Getting started with PeerStreet

PeerStreet: Getting started...

• What is PeerStreet
• Getting your referral "Yield Bump Token" bonus at sign up
• What you can expect 

What is PeerStreet and what is Real Estate Crowdfunding?

PeerStreet is a real estate crowdfunding platform.  Its similar to other crowdfunding platforms (Groundfloor or Fund That Flip), a bunch of people provide money to meet a target goal for a project. PeerStreet projects are based in real estate like fix-n-flips or cash out rehabs, these projects provide short term, high-yield debt secured against the real estate as a first position loan[1]. PeerStreet is one of the best and respected real estate crowdfunding sites  Ian Ippolito rates PeerStreet #1 in the top 100 list at "The Real-Estate Crowdfunding Review"[2]  As of writing this they claim annualized returns of 6-9%[3].  And if you're old enough to remember the housing markets crash the "guy" who called it and made millions Dr. Michael Burry played by Christian Bale in the movie “The Big Short” is an investor in PeerStreet.

How to get your referral "Yield Bump Token" bonus

Wait what the heck is a Yield Bump? So a yield bump is not a cash bonus, it is a 1% increase in your next loan. If you buy a loan at 6% they will pay you 7%.  This lets you control the bonus because instead of giving you 10$ flat, you can pick a great loan that you really like.

If your like me you'll pick a loan with a repayment term of 24-36 month at around 7-8% return. Also for these loans I'll spend about 5x (I don't let any loan be more than 2% of the total invested) but with a 1% Yield bump over 24-36 months is $20-$30 per $1,000.In my case I would invest $10,000 so my bonus would be $200-$300 not bad compared to $10 flat.  If you want a yield bump token on your first loan use the link, it takes you to the PeerStreet site, click the "Get Started" button and create your account, once your account is created you'll need to deposit money before you receive the bonus and invest it.

What can you expect

They offer three different loans the normal loan witch doesn't seem to have a name, the "Short Term" and the "Cash Offer". Most of the loans on the platform are the normal 6-36 month fix-n-flap style loans.

Short Term, the short term loans are 30 day loans at 3%, these loans are actually normal loans that they resale a 30 day portion of the loan term to us while taking a "Liquidity Premium" of around 5% off the rate. So effectively Peerstreet is assuming all the responsibility of default for the duration of the loan while investors  buy out 30 day chunks of the loan. When this program started I couldn't believe what I had read, I actually called in to verify this wasn't a misprint, it is a guaranteed 3% return even if the loan does not repay[5], but it's true.

Cash Offer Cash Offer loans are basically a bridge loan for people who are buying and sell a property at the same time. So what happens is you want to sell your house and buy a new one, but you need to buy new house before you move out and sell your old house. You can use a Cash Offer loan to buy the new house and when you sell your old house it pays off the Cash Offer loan (we hope), These loans are around 4 month terms and pay 5% return. PeerStreet actually gets appraisals for each loan that you can read before investing. I recommend reading everything you can about the loans so you can get familiar with how you want to select loans moving forward.  You can even use sites like Zillow, Trulia, MLS and LoopNet to look at comps.

After you've signup using the  link and transferred money in your account you should get a yield bump message, you can see the available loans by clicking "Investments" link at the top middle.  PeerStreet has even given me yield bumps for my birthday before. They have real good settings for Automated Investing, and you can cancel an automated loan purchase up to 24 hr after it is made giving you ample time to review the loan terms.  Yield bump tokens aren't used in automated investing.
Once you lend the money you can't get it back until it's repaid, some borrowers repay early, some repay on time and some pay late. I invest in PeerStreet for the cash flow, I can spread my investments over as many loans as possible and by loans each month to increase my cash flow. PeerStreet has been my safest, most reliable, passive investment to date 9/13/2019.

Cons:
Unfortunately if there is a 9% loan in the system, before you can say words: "9% loan", it is fully funded.
Unfortunately if there is a 8% loan in the system, before you read the appraisal, it's usually fully funded.
Unfortunately you need to be an accredited investor to join and have at least $1,000 per loan to start investing.

Defaults You seriously need to set some realistic expectations about defaults.. Some borrowers will default, for me it not that big of a deal. I'll do a separate blog on why I feel that way.

References

[1] www.PeerStreet.com © 2019 How it works
[2] The Real-Estate Crowdfunding Review © 2015-2018 Top 100+ Real Estate Crowdfunding Sites
2019 Rankings and Reviews
[3] www.PeerStreet.com © 2019
[4] Business Insider © 2019   A startup backed by the hero of 'The Big Short' is attempting to bring Wall Street to Main Street
[5] www.PeerStreet.com © 2019  FAQ What is a 30 day note