This Peer-to-Peer Investing Platform Is a Disruptive New Tool for Making Money in Real Estate
PeerStreet is a using award-winning fintech to upend the industry.
FinTech, which stands for “financial technology,” has been one of the biggest buzzwords in the world of finance over the last few years, and for good reason. Broadly speaking, FinTech is made up of new technologies that are applied to—or sometimes specifically designed for—the traditional financial services sector. And as of late, they are starting to disrupt the financial industry by bringing in a deluge of new players who had previously been denied access to the game. And one of the most obvious examples is peer-to-peer investing.
Peer-to-peer investing is changing the way people invest and borrow money. In years past, if you wanted to borrow money to start a business or buy a house, your only option was to go to a bank and apply for a loan. Thus, only large financial institutions had access to highly profitable debt investments. But now, crowdfunding technologies are democratizing the process. Online peer-to-peer platforms are connecting borrowers with private investors by the thousands, creating an entirely new, mutually beneficial asset class in the process.
One of the most noteworthy peer-to-peer investing services out there today is PeerStreet. Founded in 2013 with the backing of several prominent venture capital firms, the company built an award-winning peer-to-peer investing platform that is arguably doing more to disrupt the traditional real estate investment market than any other firm.
PeerStreet is a high-tech online marketplace for real estate-backed loans. Put another way, it’s crowdfunding for mortgages that breaks standard loans up into small pieces so individuals can become microlenders. And the entire process is guided by cutting-edge data analytics.
PeerStreet works with established private lenders from across the United States to purchase real estate debt. They review each lender’s track record, then run the loans through their own proprietary analytics engine. By using advanced algorithms and data science, the company is able to curate a pool of safe, high-qualify real estate debt investments. In this way PeerStreet connects investors with borrowers in a way never before possible. Investors get to earn 10 percent or more on their investments, and borrowers get the money they need to buy a house or run a business.
But PeerStreet’s FinTech innovation doesn’t stop merely at crowdfunding mortgages. They also employ cutting-edge Automated Investing technology that takes the guesswork out of building an investment portfolio. All you have to do as an investor is select your investment criteria, such as interest rate or loan term, and you will be notified when loans that meet your criteria become available.
Unfortunately, because the crowdfunding marketplace is so new, the PeerStreet platform is currently only available to accredited investors. According to SEC rules, these are individuals with a net worth greater than $1 million or an annual income greater than $200,000. However, if you don’t fit into that category, there is some good news.
In 2015, the SEC officially opened up the crowdfunding marketplace to non-accredited investors. There are still strict rules in place that limit the amount you can invest per year to either $2,000 or 5% of your yearly income or net worth, whichever is greater. But it’s better than nothing. And it suggests it may just be a matter of time before PeerStreet’s automated investing tech becomes available to everybody.
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