Keeping money in a savings account has a low rate of return, and the stock market is unpredictable. According to fintech startup PeerStreet, investing in real estate loans is a better way to grow wealth.
PeerStreet’s platform serves two groups: investors and professional real estate lenders. The company uses artificial intelligence as well as its finance and real estate professionals to vet lenders and underwrite loans. Then, institutional or accredited investors can browse PeerStreet’s online marketplace and build their investment portfolios. That way, investors’ money is partially protected because the end borrower has equity in the real estate, and lenders get more capital to dole out to landlords and house-flippers.
The company said its investors generally see 6 to 9 percent annual returns over a six-month to three-year period with loan-to-value ratios under 75 percent.
PeerStreet announced today a $60 million Series C funding round led by Colchis Capital. It plans to use the money to grow its team and expand its reach, according to Forbes.
PeerStreet makes money by charging servicing fees between 0.25 and 1 percent on the interest its investors earn. The company recently reached $3 billion in loan volume, according to co-founder Brett Crosby.
Asset investment historically has been tough to access for the average investor. While PeerStreet’s investors must be accredited — meaning they have a net worth of at least $1,000,000 or an annual income of at least $200,000 — platforms like this may make the playing field more level.
