Manhattan Beach- based e- trade for real estate start- up company PeerStreet has brought real estate investment within reach of smaller scale investors.
In a report by sandiegouniontribune.com, PeerStreet "aims to democratize access to investments previously only available to a privileged few."
The report has also detailed how PeerStreet Company works. It said:
"The company partners with a special class of lenders, known as hard-money lenders who often loan money to fixers and flippers. They are the kind of borrowers who require fast access to cash for durations much shorter than the typical mortgage. PeerStreet acts as an intermediary and passes the hard-money lenders' loans on to its members, who can invest as little as $1,000 in deals. When a loan is filled, it's purchased from the hard-money lender and investors get paid in annualized interest rates every month."
Brew Johnson, PeerStreet's co-founder and CEO, said "Nobody really had access to [real estate backed loans]. Historically, it's been a very small, country club-like network. Wealthy real estate experts and their [associates] would be the ones who generally got access."
PeerStreet is believed to be serving a certain market by giving alternative financing options when banks are in reluctant or in doubt of lending. The company's average annualized interest is 7.7 percent but other deals yield as low as 6 percent while other return as high as 12 percent. The loan period varies from six months up to one year.
According to crowdfundinsider.com, Brett Crosby, COO and co-founder said "Unlike platforms that originate their own loans, our professional origination partners know their local market in terms of property values and local economic conditions. This reduces risk for investors on our platform."
The company offers lenders the opportunity to build their loan portfolio with lower risk as individual investments can start for as low as $1,000. Together with its launch, PeerStreet has started to offer its referral program for members who invited other investors. Both of them will receive a one percent yield bump on their next investment.
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