If you’ve heard of real estate crowd funding and are trying to jump in on it, Peerstreet could be the platform for you.
Powered by automated investing and peer-to-peer lending, users have a ton of real estate investment opportunities right at their fingertips.
In this Peerstreet review, we’ll highlight the platform, introducing you to all that it can do to keep your skin in the game. We’ll share some tips on how you can make money and even point out pros and cons to help you decide.
By the end of this comprehensive Peerstreet review, you’ll have a good idea how it works and even start toying with ideas of automated investing and boost your financial life. Let's get started!
What is Real Estate Crowdfunding?
Crowdfunding is all about raising money using resources like social media Businesses use crowdfunding instead of a traditional lender as a way to bump up their investments to gain financial independence, taking help from their community or private lenders that just happen to pop through.
Ideas with Real Estate Crowd Funding
Real estate crowd funding has the same idea, connecting potential real estate investors with properties for independent underwriting. Many deem acceptable investments as those with the best return, something you'll find with crowdfunding.
In many cases, there are investment opportunities for multiple parties that could purchase a piece of the company and become a shareholder with their skin in the game.
When businesses partake in real estate crowd funding, they can tap into hard money loans with a good loan to value ratio that they didn’t have before and use it to make moves that make more investor funds in the end.
Peer Street is a real estate crowdfunding platform that, along with City National Bank, offers unique equity investments for anyone looking to make hard money lending that grow their cash.
With the help of automated investing, this lending club can invest in loans and make money as borrowers pay them back on the interest rates. These investments are known as real estate debt investments, where investors collect profits off of Interest.
Unlike other real estate crowdfunding sites, PeerStreet loans offer users a chance to grow their money with help from Peer Street Pocket. Instead of leaving your money in a regular old bank account, a Pocket account allows users to collect on the interest rate. There is no reason why your money should just sit there and do nothing, take steps to make it grow.
Unlike other investments like student loans, real estate loan investments are more profitable. They can increase your net worth and help you collect money as borrowers pay thier remaining loans.
Continuing with our PeerStreet review, we’ll take a look at some of the key features of this real estate investment platform.
Real estate is a busy market full of fast-paced buying and selling opportunities. One way that PeerStreet has streamlined investments is with automated investing. You can diversify your portfolio in a matter of minutes and get notifications when residential properties go live.
Instead of banking on student loans and hard money lending that take decades to pay off, an accredited investor can bump up their net worth in no time, investing in promising projects.
With just a few clicks, you can invest and reinvest to keep your money where you want it. From small increments to large, you can choose how you diversify.
Thanks to innovative technology, investments are more transparent than ever before. Instead of investing on a whim, you can take advantage of the proprietary technology platform, which streamlines real estate investing.
Get an inside look into all aspects of the real estate backed loans you’re buying into, knowing what you’re getting into before you invest a single dollar. Plus, enjoy top-notch security and scalable options to help you grow and learn while adding to your overall worth.
Real estate has always gotten a reputation as a solid investment. That’s why PeerStreet offers more security than other types of real estate projects, backed by an underlying property.
Instead of speculative objects and banking on a minimum loan, PeerStreet investors have an actual object that protects their money on interest rate.
Invest in Short-Term
Some investments are for the long run and do not offer return for years to come. With investing, most opportunities have a loan term from 1 to 36 months, decreasing the risk and increasing the time to return.
Investors can start collecting profits on higher yield loans and keep their own due diligence open while more opportunities come their way.
Peer Street offers a number of benefits for investors of all types. Whether it’s small time or big time, investors can enjoy unique features and pros like those listed below.
Automated investments work the push of a button, helping investors see real-time stats. Users can set their preferences and automated investing will do the rest, matching the best and most profitable interest rate to your account.
You have 24 hours before investments go live to decide, getting to jump at opportunities when they first hit the market.
Lots of Real Estate Exposure
New investments are uploaded onto the platform each and every day. That means that this lending club can skim through the new stuff and keep a close watch for those that look like the most profitable.
Plus, you won’t find just one type, with options to invest on homes, real estate lending, or student loans.
It can seem risky to invest in defaulted loans but, PeerStreet has a solid track record for getting people back where they need to be.
Most PeerStreet review ratings have them ranked in a top spot, with users satisfied with their options for hard money lending.
Their goal is to help those that have defaulted start paying their debts back while giving investors something that they can benefit from.
No Hidden Fees
Unlike the competition that keeps fees a secret until it’s far too late, PeerStreet puts it all out on the table so that investors know what they’re working with.
Get a look at performance and specs before you invest and leave the rest to them.
One of the best things about investing with PeerStreet is that they put their real estate lending earnings to good use.
They have projects going on to support real estate in underfunded areas and do a lot of outreach programs to help neighborhoods in the lower-income range.
Just like there are pros to investing your money with a platform like PeerStreet, there are drawbacks. Knowing them will help you better decide if they are the investment platform for you.
Only Deal with Debt
This is not a true drawback but, it is something that you should consider as an investor. Sometimes, investors like to vary up their investments in order to get better return.
With PeerStreet, you’re only dealing with debts, limiting you to other investments. Plus, with three remaining bad loans, you could be looking at issues.
Still, you can enjoy a steady flow of incomes and grow your principal investments, two goals that are at the top of every investor’s list.
Accredited Investors Only
While other investments are open to anyone that has the money to drop, PeerStreet is a primary corporate entity and limited to only accredited investors.
Though this is their current standing, it could be subject to change in the future if their track record continues as it is.
To start earning on interest payments, accredited investors have to put down a pretty hefty minimum fee.
There are not many other Peer Street fees that you’ll have to watch out for but, their minimum $100,000 investment is higher than the average for other crowd funding options out there.
Types of Investments PeerStreet Offers
Peer Street offers tons of investing opportunities and is continually expanding and spreading into different things here and there.
Their automated investing platform is one of the key players that every accredited investor should look into, as it helps make more insightful choices on where to grow your cashflow.
Turn Interest Payments into Investments
When new opportunities come to the surface, an accredited investor has an option to jump in on them for as little as $100. Investors can make returns on the interest rate for real estate properties, making their money work for them.
Investors can try their luck on real estate loans, earning as buyers pay on their mortgage lender. With a single real estate investment, accredited PeerStreet investors can pick and choose one property and earn cash.
On the other side of things, investors can choose to diversify their portfolio, choosing a list of properties and three remaining loans that work for them.
By setting a list of criteria, real estate investors can enjoy automatic investments that will keep their portfolios diversified.
Related: CrowdStreet vs Fundrise
Instead of real estate, borrowers can take tax advantage accounts into consideration, investors can choose to self-directing IRA investing to boost their return over time. This high loan volume can be a benefit in a secondary market.
These types of investments allow investors to have more control over their funds, able to choose where and how you would like your money to work for you.
With a good loan to value ratio, these investments are much better than hard money loans and increase the return for all types of investors.
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Minimum Investment Amount
To get in on real estate loans with PeerStreet, real estate equity investors need to come prepared to put down $1000.
If they are reinvesting, it’s only $100, which helps to bump up their stake with some of the most competitive properties.
With a minimum investment, investors have the opportunity to check into real estate investing and pick the loans and mortgages they choose.
Related: DiversyFund vs Fundrise
When it comes to investment fees, PeerStreet doesn’t go overboard and actually offers much more opportunity to grow than the competition.
Their servicing fee is one of the main ways that they make money, which they tack onto all secured loans.
The way that they calculate the service fee is with a spread, of which they use the interest rate for both borrowers and investors. In addition to servicing fees, they charge borrowers other fees like:
Loan Originator Fees
This fee is charged to borrowers as they make their way into the new lending contracts. It’s an upfront fee that will only go to the borrower with real estate loans and, with PeerStreet, it’s always disclosed.
There will be no surprises or opportunities for other things to pop up here.
Other Penalty Fees
If there is ever loan defaults, there are lots of penalty fees involved. While these are charged to the borrower, these could potentially be pocketed by the owner.
Still, PeerStreet will go through an entire foreclosure process the home and loans if necessary.
If the borrowers fails to pay their promised amount, then the buyer could be at risk for losing their investment.
Investors will not see their principal or any interest incurred unless the borrower starts to pay or a foreclosure is finalized.
Related: M1 Finance vs Stash
How to Make Money with PeerStreet
For professional investors, making money from hard money lenders is nothing new. Real estate loans are also not a new concept but, buying into debts is.
Investors can make money by following the process that follow the trail from a home loan all the way to money in their pocket.
Though it might sound complicated, PeerStreet’s innovative platform makes everything simple, allowing investors to tap to buy in.
1. Borrowers Look for Money
It all starts when real estate entrepreneurs are on the hunt for money to buy, renovate, or build property.
In many cases, properties are in need of a little TLC, which is why borrowers are determined to flip them to turn their homes into beauties to sell or rent.
2. Investments Roll In
Using the Peer Street platform, buyers can take a look at all of the potential lenders and brokers from across the country.
A lot of investors already have their criteria uploaded into the platform and can choose to get involved in just a few clicks.
That means that borrowers could have hits in a few minutes up to 24 hours to get their home building dreams up and moving.
3. Automated Real Estate Loans
The automated system works to pair borrowers with lenders and looks at the criteria input by the investor and the amount that the borrower needs.
4. Opportunities Pour In
Though lenders with matching criteria get the best bite, other lenders get to take a gander at it after 24 hours. That means that there is a lot to choose from, allowing the borrower and the lender to make a solid match.
Potential investors can get insight into all of the important details, including the value of the rental property, borrower’s credit, and more.
5. Money Management from Start to Finish
PeerStreet has a long list of professional legal and financial teams that are there to manage loan investments lifecycle from start to finish and even add tax advice.
They collect payments and help to keep borrowers on track so that everything goes smoothly.
If for some reason things start to head south, PeerStreet’s team will step in and make things happen to avoid loan default or foreclosure.
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6. Collecting Real Estate Debt
Lenders make money off the interest as borrowers make their payments. Each monthly payment is tacked on with interest, which is deposited directly into Investor’s accounts. Loans matured make great profitable loans, which boots ordinary income.
Diversification for Increased Profits
Once lenders get the hang of things, they can start to diversify their portfolio to increase their monthly investments. There are opportunities uploaded daily that include real estate of all types.
By buying into different homes on the market, their diversified portfolios can earn them loads of money over their principal, allowing them to bulk up their funds, invest more with real estate crowdfunding, and pour more out into the community.
Final Thoughts: Is PeerStreet Right for You?
After reading this PeerStreet review, you should have a better idea whether or not it is a good platform for you.
Investors get a pretty promising return, able to take their investing skills up a few notches. At the end of the day, PeerStreet is a solid investment, though there are some risks involved.
Risks with Peer Street
When you get into a loan with a borrower that has remaining bad loans, you could be looking at a loss of principal on underlying real estate.
You won’t be able to tap into your funds until everything is settled. This means your interest too, unable to collect it. While that is one risk, the benefits are also pretty sweet.
The automated investing feature is perhaps that best part of the technology, working with lenders to help them score the loans generated they want and get rid of anything they don’t without much investor participation.
It’s all automated and, once a lender’s criteria is set, the platform takes over and matches lender and asset class to borrowers better than any banking system could.
The Turn Around
Our PeerStreet review shows that perhaps the best thing about the platform is that you can make your money back fast.
Investing on short-term loans and real estate crowdfunding instead of long term, you can see your profits in no time. Plus, it decreases your risk so you don't lose money, as the chances of a default fall below.
PeerStreet now welcomes certified investors but, they may start welcoming others soon.
The opportunities to invest with them along with the potential to diversify with innovative technology is unlike any other platform, and something that lenders of all levels should take advantage of.