Peer street ? ask for experience

[Ken Wang]

Dear All,

  Has anyone used peer street ? Any catch or pro & cons to share with us? appreciate your time!

Sincerely,

Ken

[Michael G.]

Here's my take:  (Warning: Long post)  As a RECF site that focuses only on Real-Estate Debt, they seems to be just a newer, carbon-copy of PatchOfLand.com, as far as I can tell...   I haven't done extensive research, but I noticed 4 main differences:  (Please weigh in if you know differently... I promise not to take it personally)

1. They don't appear to pre-fund to their borrowers - which essentially means that a.) they don't have skin in the game, and b.) the lenders/investors don't begin accruing interest right away
2. They don't appear set-up investors up with a 'Bankruptcy-Remote' legal structure which protects investors in the event that PeerStreet goes bankrupt. This is an important one because if you invest in a borrower whose project is going well and is paying on-time, but then Peerstreet fails, it would be a cryin shame!
3. They don't source their own borrowers.. They appear to buy pre-vetted, pre-underwritten loans from others... While this may save them Marketing costs to acquire new borrowers, I worry about the concept of "adverse-selection."  Why would someone else sell their best loans, rather than their worst?
4. Their returns appear to be lower. Not sure if they are pocketing a few %'s more than the industry, but their yields appear to be consistently lower for what amounts to the same risk assumed vs. PatchOfLand or Realty Shares.

Like PatchOfLand, PS seems to also allow investors to review all the details of all previous loans. To the extent that as much transparency as possible is good, I definitely like this. (Not sure If they post info on their defaulted loans, as invariably, if you do enough loans, some % of them will eventually go into default.)

As I said above, I don't hold myself out as an expert by any means so please don't hold me to the above or take it as scripture. They are only my initial observations so far.  If I missed any differences, please add to my comments too!

As it happens, I genuinely like ALL of the above names - PatchOfLand, RealtyShares, and possibly even PeerStreet too (although they are a much younger newer entrant to the market, so I would like to see if they are still around in a year or two).    Others top players in the market are Real-Crowd and LendingHome.

Would love to hear feedback from neutral others on what they think are the +'s and -'s of each of the above names (but if you're affiliated with any of the above, please stay away!)

Thanks!