If you’re interested in investing in real estate, PeerStreet is a real estate crowdfunding company that enables people to invest in high-quality real estate from their computer or smartphone. With PeerStreet, investors have the opportunity to have some of your investment portfolio into the commercial real estate sector. PeerStreet makes investments simple by making them easy to analyze and easy to purchase by enabling you to invest with as little as $1,000. This is a pretty low minimum, as most other real estate crowdfunding sites have higher minimums. New account holders are welcomed with a call from the investor relations team to answer any of your questions and get you up to speed with what’s going on. PeerStreet’s simple-to-use platform has everything you need to make investments and monitor your account, leaving out all the fancy visualizations and making it easier to navigate. Read on to learn more about what PeerStreet can offer you.
PeerStreet teams up with regional loan originators who make loans to borrowers who are often real estate developers and investors. In-house real estate experts from PeerStreet make sure to go through a diligent checking process to select the highest quality loans to list on PeerStreet for investors to participate in. PeerStreet investors join with the originators to make the loans to the borrowers. This process lowers the risk for the loan originators and provides access to more funds for more deals. Most of the loans give 6%-12%+ yields, are from 6-24 months, and have loan-to-values below 75%. After a loan is completely funded, it takes about 1-3 days to close. Then the loan begins paying the investor interest on a monthly basis. Funds can then be easily reinvested into new loans once the cash balance reaches the minimum investment threshold of $1,000. With PeerStreet, you can invest in real estate loans historically reserved for professionals. The loans you invest in are secured by first liens on real estate properties, meaning that PeerStreet is the first to get paid. And if the borrower defaults, PeerStreet would be the first to take ownership of the property along with its partners. PeerStreet loans are usually used as short-term financing for fix and flips, cash-out refinancing, and acquisitions. In exchange for your money, investors receive a stated interest rate that is net of fees.
Why You Should Invest in PeerStreet
- Debt-only focus. Other real estate sites will offer at least both equity and debt. PeerStreet only focuses on debt, which makes investing simpler, leaving limited gains, yet also minimum losses. This method is also referred to as “hard money lending”.
- Low $1,000 investment minimum. Most real estate investment sites have minimums ranging from $5,000 up to $25,000.
- Greater availability of investments. PeerStreet has one of the highest and most steady volume of loans due to their process of allowing a network of lenders that bring in loans for them. This allows PeerStreet to keep up with the lower $1,000 minimums and add in more diversification, plus easy reinvestment of matured loans.
- Automated investing. Having a $1,000 investment minimum and a greater availability of investments allows PeerStreet to run an automated investment program. For example, if you give them $5,000, they’ll invest it automatically between five $1,000 loans. You can set certain criteria, such as interest rate, loan-to-value ratio, and term length. When a loan matures, your available cash can be automatically reinvested without touching it.
- Expected annual returns. PeerStreet boasts that typical loan investments will earn an average APR of between 6% and 12%. This is higher than mortgage rates typically charged by banks and mortgage companies, due to the fact that PeerStreet represents loans for special situations, such as property rehabilitation. Thus, they’re the kind of loans that aren’t typically available to real estate investors and banks.
- Strong venture capital backing. PeerStreet is growing tremendously fast over the past few years. Michael Burry was an early seed investor, using $6.1 million of his own money according to TechCrunch. In November 2016, Andreessen Horowitz did a $15 million Series A round. As of October 2017, the company has surpassed $500 million in loan originations with zero losses to investors. In April 2018, PeerStreet just closed a $30 million Series B round.
- 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.
How To Start Your PeerStreet Investment
- Open an account on PeerStreet by entering basic information and choosing which type of account you’d like to open. You can invest through a regular taxable account or create a self-directed traditional IRA or Roth IRA. Self-directed IRA accounts are administered by Self Directed IRA Services by Horizon Bank. PeerStreet will reimburse some of the account opening costs with a balance greater than $5,000.
- A couple days after opening the account, you will be contacted by the Investor Relations team to be answered any questions you have about PeerStreet.
- Your account will then be funded by either wire transfer or ACH bank transfer and will be instantly available. Cash holdings on PeerStreet are held by City National Bank.
- Start investing by clicking on the “Investments” tab and selecting any investments currently available. If you’re not interested in the current options, new loans become available for investment a few times per week, so be sure to check back!
PeerStreet offers accredited investors the opportunity to invest in solid, asset-backed loans in an easy-to-use online interface. PeerStreet offers high-yield, short-term loans backed by private real estate. As compared to traditional “hard money lending” investments, accredited investors can diversify with $1,000 minimum investment per property, automated reinvestment, and steady nationwide loan volume. If you’re interested and you’re an accredited investor, you can sign up for free and check out the investments at PeerStreet before you deposit any funds or make investments. Check out more of the best brokerage bonuses, here on HMB!
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