PeerStreet is doing for real estate investing what Lending Club did for personal lending. PeerStreet is a peer-to-peer (P2P) lending platform that brings investors and borrowers together on one website to create real estate loans. And since it involves real estate loans, its function is more commonly referred to as crowdfunding.
PeerStreet is an online marketplace where investors invest in high-quality private real estate loans. The objective is to provide real estate loans in a niche that’s not easily accessed by those who aren’t traditional real estate investors.
The platform concentrates on private money loan investments because they believe that the risk for the asset class is mispriced in favor of investors. They structure the loans to mitigate the various risks associated with such investments. And since the loans are secured by a deed or mortgage, there is a hard asset to back up the loan.
PeerStreet is different from a real estate investment trust (REIT) because as an investor you have an opportunity to select which loans you will invest in. This is unlike a REIT, where your investment represents a percentage interest in the overall real estate portfolio being held by the trust.
PeerStreet Features
| Minimum Investment | $1,000 |
| Account Fees | 0.25% – 1.0% setup fee |
| Time Commitment | 6 Months |
| Accreditation Required | True |
| Private REIT | False |
| Offering Types | Debt, |
| Property Types | |
| Regions Served | 50 States |
| Secondary Market | False |
| Self-Directed IRA | True |
| 1031 Exchange | False |
| Pre-vetted | True |
| Pre-funded | False |
Choose Your Own Investments — The platform gives you the ability to select loans individually and build a portfolio based on your own parameters and preferences.
Automated Investing — Just as is the case with P2P lending sites, PeerStreet also enables you to use the site’s Automated Investing function. You set parameters based on your own investment preferences and the automated feature will automatically add those loans to your portfolio.
Expected Annual Returns — PeerStreet maintains that typical loan investments will earn an average APR of between 6% and 12%. This is substantially higher than mortgage rates typically charged by banks and mortgage companies, but that’s because they represent loans for special situations, such as property rehabilitation. They’re the kind of loans that aren’t typically available to real estate investors and banks.
List of Originators — PeerStreet actually provides a list of originators. This will help you as an investor to do some research on the people and businesses that you will be providing investment capital for.
Type of Accounts Available — In addition to regular taxable investment accounts, you can also open up a traditional or Roth IRA through PeerStreet. IRA accounts are self-directed.
Account Protection — Investor funds are held in an Investor’s Trust Account with City National Bank and have FDIC insurance coverage up to $250,000 per investor.
Site Security — All interactions on the platform take place over a secure and encrypted connection that uses SSL/TLS, which is a security technology that is used by all banks and other financial institutions. Personal data is stored in public key encryption technology. PeerStreet’s hosting services provider also undergoes regular penetration testing and vulnerability assessments.
Loan Defaults — PeerStreet holds defaulted loans in a bankruptcy-remote entity that is separate from the regular business. They will move to handle the workout process, work on behalf of investors to protect their investment and maximize proceeds on liquidation. Their staff includes people who have a deep understanding of real estate lending, including commercial lending experience, as well as law and regulatory compliance.