What is peerstreet.com? What is unique about what it offers? Is it one from which you can benefit currently? Join me in today’s review in which we shall take a closer look at this company in a bid to establish how viable the opportunities it presents are. By the time you’re getting to the end of this review, you’ll be better informed on whether you should reach out to this company’s support staff to get started with what they have to offer, or not. Let’s get started right away.
Name of the company: PeerStreet
Official Website URL: https://www.peerstreet.com/
Overall Rating: (3.8 / 5)
Table of Contents
- What is peerstreet.com?
- How does PeerStreet Work?
- What are you investing in? (as the investor)
- Which are some of the main features of PeerStreet?
- Which types of loans are offered on this platform?
- Is PeerStreet Legit or is It A Scam?
- Pros and Cons
What is peerstreet.com?
PeerStreet exists as a real estate crowdfunding service that lets you invest in real estate debt. For most people, anything under the name “real estate loan” is usually perceived as the usual 30-year mortgage. PeerStreet has, however, decided to focus on short-term loans (between 6 to 24 months) which are all backed by a first-position lien. Under a first position lien arrangement, you are usually paid before equity-holders and other types of debt holders.
PeerStreet is currently working with a wide variety of lenders across the country, most of whom are private money lenders to originate loans. These lenders bring the loans to PeerStreet, who then offer them money to investors in the form of fixed income (debt) investment.
The thing that makes PeerStreet stand out is the fact that it brings the two sides of the real estate debt market together (that is the real estate lenders and the investors).
How does PeerStreet Work?
By now, I’m sure you are wondering how PeerStreet works, so I’ll go ahead and break it down for you. The process looks like this:
- A borrower is in need of a short-term loan
- A lender who’s already registered in the PeerStreet nationwide network lends the money to the borrower
- The lender submits this loan to PeerStreet.
- If PeerStreet proceeds to approve the loan, it will publish it on the PeerStreet online marketplace.
- The investors on PeerStreet then crowdfund the loan, i.e. many investors come in to purchase small portions of the loan
- PeerStreet takes over the management of the loan as it distributes the principal and interest payments to the investors.
What’s the essence of having PeerStreet in this process? Borrowers and lenders could as well as proceed to lend and borrow the short-term loans at will. Unfortunately, attempting to do this can end up getting quite complicated. PeerStreet steps in to manage this entire process.
They take on the underwriting process to see to it that all stringent measures are met, they offer asset management and loan servicing services (i.e. the collection of payments, the distribution of the loans to investors, and following up with those who fail to pay the loans). Investors also work with PeerStreet because it’s very instrumental in the capitalization of lenders, in the way it allows them to originate more loans. This opportunity is concurrently created for a large pool of investors.
What are you investing in? (as the investor)
By choosing to invest on PeerStreet, you do not directly invest in commercial real estate. You are simply investing in loans that are directly secured by the property. These loans are usually divided into notes in a bid to significantly reduce exposure and to enable you to diversify your portfolio. The minimum amount of money you can invest in a single note manually is $1000. Institutions are exempt from this rule since they’re allowed to purchase whole loans.
As an investor, you should know that your note is not secured by the real estate, only the underlying loan is.
Which are some of the main features of PeerStreet?
The main features that investors get to enjoy include:
- Multiple accounts are available –from self-directed IRAs, trusts, joint accounts, and individual accounts.
- Income tax reporting – PeerStreet provides investors on this platform with IRS form 1099, which is essential in the reporting of their income since earnings on PeerStreet are taxable.
- Interests are usually paid twice monthly – PeerStreet pays out interest on the first and 15th of each month. You can either choose to re-invest the interest or withdraw it. The principle along with other distributions are usually paid out as they are achieved.
- There’s no secondary market – this essentially means that there’s no liquidity. If you decide to invest in PeerStreet loans, you have to be ready to hold them until the loans mature. You also cannot resell the loans in private transactions.
- The platform is available for use in all of the 50 states in the U.S
Which types of loans are offered on this platform?
PeerStreet offers different loans, which include:
-These are short term loans (3 months to 3 years)
-They’re essential in bridging the gap between financing and future events such as refinancing, sales, etc.
-They are for investment/business purposes only on this platform.
-Can be used to provide capital that would otherwise be needed to fix and flip the property that one needs to flip property or to purchase it to rent.
-These are short-term investments that offer investors more liquidity.
-In 30 days, both the principal and the interest are usually repaid to the investor, who can then reinvest in the same or another note.
-The underlying loan is usually secured by real estate.
-PeerStreet takes on the responsibility to repay the entire loan (principal & interest), regardless of whether the borrower makes the payment on time.
Cash Offer Loans
-These short-term loans enable buyers to give sellers all-cash offers as opposed to waiting for the finalization of the mortgage.
-Homebuyers identify homes and engages agents or service providers who make the purchase on their behalf. A bridge loan is usually presented to the agent or service provider, with the new home being the collateral.
-The buyer, however, has to put down an earnest money deposit and even move in as the tenant in their new home. Upon the finalization of the mortgage by the homebuyer (or the sale of their current home), the agent /service provider usually sells the home to them and pays off the loan.
Is PeerStreet Legit or is It A Scam?
PeerStreet is, in my opinion, a genuine one. There are very many reviews on the internet about it, and whereas some people are not in agreement with its mode of operation, I don’t think one can doubt the genuineness of this company. Its presence in the present-day world has given investors an opportunity to diversify their portfolios with real estate-backed loans, and earn money through short-term investments. If upon doing your personal analysis you find out that such an opportunity is worth taking up, then you can give it a try.
The good thing is that there are very many opportunities in the present world that you can take up, so you can always curate the assets in your portfolio in a manner that will benefit you both in the short term and in the long term.
If you’re looking into setting aside some money for long-term investment, then you should have a look at what the following IRA companies have to offer:
Pros and Cons
- Low investment minimums
- Short-term investments
- Automated investing
- Accredited investors (you should have an income of $200,000 per year or $300,000 as a couple, a net worth of $1000,000+, which isn’t inclusive of your primary residence)
- Debt investments only
- There are no loan packages
Do you own or represent PeerStreet?
If you are a representative or associate of PeerStreet have found something not to be correct in this review please, feel free to tell us and I will make sure to update the info on this post. The easiest way to do it is in the comment section below or simply by sending us an e-mail to email@example.com.
Final Words and Verdict
Overall Rating: (3.8 / 5)
PeerStreet presents a very good opportunity for one to diversify their investment portfolio. Unfortunately, this opportunity may not be for everyone. You have to be an accredited investor to reap the underlying benefits. I’m not sure about what your intentions are with your investment portfolio, but if you want to make money in the long term, you can give the recommended alternative below a try. Whereas it isn’t in the real estate field, it offers you a unique opportunity to own safe assets that can never entirely lose their value.
That will be all for this review on what peetstreet.com is about, and what it has to offer. I hope you found it informative and helpful. If you did, be sure to share it with your friends and family. Don’t also forget to drop me any questions that you may have in mind about it.
I wish you well,
Eric, Investor and Team Member at Gold Retired!