Meet the startup – interview with Igors Puntuss, CEO of Bulkestate

Bulkestate is a new Latvian based lender offering high returns on secured loans

You probably haven't heard of Bulkestate yet. They are a new P2P platform operating out of Riga, Latvia.  They specialise in loans secured against real estate.

Bulkestate have made a good start, successfully funding several loans in the last few months, including the €140,000 loan we recently featured in our Loans we Love post. We like the fact that they are working with BDO to provide legal services (and a board member), and Ober Haus for valuations, one of the most respected providers of these services in the region. 

With any P2P startup, there is of course a risk that there are not sufficient volumes to develop a profitable business model, and that should be considered before investing in Bulkestate. They are new and currently quite small. However, to counter this, we think that the loans offered by Bulkestate are some of the most attractive available anywhere in the eurozone currently from a risk/reward perspective, and this makes Bulkestate an interesting option for many investors. There are very few opportunities to earn 13-15% returns secured on completed real estate with low LTVs. We suspect that as long as they can continue to find loans with such high returns and low risk profiles, there will be more than sufficient demand from P2P investors to fund them.

You can view the available loans at Bulkestate here. If all the loans are currently sold out, consider opening an account so that you can get access to their mail alerts for new loans, as there can be strong demand and they can sell out quickly. The loan we featured in our 'Loans we Love' post sold out a day or two after we featured it.

Igors Puntuss Bulkestate

Interview with Igors Puntuss, CEO of Bulkestate

Igors, thanks for agreeing to this interview. For people who may not have heard of Bulkestate before, can you please describe the types of loans that you offer to investors on your site and who your borrowers are.
 
Thank you for having us. Bulkestate is a real estate crowdfunding and group buying platform. We offer investments in secured real-estate loans to private investors and companies. We want to make investing in real estate accessible to the public, by lowering the minimum required capital without compromising on the returns. We offer investments for amounts larger than €50 with annual returns of up to 15 %. We only lend to companies with great financial history against properties with strong value. We ensure the safety of our client’s investment through an evaluation of the investment projects by a strong and experienced investment committee.
 
Who are the owners of Bulkestate? How much has been invested into the business?
 
Bulkestate is co founded and owned by myself and an another partner. However I am the active representative of the company, bringing my extensive experience working with the real-estate industry to Bulkestate. We have invested more than €100,000 of our own money into the business.
 
How many employees do you have?
 
We currently have 8 employees.
 
Bulkestate lists the professional services firm BDO as a 'partner'. Can you please explain how that works?
 
BDO provides legal services for us and our investors.
 
The interest rates seem very attractive for secured loans - often around 12-15%. Why are they so high, is that the normal level in the countries you operate or are there other factors at play?
 
There are multiple factors making the interest rates so attractive. While, admittedly, non-banking lenders in the Baltic region normally do offer higher interest rates, because of the growing market, investment in real-estate through crowdfunding is itself a relatively new investment mechanism, therefore requiring more attractive terms as compared to other, older means of investing, in order to attract investors.
 
Do you have a forecast expected default rate for your loans and if so what is it?
 
We forecast a default rate of 0%, because firstly, we lend funds only to companies that pass our strict financial requirements of being able to repay the loan. Secondly, our investment objects are independently evaluated and have a low LTV ratio, making it more feasible for the debtor to sell a property and thus repay the loan. Thirdly, the interest rate on the loan drastically increases after the repayment term ends, therefore, again, making it more feasible for the debtor to simply sell the property and repay the loan.
 
What is your loan approval process? What types of loans do you approve?
 
Our investment committee evaluates the ability of company to return the loan, based on its financial history, company’s assets, management experience and soundness of it’s decisions as well as potential dangers within the markets that the company is operating in. After our investment committee has confidence in the company, we evaluate the value and liquidity of the offered collateral. In the process investment committee uses an independent estimate of the property’s value from Ober-Haus Real Estate Advisors as well as evaluates the property in person to assess its current value and potential fluctuations in the future. Throughout this process I pay close attention to decisions made by investment committee and provide my own input, in order to make sure that we only select loans that we would have strong confidence in investing on our own.
 
Please tell us a little more about your credit underwriting team, their background and experience - have they come from banks or do they have a real estate background?
 
Credit underwriting is done by a Bulkestate investment committee member with financial consulting experience of more than 20 years, who has experience working in PwC and Deloitte conducting audits of various scopes and has lead the financial restructuring department of the DNB bank, the second largest bank in the north Europe, managing loan portfolio of €250 million, with a significant share of real estate.
 
How much has been invested through the platform so far? What do you think monthly volumes will be over the next 12 months?
So far €338,000  has been invested through the platform. Because during the past two weeks we have collected an investment of €140,000 and have agreements with other potential debtors, we are confident about attracting an investment of €3 million during the next 12 months.
 
Thanks for your time Igors, and good luck to you and your team. 
 
If you would like to learn more, you can visit Bulkestate here

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