Product Overview of PeerStreet
PeerStreet is a peer-to-peer marketplace designed to connect accredited investors with real estate loans, providing an innovative and accessible way to invest in real estate debt.
What PeerStreet Does
PeerStreet facilitates the investment in real estate-backed loans by purchasing these loans from a network of vetted private lenders and brokers, and then offering them to investors through its online platform. This model allows investors to purchase pieces of these loans, enabling them to share in the profits or losses associated with the loans. The primary borrowers are often entrepreneurs or real estate investors looking to finance projects such as home flipping, where they purchase, renovate, and resell properties for a profit.
Key Features
- Loan Sourcing and Management: PeerStreet sources, vets, structures, and manages real estate loans from a nationwide network of private lenders and brokers. This ensures that the loans listed on the platform are thoroughly vetted and managed to minimize risk for investors.
- Investment Flexibility: The platform offers loan terms ranging from six to thirty-six months, allowing investors to choose investments that align with their financial goals and risk tolerance. Investors can start with a minimum investment of $1,000, enabling diversification across multiple real estate investment loans.
- Automated Investing: PeerStreet provides an Automated Investing feature that allows investors to reserve spots in investments that meet their specific criteria with just a few clicks. Investors have 24 hours to review and cancel any investment reservations made on their behalf.
- Diversification: The platform enables investors to create a diversified portfolio by investing in various real estate loans with different yields, terms, and loan-to-value (LTV) ratios across residential, multifamily, or commercial properties. This diversification helps spread risk and potentially increase returns.
- Senior Secured Loans: Investors benefit from being first lienholders on the loans, meaning they are first in line to be repaid in the event of a default. This structure enhances investor safety and reduces the risk associated with the investments.
- Transparency and Insights: PeerStreet’s proprietary technology platform provides clear insights into each investment, including details on location, property valuation, photos, and borrower credit details. Investors can monitor their portfolio performance, transaction history, and investment status in real-time.
- Self-Directed IRA Option: The platform offers a self-directed IRA option, allowing investors to benefit from tax-deferred investing. This feature integrates with personal finance platforms like Betterment, Wealthfront, and Personal Capital for added convenience.
- Servicing and Asset Management: PeerStreet handles loan servicing, collecting payments from borrowers and distributing the proceeds directly to investors’ accounts. The Asset Management team is ready to intervene if any issues arise with the loans.
Key Functionality
- Marketplace Access: Investors can browse and select from a variety of real estate investment loans posted on the platform, typically updated each business day at noon Pacific Time.
- Low Fees: PeerStreet applies a servicing fee ranging from 0.25% to 1%, which is taken out of the interest rate payments. This fee structure is generally lower than those of traditional REITs, making it more cost-effective for investors.
- Investor Safety: The platform prioritizes investor safety by ensuring that all investment opportunities are secured by a property and managed through a robust technology platform designed for security and scalability.
By combining these features and functionalities, PeerStreet makes real estate investing more accessible, flexible, and transparent for both beginner and experienced investors.