PeerStreet is what LendingClub did for personal loans, but for real estate investing. It’s a peer-to-peer (P2P) lending marketplace that connects accredited investors with borrowers seeking real estate loans. Launched in 2014, PeerStreet has since funded over 8,800 loans totaling more than $4 billion and over $225 million in interest paid out. Keep reading for everything you need to know about PeerStreet.
|Investment Offerings||Real estate debt investments|
|Property Types||Commercial, industrial and residential real estate|
|Minimum Investment||$1,000 for new loans, minimum automatic reinvestments of $100|
|Time Commitment||6 to 36 months|
|Advertised Returns||6% to 9%|
|Accredited Investor Status||Required|
|Availability||All 50 states|
- Invest with just $1,000
- No interest rate risk
- Simple, debt-only focus
- Available in all 50 states
- No expensive broker fees
- Accredited investor requirement
- Illiquid investments
PeerStreet Investment Offerings
PeerStreet only offers real estate debt investments. Most of their loans are for residential acquisitions or refinancing, as well as rental investment, with the occasional multi-family, industrial and other commercial real estate loans.
Investors can choose individual loans when they become available, or you can use PeerStreet’s automatic investing feature to invest in loans that meet your criteria (interest rate, LTV, term and investment type). Most of their loans are short-term, six to 24 months, with LTV ratios below 75%.
All loans are backed by a first lien on the property. If the project goes bust, PeerStreet gets the underlying asset, which they will then sell off to recover investor money. In comparison, Prosper or LendingClub loans are unsecured.
Over the last several years, PeerStreet’s portfolio of loans has earned 7% to 12% annually, after investment fees.
How PeerStreet Works
PeerStreet partners with regional loan originators who provide loans to real estate developers and investors. There’s a vetting process that originators have to pass in order to have their loans listed on the platform.
PeerStreet’s accredited investors (you) then join with the originators to make loans to borrowers. This teamwork lowers risk for originators and provides access to additional capital. After a loan is funded, it usually takes up to three days to close.
Interest on the loan is paid on a monthly basis. Investors will see payments in their “Available Cash” fund. You can use this money to easily reinvest into new loans once the cash balance reaches the minimum threshold of $100.
Funding Your Account
Fund your PeerStreet account either by wire transfer or ACH bank transfer. If you choose the ACH route, your funds are instantly available, and you can invest with zero delay.
The initial investment minimum is just $1,000, and cash holdings on the platform are held by City National Bank.
New loans for investment become available several times every week. When there’s a new batch of loans, PeerStreet will send out an email the day before. Normally, loans will go live on weekdays at 3pm EST, following automated investing.
PeerStreet investment opportunities can fill up quickly, especially for higher-yielding loans. If you have FOMO, or you can’t make the 3pm deadline, you’ll want to consider PeerStreet’s automated reinvestment feature.
You get to set the minimum investment threshold ($100 or above), interest rate, LTV, loan term, and investment amount per loan. If you have enough cash in your account, and a loan matches your criteria when it becomes available, a pending purchase is made. You then have 24 hours to accept or decline the investment loan. This gives you time to perform your own due diligence before committing funds to the investment.
When a loan is oversubscribed – often the case for higher interest rate and lower risk loans – a queue is formed.
PeerStreet Pricing & Fees
PeerStreet charges investors a “service fee” on each loan. This fee is a spread between the interest rate it charges borrowers and the interest rate it pays to investors, falling in the 0.25% to 1.00% range. You’ll clearly see the service fee alongside investment details.
PeerStreet is a real estate investment platform with higher-yield, short-term loans backed by physical real estate and a low required minimum of $1,000. However, they only accept accredited investors, and their investments lack liquidity.
Other real estate investing options you might like:
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