PeerStreet’s Co-founder and COO, Brett Crosby, was recently a guest on Craig Sewing’s American Dream TV show to discuss PeerStreet and how it allows more people to access real estate debt as an investment to generate passive income.Brett explains how PeerStreet’s model allows for investing in real estate like never before. Investors have been able to invest in real estate equity, but real estate debt investments, which are typically safer because of where they are on the capital stack, is a relatively new innovation. By giving people access to real estate-backed loans, investors can diversify their portfolios through PeerStreet, which as a company, double checks the underwriting of each loan offered as an investment. PeerStreet empowers the American Dream, which Brett points out because it is a safer investment than many alternative options such as consumer credit. Not only that, PeerStreet enables real estate entrepreneurs to improve the US housing stock which creates jobs and improve communities.Brett also discussed his time in San Diego (where the show is filmed and where Brett co-founded Urchin Software Corporation before it was acquired by Google in 2005 and subsequently relaunched as Google Analytics) as well as his time at Google. The premise of the show is to highlight positive news and opportunities in part to offer an alternative to the modern day negative news cycle. Watch the full interview on YouTube.
We want our investors to be able to easily track and understand the status of each of their loan positions. That’s why PeerStreet wants to keep improving your Dashboard to help make investing on PeerStreet as transparent as possible. Your investment dollars are important to us and since we closely monitor the performance of each loan, you should be able to do so also.Recently, we improved the Positions tab so that you can sort your loans based on maturity date, rate and loan status. With this feature, you can quickly review the payment status of each of your loans. The improvement makes it easier to identify your loans and read notifications from PeerStreet with more information about payment status.Positions tab sorted by maturity date:
Positions tab sorted by rate (does not account for a yield bump, if applied):
Positions tab sorted by loan status:
If you have feedback for us about how we can keep improving, please reach out to us at [email protected].*All data displayed in screenshots is fictitious data.
The end of this year has been packed with some excellent coverage for PeerStreet that we are pretty excited about. We wanted to recap some of the big highlights for our investors. Forbes recently published an article about PeerStreet about how we are changing the real estate investing industry. Read the full article: “This $700 Billion Industry Has Been Untouched By Tech, Until PeerStreet Changed Everything." Motley Fool, a popular investing and finance blog, wrote about our Self-Directed IRA investing program and how accredited investors can take advantage of this opportunity to buy real estate debt. Crowdfund Insider picked up on our news about how we’ve launched new analytics tools for our lenders and how these tools help our lenders originate quality loans. Brew Johnson made an appearance on a show that focuses on notable tech startups in Los Angeles. A quote from Brew opens the episode about changing the lending system and his full interview starts at about 20:07 until the end of the show. Finally, Alex Rampell, our board member from Andreessen Horowitz, was interviewed by The Twenty Minute VC on Innovation and PeerStreet’s burgeoning business model. It’s been a year filled with positive coverage as we’ve continued building our company and we’re happy to see it culminate in more growth for our business.
As always, we welcome feedback from our investors about how we can continue to improve. If you have something you’d like to share with our team, please write to [email protected] and let us know what you think.
PeerStreet has been nominated in the Best Alternative Investments Platform category for the Benzinga Global Fintech Awards for 2018. Support PeerStreet by sharing the Benzinga link on Facebook, LinkedIn or Twitter. Every social media share equals one vote, so share as much as you can to ensure we get into the next round of judging to win the category!This is the fourth year Benzinga will be hosting this award ceremony, which focuses on celebrating outstanding innovation in the financial technology space. Over 250 companies in 19 different categories compete against each other by collecting impressions through social media. Since being nominated for this award last year, PeerStreet has been recognized as a CB Insights FinTech 250 company and has won numerous awards including the LendIt Emerging Real Estate Platform award, and the Fintech Breakthrough Award for the Best Overall Peer-to-Peer Lending Platform. We were also recently named one of the top startups to work for in LA and one of the Rising Startups at TechWeek Los Angeles. Our two Co-Founders were both featured in some notable interviews, as well. Brett Crosby was featured in a video interview by Fintech Finance during the Money20/20 Conference in Las Vegas last month. Watch the video to learn about how PeerStreet is creating a secondary market for real estate-backed loans. Also, Brew Johnson was interviewed by National Real Estate Forum about creating a secondary marketplace for real estate loans.
We are also currently hiring across a diverse set of roles at PeerStreet including engineering, accounting, graphic design, business development, real estate and sales. Please visit our Careers Page to look into the exact positions that we are looking for. If you are interested in applying for a position, please contact us at [email protected].
This past summer, we continued our internship program from past years and had Jake Lane, a current student at Fordham University in New York City, participate in our program. While at PeerStreet, Jake performed duties for both our real estate team and our servicing team. At the end of his internship, Jake wanted to help write about private money lending, based on what he had learned over the summer at PeerStreet.
Many investors on our platform know that PeerStreet sources loans from private lenders. However, the private lending market is a niche area of finance. Today, private money loans, sometimes called hard money loans or bridge loans, describe short-term high-interest rate loans from private funds. Private money lenders tend to be local organizations that lend against a hard asset, such as real estate. They are not as heavily regulated as traditional banks and therefore may have additional flexibility in terms of loan amount, interest rates, duration, etc. These private lenders offer a pool of resources and capital to potential borrowers and are sometimes funded by their networks of family and friends.
The private real estate lending industry emerged in the 1950s and has developed into a diverse and progressive financial alternative for real estate entrepreneurs. California is a dominant force in the private money industry, with over 180 lenders statewide. The size of the California private real estate lending industry, in particular, has been critical to borrowers in this market, as the median home price in California has increased 60% over the last five years, skyrocketing from an average of $312,000 in June 2012 to $503,000 in June 2017. This tremendous rise has fueled a vibrant private money lending community within California, which provides quick financing and access to large amounts of capital. PeerStreet is situated in the middle of this rapidly growing market and does a significant amount of volume in California, across many different lenders.
It is common for borrowers to use private money loans to rehab a property. Two popular strategies borrowers use are “fix-n-flip” or “fix to rent” for single-family residential properties. These lenders underwrite the property and credit score of the borrower and place emphasis on the LTV and ARV (after repair value) of the subject property. These are generally short-term loans where the lender typically charges higher interest rates than traditional banks. Even with higher rates, these loans are oftentimes still worthwhile for the borrower because, without it, they’d miss out on a business opportunity. In short, private lenders can help borrowers bypass the red tape of highly regulated banks and offer a viable and alternative source of capital.
Private lenders typically focus on specific regions where they are experts on the local real estate market. This gives them an advantage when they need to underwrite a property quickly. What is also valuable about private lenders is that they have invaluable relationships with experienced and successful borrowers. In this way, lending on a local level is beneficial in the underwriting process, since most lenders understand their local real estate markets intimately. This ecosystem of lenders and borrowers has helped us quickly expand to over 30 states throughout the US, while still maintaining a network of lenders who know their local markets and borrowers. As part of PeerStreet’s diligence process, each loan goes through an additional underwriting review by our team of in-house experts. Our goal is to create a system that allows us to scale our business while continuing to offer high-quality assets to investors in a way never before possible.
As shown above, private lenders offer a compelling alternative to traditional sources of financing. Their loans represent a unique opportunity to investors who now have the unprecedented ability to access and diversify across this asset class through PeerStreet. Whether you are looking to take out a loan from a private money lender to finance your next project or use PeerStreet to invest in this space, the private money market is a dynamic arena for investors looking to diversify and build wealth.
If you’d like to learn more about investing on PeerStreet, please see our How It Works page or contact us at [email protected] or 844-733-7787.
Happy Two-Year Anniversary at PeerStreet! We can’t believe how time flies and we couldn’t be more proud of where we are today! Only two years ago, PeerStreet launched our platform to the public during Money 20/20, an annual nationwide financial services conference. Below are pictures of our team cutting the ribbon on our booth to celebrate our launch.
Our co-founders, Brew Johnson and Brett Crosby, were back at the conference this past week. In the last two years we’ve experienced remarkable growth and now have over 70 employees, along with investments on our platform in over 30 states. Last month, we hit a milestone of over half a billion in loans funded and still have zero losses to our investors. We want to thank all of our customers who have supported us from the beginning. Your constructive feedback has helped us develop into the organization we are today. In addition to our investors and lenders, we’ve also had incredible support from many reporters and publications across the board. In particular, reporters within the alternative investment industry were some of the first to write about PeerStreet, like George Popsescu of Lending Times, Tony Zerucha of Bankless Times, Glenn Leibowitz at Inc., Daniel Lanyon at AltFi, Diana Asatryan at Bank Innovation, Peter Renton at Lend Academy, Samantha Hurst at CrowdFund Insider, Omri Barzilay at Forbes and Chris Lustrino at Simple.Innovation.Change. Certainly, no less important are the bloggers and podcasters in the space who have also covered us. We are particularly grateful for the flattering reviews from Mr. Money Mustache, Ian Ippolito of Real Estate Crowdfunding Review, Invest Like A Boss, and GenY Finance Guy, but there have been many, many others.As we continue to build out our platform, we’ve received recognition from several organizations for our work, including Best Peer-to-Peer Lending Platform from the FinTech Breakthrough Awards, Innovator of the Year in Lending from Think Realty Magazine, and Top Emerging Real Estate Platform from the LendIt Industry Awards. We were also recently listed as one of the “Top 10 Startups To Work For In Los Angeles.” These awards motivate us to keep making progress, but we are still reminded of where we came from in the beginning with only a handful of employees and an idea to revolutionize the mortgage industry. We hope you are enjoying the journey with us. We look forward to your continued feedback and support. If you have an idea of how we can continue to improve, please feel free to reach out to us at [email protected].
Building a startup can be both challenging and exhilarating, often at the same time. At PeerStreet, we are changing the way people can invest in real estate mortgages, which presents plenty of obstacles and rewards for our team. Thankfully, we have attracted talented and passionate people who work hard every day to build this business. Our founders, Brew Johnson, Brett Crosby and Alex Perelman, all have unique experience working for and launching successful startups.Recently, Noah Kagan, an influencer covering startups and entrepreneurs, interviewed Brett about how his former company, Urchin Software Corporation, was acquired by Google. He shares some of his insights on Noah’s newly published video, Real Business Stories: The Unlikely Origin Story of Google Analytics. In the episode, Brett gives Noah a tour of PeerStreet’s office space, so watch the video to get a sneak peek of where our daily operations happen. Brett also recently shared several lessons and experiences for the Xoogler (ex-Googler) network. He talks extensively about PeerStreet and shares some of the worst and best highlights of his career.
Now that you’ve had a glimpse into what life is like at a technology startup, if you want to learn more about what PeerStreet does, watch our explainer video. As always, we’d love to answer any of your questions. Please reach out to us at 844-733-7787 or [email protected].
Less than two years ago, we officially launched PeerStreet to the public. One year ago, we had funded 300 loans, representing roughly $100M in volume. Today, I’m pleased to announce, we’ve surpassed half a billion in loans funded on PeerStreet, with zero losses to investors and our monthly origination volume has now surpassed $50 Million. While we are excited about the growth, this is just the beginning of our journey to change the industry. Our goal remains the same as when we started: to level the playing field between Wall Street and Main Street by providing access and transparency to a market that had previously thrived on opacity.We continue developing features and integrations to improve the experience for both our lenders and investors alike. We recently announced a new dynamic loan status page that allows investors real-time transparency into the servicing of their loans. We’ve also announced integrations with Betterment, Wealthfront and Personal Capital to allow investors to combine their PeerStreet investments with their broader portfolio.Along with the growth in our business, I am incredibly proud of the culture and team we have built within the company. We have found amazing talent across all divisions of the business and were recently recognized as one of the Top 5 Startups To Work For in Los Angeles. We have significant plans for the future. We will continue to improve the platform and roll out additional features for both our lenders and investors. We also plan to expand our lender program across the country and continue to showcase the important work borrowers are doing to improve their communities.Thanks to our community for all the continued support. We look forward to a great year! --Brew Johnson, Co-Founder and CEO
If you have feedback or want to share your experience with PeerStreet, we’d love to hear from you. Please email us at [email protected].
By now, you’ve probably seen the news about Tim Gurner, a 35-year old Australian real estate developer, who slighted millennials for eating too much avocado toast. He claims that if they stopped indulging in expensive habits, such as avocado smashed on toast, they could potentially afford to buy a home. Not only has Gurner been highly criticized, but the “avocado toast” reference has gone viral in nearly every news category from savings to generational differences.This begs the question, are millennials investing like the generations before them? The debate is still on, but recently a top-blog argued against the rumor that millennials, as a generation, lack financial savvy. According to their site, Nanalyze “provides objective information about companies involved in disruptive technologies so that investors can make informed investment decisions.” Nanalyze cites a census bureau study that indicates millennials are saving more than any other generation. Specifically, Nanalyze points to PeerStreet as an investment vehicle many investors are utilizing. In fact, Nanalyze suggests that PeerStreet may be an investment strategy well-suited for millennials. This could be due to the technology platform we’ve developed or the transparency we provide. Studies have demonstrated that millennials distrust banks for a variety of reasons including their lack of transparency. So what’s our take? We say let them have their avocados and eat them, too. On toast sounds good to us. Or guacamole... or just plain with a little salt? You really can’t go wrong with avocados.
While PeerStreet is only available to accredited investors, millennials are certainly not disqualified because of age. If you are a millennial, or otherwise, and looking for a whole new way to invest your earnings, contact us at [email protected] or 844-733-7787.
Earlier this month, Think Realty Magazine, a resource for real estate investors, published an in-depth article about PeerStreet. Our co-founders, Brew Johnson and Brett Crosby, sat down to tell how the business, as we know it today, began. Overall, we thought that Think Realty captured the PeerStreet vision to reform the mortgage industry well and wanted to share it with our investors. Read on to see what this real estate investor-focused publication had to say about us.
A High-Tech Lending Ecosystem Frees Up Capital for the Industry as a Whole. By Carole VanSickle EllisThis article first appeared in the September 2017 issue of Think Realty Magazine. You can view the original article, including all images and graphics, at https://ThinkRealty.com or by clicking here.When Brew Johnson and Brett Crosby, co-founders of PeerStreet Lending, first joined forces, the old friends never once thought about their private lending project on a small scale. Nor do they think on a small scale today.“We have created a technology platform to empower lenders to make loans to borrowers in their communities. It’s about developing a more efficient way to provide capital to real estate industry participants,” said Johnson. He added, “Our idea was to create a platform where high-quality lenders of any size could access both cutting-edge technology and capital in a way that allows them to compete with major financial institutions and truly level the playing field. And those lenders, in turn, provide capital to real estate entrepreneurs and investors that enable them to buy, build, and fix up properties.” Crosby chimed in, “When people invest in loans on PeerStreet, they help borrowers improve communities one house at a time.” All things considered, it is a relatively modest set of goals for a high-powered real estate attorney and a former Google marketing director and software developer.
The technological platform that Johnson and Crosby created has done more than 1,000 loans for a value of hundreds of millions of dollars in just about four years. While the numbers are impressive, the pair believe that the real benchmark for the company is the opportunities it provides to every entity involved in a real estate transaction, from the lender and investor to the eventual buyer and the community at large. “Even if you’re not a direct participant in our platform, you benefit,” said Crosby proudly. “We are enabling more houses to be improved, which positively impacts communities throughout the country. Our lenders fund projects that turn neglected homes into respectable residences. If that happens once in your area, well, that’s great. But when someone can access the funding to make it happen 50 times in a community, then the entire community is lifted up. Local jobs are created; money goes to local stores and local businesses, and, over time, there’s the potential to uplift many participants in the community. This could impact the state of the entire U.S. housing stock.”The two founders and their team believe they are providing a far greater service than just improving the nation’s housing stock, however. PeerStreet believes its mission is to provide transparency to a historically opaque industry: finance. “Let’s go back 50 or 60 years. Lending was very local,” explained Johnson. “Banks lent in their communities to constituents they knew. They made loans in the community that changed the community, hopefully for the better. Then, securitization came into play, which started out positively by providing more capital for banks to make more loans in their communities, but, over time, lending became totally detached from the community and lending decisions were driven by the Wall Street securitization machine, financial engineering, and crazy risk-taking with other people’s money.”PeerStreet strives to take the advantages that private lenders have over “mega-banks” and institutional lenders, namely nimbleness, flexibility, and common sense according to Johnson and Crosby, and create a large-scale marketplace for lenders and loans. Inside that marketplace, everyone involved understands the risks, rewards, and collateral involved in the deals. “We connect small local lenders to a national capital market so that together they can compete with larger institutions. We use technology and capital to empower those local lenders and sell their loans to our investors. Overall, transparency is key to serve the needs of both lenders and investors,” said Johnson.
Johnson had the idea for PeerStreet while working at one of the top real estate firms in the country, where he practiced real estate law during both the housing boom and at the beginning stages of the subsequent bust. Johnson left the firm in 2005 to move into other aspects of real estate law, including estate planning. While working with his brother on a new tech business, Johnson saw clearly how the inherent flaws in the pre-crash lending environment could be addressed by pairing the right technology with the right lending platform. “I realized if you could create the right platform, you could literally create efficiencies and value for the real stakeholders in the market,” said Johnson. “There are a lot of unnecessary intermediaries in the market that are really just leeches and provide no benefits to anybody or anything but themselves,” he added. When applied to private real estate financing for investors, this revelation would be groundbreaking because removing the unnecessary pieces of “the system” for private lending meant that far more investors and private lenders would be able to work together to fund and do deals. “Taking complex things but making them easy to use, taking things that are not necessarily intuitive or obvious and making them as simple as possible, that is what we believe the real estate and lending industries need from our platform,” Crosby added. Johnson knew his college friend, Crosby, would be the perfect business partner. Crosby had spent the previous decade working at Google as a director of product marketing after his pioneering web analytics company was acquired by the search behemoth in 2005. In fact, Crosby’s analytics company served as the foundation for what is today’s Google Analytics. While at Google, Crosby helped launch the inaugural format for Google Mobile Ads, Google Drive, and many other products. When Johnson explained what he was hoping to create, a lending platform based on the solid value of the real property collateral behind the loan rather than on a borrower’s likelihood to repay the loan, future appreciation of the collateral, or any other intangible factor, Crosby was hooked. “One of the beautiful things about technology is that it levels the playing field. We wanted to use technology to give a lot of people, real estate investors and private lenders, in particular, opportunities to do something that previously could only be done by people or entities with access to certain information or with an extremely large amount of capital,” Crosby said. In 2013, the pair teamed up to build what would eventually become the PeerStreet platform.
Johnson and Crosby emphasized that PeerStreet is not a lender, but a marketplace for people with private money to fund real estate deals and for people with real estate deals to find funding. “Our lenders tend to know their space very well, which gives our borrowers a big advantage because not only do their loans get underwritten faster, but the lender on the project likely has knowledge of other factors that may be specific to the location of the project,” said Johnson. The company secures its loans with first liens on the collateral, which means that if a loan does go into default, PeerStreet investors will have first priority when it comes to repayment on the loan. PeerStreet loans are attractive to all types of real estate investors, whether they are borrowing to do deals and need relatively short-term loans, from six to 24 months, or interested in making private loans with their own money. The company also offers an “automated investing” service that will automatically submit orders on loans up to a specified investment amount whenever a loan that meets a private lender’s criteria enters the system.
For lenders who want to personally evaluate risk and make loans rather than rely on PeerStreet’s automated system, Johnson and Crosby believe the platform’s dedication to truth and transparency on all sides of the lending equation is crucial. They are willing to ask hard questions and read a lot of fine print in order to make sure that both a borrower and lender are qualified to do the deals in which they are invested. “I think a lot of real estate investors and private lenders that get into the space do not realize the number of factors involved in the real estate mortgage business, from underwriting the economics and risk to proper legal review and documentation,” said Johnson. He explained the PeerStreet system hinges on a multi-layered vetting process that evaluates not just the physical real estate and the investors borrowing to fund their projects, but the lenders making loans as well. “There are certain operators out there, both online and offline, that do not take underwriting and due diligence as seriously as they should,” added Johnson. “That is not just a potential risk for a private lender and their investors; funding an inherently bad deal is a disservice to the borrower as well.” PeerStreet’s in-house team of cross-industry experts follows each loan from start to finish, making sure that investors’ interests are protected at every stage of the process from underwriting to pay-off or, on rare occasions, default and foreclosure. The combination of live, breathing expertise – more than 97 years’ in real estate, 52 in law, and 12 in regulatory, the co-founders pointed out proudly – and the insight provided by the technological platform maximizes PeerStreet’s ability to identify loans that are a good fit for members and that are most likely to yield fruit. PeerStreet’s large and diverse team yields big benefits not only when underwriting loans at the start of a project, but also when it comes to dealing with what other companies might simply write off as disasters. Thanks to the extensive in-house community, generally the group is able to avert major problems even when projects run into snags.
“One of the most important things I learned during my time at Google is that you need to be mission-focused and ensure that the mission matters to the people working for and with you,” said Crosby. For PeerStreet, the mission revolves around making the financial industry transparent, profitable, and beneficial for everyone involved. That kind of passion is a critical component to the company’s success thus far as well as their hiring process. “We feel like PeerStreet could ultimately be one of the most important financial businesses of all time if we do things right,” Crosby said. "Our team members are really the unsung heroes here (and so are our fabulous wives). There are literally dozens of examples of really incredibly talented people working with us.”“Trying to do big things with a mission results in attracting the right kind of people to your business,” Johnson added. “There is this interesting network effect when the more people you bring in who are attracted to your mission and dedicated to it, the more people are interested in being involved. We want to have a profound, positive societal impact so that at the end of the day, our impact is the reward and the dividends are the cherry on top.” Johnson concluded, “One of the biggest reasons that PeerStreet is experiencing so much success is our team and our united belief in what we are doing. We want to bring transparency and the participation of the community back to the real estate and financial industries.”Request permission to republish this article on your website by emailing [email protected]
As a company, we write a lot about how our business intersects with real estate, finance, law and technology; but we don’t often emphasize what it’s like to work at a startup. We were really excited to see when we were named as number four in the “10 Best Startups to Work For in Los Angeles” list created by Zippia, an online startup career website. We were proud to be named along with some other really revolutionary companies doing impressive work in blockchain technology, cloud-based software, gaming, and communication. Los Angeles is becoming an increasingly attractive location for startups, partially due to the growing number of venture capital groups that are interested in Silicon Beach technology companies. At PeerStreet, our mission is to level the playing field between Main Street and Wall Street. We’ve always believed it’s not just what you do that matters, it’s also how you do it. We take our culture seriously and are excited to be recognized for it. We are also honored to help build momentum and support for startups in Los Angeles.
We are always looking for more smart and passionate people to join our team. To check out our current openings, visit our Careers page.
At PeerStreet, we strive to make working with us as easy and transparent as possible. Many of our users have asked that we communicate more clearly about the changes in each loan over the life of the investment. We’ve updated the Investor Positions Page to dynamically display the status of each loan more clearly.
You can also read our FAQ page to understand how PeerStreet categorizes different loan statuses and what our Servicing and Asset Management Teams are doing every step of the way.
If you have feedback, please reach out to us at [email protected] or 844-733-7787.
You’re investing in people, neighborhoods and communities.Many of our customers like investing in the assets we make available on PeerStreet, but not everyone knows the deeper story about how these investments have the capacity to change lives. On the heels of Labor Day weekend, when most people are afforded a welcome holiday from their work, we thought it would be a good time to take a moment to celebrate the work of our borrowers by showcasing one of the lesser known benefits of our space - the important projects borrowers are doing in their cities. Here, we’re highlighting one of our borrowers, Christian Fuentes, who does 20 or more projects in his local community a year. Christian is just one of over a thousand different borrowers that we’ve worked with across the country.I’ve written before about why investors can feel good about investing in real estate debt. A single real estate entrepreneur rehabbing a home not only helps the new buyer of that home, but also creates local jobs, provides revenue to local businesses and municipalities, and improves the overall neighborhood. If done multiple times in a local region, it can have a big impact on the overall community. At scale, it can impact communities throughout the entire country. But what’s particularly unique about this investment is that even non-participants benefit from these projects. People who live in the area get better neighborhoods and improved home values. So, not only are the loans on PeerStreet an attractive investment, they’re an investment you can feel good about.Take a look at the video and let us know what you think.
Special thanks to Christian Fuentes for showing us the impressive work he does in his community, Golden Capital for introducing us to Mr. Fuentes and to the team at Davey Jones Productions who helped us tell this story.
It’s not a stretch to say that for all of us, much of our lives revolve around payments. Whether money owed or money paid, the patterns of our lives depend upon paychecks, interest payments, mortgages, car payments, utilities… the list goes on and on. The fiscally responsible person typically pays these on time. It’s built into our social fabric to do so. So, when it comes to private money loans, like the ones you find on PeerStreet, why do late payments happen? Are borrowers poor cash-flow managers or, are there structural reasons why late payments are more common in this industry?We hope to explain why a late payment doesn’t necessarily indicate that the borrower is negligent. This may sound confusing, but it’s true. In private lending, late payments aren’t all that uncommon. But late payments don’t necessarily mean it is time to sound the alarm.
While late payments are common, defaults have not been. In fact, only 0.78% of the loans in PeerStreet’s portfolio have ever been in “default”, with “default” being defined as the filing of a foreclosure lawsuit or notice of default. There can be any number of reasons for late payments, which may indicate an actual problem with the loan, but not necessarily. There are many benign examples for late payments. When PeerStreet purchases loans, we work with the originating lender to transfer loan servicing to a company that processes the loan payments for us. Occasionally, this transfer gets delayed. Additionally, at times a borrower will accidentally send an interest payment to the wrong entity. This is a simple clerical error that usually gets cleared up by the next payment period. Another benign reason is that PeerStreet’s servicer sometimes receives the wrong billing address for the borrower and mail bounces back. Additionally, a borrower might be on the verge of selling a property and paying off the loan but prefers to pay late fees instead of requesting an extension on the loan.
Regardless of the reason, late payments are common in the private lending space and, many times, are cleared up quickly. For many industries, i.e. law firms, construction vendors, wholesale distribution, late payments are fairly normal. However, when borrowers miss a payment, PeerStreet closely monitors those situations. In all scenarios, our team proactively communicates the loan status and how the situation is being resolved to investors on the Positions Page within the Investor Dashboard. Unlike with unsecured consumer debt, with a real estate loan, there is collateral to pursue if a borrower fails to repay their debt. Still, borrowers will typically try very hard to avoid having the property foreclosed on for many reasons, not the least of which is that they usually have money at stake in the deal.
Lack of transparency generally in the private lending industry leads to lack of knowledge overall regarding nuanced details such as reasons why late payments are common in this space. As explained above, there are many reasons why some borrowers occasionally might be late on their payments, the majority of which do not signal problems to investors. If you have questions and want to discuss with one of our Investor Development Team, please reach out to us at [email protected] or 844-733-8788. We’d enjoy hearing from you.
We recently announced our official integration into Personal Capital, an automated investment service. This development allows users to view their PeerStreet positions within the context of their entire portfolio. After integrating with Betterment and Wealthfront, many of our customers requested that we work with Personal Capital to also arrange this partnership. So when we announced this integration, many of our customers expressed appreciation for this work. We also received many requests for other integrations with services like Mint, Vanguard, SigFig, and more. Initiatives like this are important to us at PeerStreet and we plan to continue to work on them, especially where third parties like Yodlee and Quovo help pave the way. But it is a two-way street, so if there are specific integrations you’d like to see, please also request them from the other companies so they know they’ve got customer demand for the integration.Beyond our own investor base, news of this integration was well received by both real estate and financial press. It was also interesting from a timing perspective that Personal Capital just raised an additional piece of their Series E round of financing for $40 million, which led to news of our integration being included in additional press. We congratulate Personal Capital on their success thus far!Take a look at what journalists are saying about this integration and why we value transparency and ease of use for our investors. News of the integration was covered by the following press:
If you are an investor and want to let us know about other requests you have for PeerStreet, you can always reach out to us at [email protected] or 844-733-7787.