Investing with Peerstreet?

11 Replies

Hi @Kelly S.  I have been investing with PeerStreet for a year (started July 2018) and my experience has been positive.  If you search the forum you will find lots of threads about other people's experiences, but if you have a specific question, I can try to answer it for you.

I would certainly stay away. I haven't been paid a substantial principal/interest payment in months, and most of my loans are either way late on payment, and one is in default. When I first started investing it was clear when my interest payments were coming, but for the last several months the payments are mixed in and its not clear. I always assumed that since PS had lower interest rate payments than other platforms that they did more due diligence (and their claims of not having any defaults). Not finding that to be the case. I diversity with only putting 5k in per note, but even if only one defaults, when you adjust your return its pathetically low compared to what you can get elsewhere.

My experience with PeerStreet has been terrible. I highly recommend you stay away. I have 2 investments both started in 9/2018. One never paid and has been in foreclosure for months and is unresolved. The other is also in foreclosure and paid $190 on $5k over 16 months. When you approach PeeStreet for answers, they cut/paste standard responses. You only get one update per month and it is very short, not detailed and usually an excuse for a further delay. Their sense of urgency to deal with non performing investments is the absolute worst and unacceptable. They are certainly not good stewards of their customers money. There are better investments out there for 8% yield. PeerStreet is at the bottom of the list.

I think on BP you can find people who are looking for investors and willing to give returns similar or better to what Peer Street promises, but with a secured note..  I know I am one of them.

Just to add a few counterpoints, I have found PeerStreet to be a worthwhile addition to my portfolio.  First, maybe it is just good fortune, but I have not had the same issues with foreclosures and late payments that other BP members have discussed in this thread.  I started investing in July 2018 and have yet to have a single property have to go all the way through the foreclosure process.

Second, I think PeerStreet needs to be seen for what it is and isn't.  There are many different investment vehicles that can get you better returns, tax sheltering, and/or more static and consistent payouts.  Here are a few ways which I think PS is helpful to me and may be helpful to others:

1) Truly passive - You could dump a lump sum and/or setup recurring monthly deposits, turn on auto-invest, and then not touch it or pay attention to it all year if you wanted to.

2) Low minimums - You can invest in properties with as little as $100.  If you've got some extra cash at the end of the month after tending to your other investments, PS is a good place to sweep the extra to put it to work

3) High volume - While this can certainly be viewed as a negative if PS is not doing their due diligence, it can also be a positive because it is easy to get into an investment and put your money to work faster

4) Diversity - When combined with the low minimums, PS allows you to invest in a lot of different deals which spreads risk and lowers the chance your distributions will be greatly disrupted due to one or two properties falling behind

5) Reinvest or income - You can decide whether to reinvest your distributions or take them as income.  You can change your mind and switch back and forth at any point

6) Supplement your emergency / down payment fund - By combining the diversity and income options you can create an emergency or down payment fund.  Over time, as your PS investments grow, you will have the principal on numerous properties coming due each month.  Similar to laddering CDs, turn off reinvesting and using the distributions plus principal for ending investments, you can start gathering the money monthly for emergency help or to put towards a down payment.  I don't recommend you use this in lieu of an emergency fund, but maybe you only need to keep 3-4 months of cash on hand instead of 6 (or whatever you personal risk tolerance allows)

These are just a few things to think about.  I advise that whether you invest in PS or not, you make it just one part of your overall portfolio.

I did 3 small placements in 2018 with PS and 2 of the 3 are in default (still). I am a private lender and if I had their success rating that I've experienced I would find a new profession. Don't gamble your money with them. There are better choices.

@Kelly S. I started with PS in late 2018, getting up to 10 positions @ $1k ea by ~mid-2019. At that point I was disappointed with their performance and communication. I don't believe they do a good job with comps or risk assessment. I starting withdrawing my $$ by 3Q2019 as loans paid off. I have 4 remaining positions now, one is REO listed on the MLS for less than the value of the PS loan, another is in default and the last 2 are ~90 days late, on the cusp of default. Note also that I was selective in where I chose to invest, avoiding CA, NY, NJ, IL, etc, trying to pick areas with a net-population influx and non-judicial foreclosure laws. This apparently has not helped much. I will close my account as soon as I can get whatever comes from these last four positions.

You've been warned.

I've used Peerstreet for a few years and it's a mixed bag. At one point I had close to $100K invested across several dozen loans and to date have generated almost $10K in interest. That's the first ding - Peerstreet's returns are in the form of mortgage interest, which is taxed at your marginal rate. I also experienced a frustratingly high number of early payoffs that seriously diminish returns. The unfortunate dynamic is that the good credit borrowers pay off early, and the poor performing loans can be (and are) tied up for years. I lost a modest amount of principal on a Palm Springs property that was tied up for over a year in foreclosure. I'm currently sitting on my last $2,000 that has been tied up for four years, non-performing since 2018, and currently in foreclosure proceedings. In short, it's a reputable platform if you have, say, $10K or so you'd like to invest. For any serious money, you have much better options that will have a professionally managed portfolio that pays out in dividends (check out Broadmark's private fund).

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