With the new rating, investors have more control over the risk.

To give our investors a detailed overview of the risk level of the projects on Investown, we score all loans with a so-called rating before publication. We have perfected the risk calculation method thanks to our experience with more than 135 crowdfunding projects.

As a result, we have developed a new rating model consisting of 9 rating grades (instead of the former 3). To evaluate the risk score, we now use three unique calculators, one for each type of loan. With these calculators, we can determine a fair interest rate for projects and assess them more accurately, giving investors more control over the risk.

What Investown's new rating looks like

While the original model consisted of 3 rating grades (A, B, C), there are now 9. Each project we rate is assigned to one of these risk categories.

A+

A-

Insignificant risk

B+

B-

Low risk

C+

C-

Medium to higher risk

The final rating then refers to the risk premium shown as a percentage. The best rating is A+, which means that the project has minimal risk of default and offers a lower return on investment. Projects with slightly higher risk and the highest return are marked as C-.

Risk score is now more accurate than ever

The new risk rating model gives investors better insight into the risk associated with a particular project.

Safer investments yield lower returns, whereas riskier investments yield higher returns. The better the risk score of a project, the more secured by real estate the project is.

Why rating is important for us and investors

Having invested in over 135 loans with 85 partners, we have a proven process for assessing the risk that comes with each project. We do not use third-party models and ratings. That is why the success rate of projects on Investown is still 100%.

The benefits of having a quality rating:

It allows us to accurately assess whether and how a partner is able to repay the loan. If an applicant does not meet the requirements, we automatically reject their application.

Investors get a thorough overview of the opportunities they invest in. There is a risk scoring table in the detail section of each project, where we provide the scoring criteria, including the total number of points the project has received.

Investors can further diversify their portfolio in terms of risk, having more control over it.

How the Investown rating works

We are committed to ensuring that only proven and reliable projects appear on the Investown platform. That's why we approve less than 20% of applications.

We now use three unique calculators to rate the riskiness of loans. The rating factors vary slightly for each type of calculator, depending on the relevance to the project. For example, when assessing the risk of a development project, we consider building permits, pre-sales (how many units the partner sold before construction began), and project delivery methods.

The calculation of the risk is performed as follows:

Every category we evaluate has its weight in the overall assessment according to its relevance to the project type.

The categories are further subdivided into different factors to which we assign a score (proportionally according to weight). The final score will always come out between 0-210 points. The worst projects will, therefore, receive a rating of 0 and a rating of D or E. Such loans never make it onto the platform as we automatically reject them. The best ones get 210 points and an A+ rating.

Rating FAQs

Which types of projects do you reject?

We reject an application in 100% of cases if we find so-called KO factors of the project or its owners. These include, for example, insolvency, foreclosures, bankruptcy, insufficient source of income, or information indicative of a negative impact.

Where can I find the risk scoring sheet?

It is located in the details of each project and contains the scoring criteria and the number of points the project has received.

Which categories do you use to evaluate projects?

We use three calculators for each type of loan: business development, development projects, reconstruction, property purchase, and refinancing:

🔵 Business Development:

1. Capital and financial indicator

Amount of equity capital
The applicant's capital is assessed. If there's a co-borrower, we assess their capital cumulatively
Level of debt
The ratio of external resources to the applicant's balance sheet total
DSCR (debt service coverage ratio)
DSCR = EBITDA / debt service

2. References

Client's experience in the industry, business history
Evaluated according to the client's level of experience

3. Security

LTV
The value of the property, as confirmed by an internal appraiser, and the amount of the requested loan are measured
Location of the mortgaged property
The location of the mortgaged property is assessed.

4. Other

GCC evaluation
Assessment of the overall performance of the holding or the group of connected clients
KYB
We look into historical foreclosures, insolvencies, and other pieces of information

5. Additional: Risk assessment

The project as a whole is evaluated, where the risk analyst can see potential risks or upsides of the project that are not captured by the credit scoring

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🔵 Development projects / Reconstruction:

1. Capital and financial indicator

Amount of equity capital
The applicant's capital is assessed. If there's a co-borrower, we assess their capital cumulatively
Level of debt
The ratio of external resources to the applicant's balance sheet total

2. References

Applicant's experience in the sector, business history
The more successfully completed projects, the better.

3. Security

LTV
The value of the property, as confirmed by an internal appraiser, and the amount of the requested loan are measured
Location of the mortgaged property
The location of the mortgaged property is assessed.

4. Other

Permissions
Permits that the client needs to start the construction

Pre-sale
The pre-sale rate reduces the risk that the property will not be in demand at the end of the project
Project delivery
The method of construction is assessed
KYB
The project as a whole is evaluated, where the risk analyst can see potential risks or positives of the project that are not captured by the credit scoring

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🔵 Property purchase, refinancing:

1. Capital and financial indicator

Amount of equity capital
The applicant's capital is assessed. If there's a co-borrower, we assess their capital cumulatively
Level of debt
The ratio of external resources to the applicant's balance sheet total
DSCR (debt service coverage ratio)
DSCR = EBITDA / debt service

2. References

Applicant's experience in the industry, and their business history
Evaluated according to the level of experience in the purchase and sale of real estate. The more successfully completed transactions, the better

3. Security

LTV
The value of the property, as confirmed by an internal appraiser, and the amount of the requested loan are measured
Location of the mortgaged property
The location of the mortgaged property is assessed.

4. Other

LTC
The loan's amount to the purchase price of the property ratio.

5. Additional: risk rating

The project as a whole is evaluated, where the risk analyst can see potential risks or positives of the project that are not captured by the credit scoring.

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What else are you doing to thoroughly assess the risks of the project?

During the risk assessment, we screen project owners (individuals and legal entities) for foreclosures, insolvencies, indebtedness, experience and references, connections, or KYC and AML (anti-money laundering measures). In the case of legal entities, we also consider the group of connected clients (GCC).

For extra security, we also audit external appraisals of the value of the mortgaged property, even though the project owners themselves supply us with a certified appraisal. During the review, we assess whether the property is suitable for mortgaging.

In addition, we receive an expert assessment of the project regarding feasibility, preparedness, future saleability, achievable future prices, budget, required permits, and cash flow. We only work with members of the RICS (Royal Institution of Chartered Surveyors) and members of the Chamber of Chartered Surveyors who consider the factors set out in context.

As a result, the experts provide us with a conclusion as to whether or not the project is deemed suitable for successful completion and repayment of the loan. If the project is assessed as unsuitable, we will reject it immediately.