Online investing is becoming increasingly attractive to investors. Crowdfunded REITs are consistently gaining in popularity. But, those who are not too keen on the standard 5+ year REIT terms are seeking other methods. PeerStreet offers a different online investment approach, with terms as short as 6 months. Their platform is not open to the “Average Joe,” though. You’ll need to be an Accredited Investor, Fund, or Institution to invest in these private real estate loans.

In addition to sharing what unique traits this company has to offer, as well as historical funds data, this review will provide the most up-to-date BBB rating and need-to-know factors so you can determine if it’s a good fit for your portfolio and your wallet.

~ Some of our articles may contain affiliate links. For more information, see our Disclosure Statement.

What is PeerStreet? (Review) The non-REIT Real Estate Investment

PeerStreet property types include schools

My PeerStreet QUICK-LOOK Review

Company Name: PeerStreet

Company Websitehttps://www.peerstreet.com/

Founder: Brew Johnson, Brett Crosby, and Alex Perelman

Minimum Investment: $1,000 per loan

Investment Term: 6 to 36 months, with most between 6 and 24 months

Account Fees Disclosed: a “loan servicing fee” of less than 1%, a “liquidity premium” fee of 3% to 8% on all 30-Day Notes

Annual Yield: 6% – 9%

Property Types: Single-family home, Condo, Duplex, Triplex, Fourplex, Multi-family home, Special purpose (such as a church, theater, school, or public utility), Office, Hotel, Retail, Industrial, Restaurant, other Mixed-use and Hospitality

Investment Types: Bridge Loans, Cash Offer Loans, and 30-Day Notes (details below)

Accolades: Forbes, Bloomberg, The Wall Street Journal, Reuters, Huffington Post, Business Insider, TechCrunch, and more, recently “named among the top 25 fastest-growing technology companies in Deloitte’s Fast 500 list”


Compare your Real Estate investing options. Learn more about crowdfunded REITs. Start with this article: What is stREITwise (Review) Should You Invest?  Open to both Accredited and non-accredited investors.


My PeerStreet FULL Review

About PeerStreet

Founded in 2013, PeerStreet’s mission was to be the…

” … first-of-its-kind online platform for investing in real estate debt. The platform represents a two-sided marketplace that, on one side, provides hassle-free access to an asset class that was previously inaccessible to individual investors: short-term, real estate backed loans. On the other side of the marketplace, PeerStreet connects a vetted network of private lenders with diverse sources of capital to help fuel their growth and bring lending back to their local communities.” (peerstreet.com)

The PeerStreet Investment Options

An Affordable Way to Get into Real Estate:

Welcome to online crowdfunded investments. Yes, it’s the affordable way to add real estate investing to your portfolio. Rather than writing the huge checks yourself, you write a small one alongside a community of investors who collectively loan money in the real estate sector to receive a bit of return outside of the stock market.

The Details on Investing at PeerStreet:

At PeerStreet, you are not investing directly in any property. Rather, you are investing in short-term real estate loans, and you will receive a mortgage-dependent promissory note with each investment.

Peer Street loan investment options

There are 2 Ways to Build a Portfolio at PeerStreet

You can choose whether to invest by manually selecting individual loans yourself, or by using the PeerStreet Automated Investing process for assistance in selection.

  • Manual Investing:
    • You hand select each loan that you are interested in placing an investment. This allows you to create the most personalized portfolio.
  • Automated Investing:
    • Automated does not mean random. It is still a personalized approach.You select your preferences. Once a match is found, you will receive an e-mail detailing the transaction. You then have 24 hours to review the details. After 24 hours, the transaction will go through, at your pre-stated investment amount, unless you cancel the order.
    • With Automated Investing, PeerStreet intends to see that your portfolio is diversified. How diversified depends on how many different loans you can participate in, of course. The more money you fund into your PeerStreet account, the more you can diversify your portfolio.

There are currently 3 Loan Types to choose from:

  • Bridge Loans
    • These are short term loans (typically 3 – 36 months) that provide capital needed for a new acquisition or a refinance from a previous mortgage, typically with the intention of:
      • Improving the property, then selling (fix and flip)
      • Improving the property, then renting long term  (fix to rent)
      • Purchasing without major improvement, then renting long term (buy to rent)
    • These are used for non-owner occupied properties that can be zoned for either residential or commercial use
  • Cash Offer Loans
    • These are very short term bridge loans (typically 3 – 4 months) that help homebuyers acquire a new home while selling their current home, or while waiting to receive traditional mortgage financing.
  • 30-Day Notes
    • These are short-term investment that provides investors with more liquidity. After one note matures, an investor may choose to invest again in the same Note or a different 30-Day Note.

Account Minimum Investments:

Currently, the minimum initial investment amount in any loan is $1,000.

You can use your Dashboard to set up a one-time payment to fund your account, as well as recurring payments up to twice a month. When you have at least $1,000 of unallocated money in your account, you can select an investment.

The Potential Return:

Historicaly, the annualized returns have been between 6% and 10%.

Must-know Investment Information:

With PeerStreet, you’re able to contribute to multiple investments with varying loan characteristics.

After you create and fund your PeerStreet account, you can allocate those funds across several individual loans, or you can build a portfolio of loans that meet specific investment preferences — such as property type, region, maturity date, originator and overall risk profile.

What the PeerStreet Investment Platform has to Offer

  • DIVERSIFICATION
    • an alternative investment option to the volatile stock market, and to other online real estate investing platforms such as REITs
  • LOW MINIMUM INVESTMENT
    • $1,000 minimum initial investment per loan
  • LOW ACCOUNT FEES
    • Loan servicing fees are less than 1%, and other related fees (such as the liquidity premium listed in the QUICK-LOOK at the top of this article) vary depending on the loan and are disclosed individually
  • PROFITABLE TRACK RECORD
    • They have recorded annualized returns of 6% to 10% on various closed investments since 2013
  • CUSTOMER SATISFACTION?
    • In reading Google reviews, it appears that the best feedback comes from long-term investors who have been involved for a length of time with experience in a number of loans, some of which came to term and some that went into default. So, it can be inferred that they anticipate, and realize, a percentage of loss, and determine that over time, the average return is worth continuing to invest with PeerStreet. Short term investors who have experienced loss, understandably had less positive feedback. What’s the key take-away here? Though the terms are short, the overall investment time should be expected to be long-term to absorb the deals that default or don’t provide a return, and investors should be sure to diversify within the platform.

What Does the BBB Have to Say?

PeerStreet has been filed with the BBB since 2018 with an A Rating.

There are no BBB site customer reviews. There is 1 complaint on file from January of 2018 (details are unavailable).

Google currently shows a rating of 3.2 stars with only 26 investor reviews. The most positive reviews claim excellent investments and service, while the least favorable reviews claim poor management and too many loan defaults.

3 star customer satisfaction rating

The PROS and CONS

Overall, I found the PeerStreet website a little underwhelming. While it’s easy to navigate, and aesthetically pleasing, it’s lacking in detail and transparency.

Some of the basic information is there and upfront, such as the investment terms and the average annualized historical returns data.

Other necessary information, such as how much you need to invest, is hidden in the FAQ’s, as were the property types.

So, the website’s main presentation is a little over-simplified, forcing the potential investor to research the less-fun-to-read (but very thorough) FAQ’s Page. If you’re considerng PeerStreet as an alternative investment, you’ll want to do some digging in the FAQs to complete your due diligence.

PROS:

  • ‘A’ BBB Rating
  • Low $1,000 investment requirement per transaction
  • Short investment terms offer faster liquidity than REIT investments
  • Option to choose Manual Investing or Automated Investing without sacrificing personalized planning
  • Ability to participate in multiple investments, even multiple accounts so long as each account is accredited and provides a unique e-mail address.

CONS:

  • “Sign up to Learn More” kind of website. I’m not a big fan of the sites (Companies) that require you to sign up in order to get the full picture.

NOTE TO INVESTORS:

  • This opportunity is for ACCREDITED INVESTORS ONLY despite the low investment amount due to the nature of the investments (real estate debt).
  • $1,000 minimum investment is great, but be prepared to invest several thousand in order to build a diversified portfolio to mitigate risk

How Do You Become a PeerStreet Investor?

First of all, as already mentioned several times, you must be an Accredited Investor to invest on the PeerStreet platform. The SEC regulatory requirements regarding real estate debt currently demand this be so.

That being said, this Forbes article suggests hope by PeerStreet for change in regulation in the future. PeerStreet states that it wants to be available to the “Average Joe.”

You can create a new account in less than 5 minutes. Before an investment is approved, you will need to provide proof of your Accredited Investor status.

1. Create a new Account

Enter your Full Name, Email Address, and a Password.

2. Select your Account Type

3. Complete your Investor Profile


* Disclaimer – BYIO is not providing investment advice. BYIO is not promising a return on your investment. BYIO suggests you consult with your financial professional, or make sound judgment on your own, when debating investing in PeerStreet or any other online investment company. We’ll keep sharing what information we have, and we hope you make a lot of money!


Some PeerStreet FAQ’s

1. Why PeerStreet?

For Accredited Investors, PeerStreet offers an alternative online investment with relatively short terms and decent potential returns.

2. Is PeerStreet a REIT?

No. PeerStreet is not a REIT. PeerStreet is an online marketplace where Accredited Investors, funds and institutions can invest in high-quality private real estate loans.

3. The PeerStreet website says my funds are FDIC insured. Does that mean I won’t lose money?

No. As with all investments, when the funds are invested, there is risk of loss. However, when the funds are sitting in your cash account, they are insured up to $250,000.

4. When will I get paid?

PeerStreet claims that interest and principal will be repaid to investors on the 30th day after the investment closes.

5. Can I contact somebody at PeerStreet if I have a question before investing?

Yes. Here is their Contact Information:

Address: 2121 Park Pl STE 250, El Segundo, CA 90245-4705

Phone Number: (323) 741-1060 or (844) 733-7787

Email: info@peerstreet.com

You can also find them on these social media platforms:

Facebook  |  Twitter  |  LinkedIn

Who are PeerStreet’s Competitors?

Below are some alternative online real estate platforms to consider.

DiversyFund

Click to read our DiversyFund Review. Minimum initial investment of $500, but no early redemption plan.

Realty Mogul

Click to read our Realty Mogul Review. Minimum initial investment of $5,000.

stREITwise

Click to read our stREITwise Review. Minimum initial investment of $1,000 and they offer an early Redemption Plan.

Fundrise

Click to read our Fundrise Review. Minimum initial investment is $500.

Rich Uncles

Click to read our Rich Uncle’s Review. No minimum initial investment required.

CrowdStreet

Click to read our CrowdStreet Review. ACCREDITED INVESTORS ONLY. Minimum initial investment is $25,000.

There are many real estate crowdfunding companies available to choose from. We’ll keep reviewing, and updating as necessary. We hope you find the right company to meet your goals!


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