How to stop Autoinvest?

Log on to your Crowdestate account and go to the 'Overview' page.

Find 'Autoinvest' and click on 'Stop'.


Autoinvest that has been put on stop can be changed at any time (by clicking on your Autoinvest name) and reactivated by clicking on 'Activate'.

 If you are prevented from saving Autoinvest

Make sure that you have filled all the following boxes:



If you are still prevented from clicking the 'Save' button, please send us a screenshot to info@crowdestate.eu

 What is Autoinvest and how to use it?

Crowdestate's Autoinvest is an automated tool allowing you to create your investment portfolio. Once Autoinvest function is enabled, it will help reduce the time it takes to make investment orders - just enable Autoinvest, ensure that there are sufficient funds on your account and Autoinvest will take care of investing for you. Once an investment order is made, the investor will receive a usual confirmation of booked funds to their e-mail.

Please note! Autoinvest applies to one specific investment account. If you have more than one investment account and you wish to use Autoinvest for all of them, please make sure to enable a suitable Autoinvest for all of them.

Autoinvest lets you define specific parameters according to which investments are made. These parameters include:

  • Investment amount. You can set the minimum and maximum amount suitable for you. If a range is set, Autoinvest will make an investment within the range using the available funds on the investment account. Example: The minimum amount set is 100€ and maximum 1000€, but the investment account has 640€ available funds. Autoinvest will invest 600€ into a suitable open project.
  • Expected interest rate
  • Suitable investment term
  • Type of investment
  • Country

Important

  1. You can have more than one Autoinvest per investment account. Enable as many as you want with different parameters.
  2. Autoinvest will only make investments in the amount of funds available. If there are no funds to invest, Autoinvest will not make any investment orders.
  3. There are no fees associated with using the Autoinvest.
  4. It can be paused, reactivated, closed or parameters can be changed at any time.
  5. When Autoinvest makes an investment, the usual loan agreement will be signed by Autoinvest on behalf of the investor. This agreement will be visible under documents.

To activate Autoinvest, please click on the "Autoinvest" section in your investment account overview page. 

Autoinvest will engage when prebooking period opens, and the prebooking limit does not apply for investments with Autoinvest. Autoinvest will invest according to the parameters set in the settings and according to the available funds on your investment account.

Risks

 What are my investment risks?

Any investment activities, including the investments in real estate, will expose you to the different types of risk.

We have compiled a risk statement proving you with a comprehensive overview of investment, real estate, and operational risks.

Please review this document before investing. 

You can find the document by scrolling down the page and checking the footer for 'Investment risks'.

Read more about investment risks and Crowdestate's risk rating in this blog post.

 What happens if Crowdestate goes bankrupt or out of business?

Crowdestate’s and its members’ business and assets are kept strictly separated.

Members’ monetary assets are held on specific nominee accounts, which are legally separated from Crowdestate’s own assets.

Member’s investments are held in SPV-s, which are also not part of Crowdestate assets.

The ceasing of Crowdestate’s activities will result in not having new investment opportunities on platform. The current investments are sustainable on their own and their management can be transferred over to any other capable management company.

The contracts also provide for a option to selling the investments of transferring the investment ownership over to participating investors.

The ceasing of Crowdestate’s activities might cause some temporary inconvenience or confusion, but there is not breach to their security.

 What happens if the exit coincides with market crash?

Exiting the real estate investments during the crisis might prove to be difficult of even impossible. Forced exits will cause a lot of damage to investors and should therefore avoided.

Our agreements provide for a optional extension of investment period at Crowdestate’s sole discretion to allow for the better timing and valuation of our members’ real estate investments.

 What is the worst thing that can happen to my investments?

Every investor should be aware of the general risks arising from any investment activity. Real estate investing brings along a full array of real estate specific risks.

Most of the real estate specific risks can be hedged through financial or insurance instruments. In such a case, the occurred damage would be compensated by a financial institution or insurance company.

The worst-case scenario is the real estate crash, that causes a decline in property values. The likelihood of an extra-long real estate crisis, lasting for the full investment period, is quite low. In most cases, the real estate prices have recovered in 3 - 4 years.

Real estate crisis might bring along the need to prolong the investment and continue to lease it out until the prices have recovered.

Crowdestate

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