PeerStreet Investing

PeerStreet – $0 to $77,089.49 in 5 Months

In Real Estate by Gen Y Finance Guy16 Comments

I wrote about PeerStreet for the first time back in March of 2017 after I had been invited to visit their HQ and interview their founders. Since then I have aggressively grown my investment accounts with them in a little less than 5 months. I want to take a deeper dive into the platform and the investments I’m holding in one of my two accounts (it’s a self-directed IRA).

Navigating the Platform

Assuming you have already set up your account, the first screen you see after logging in the investments tab that gives you a high-level view of your account as well as available investments:

PeerStreet Dashboard

One thing I have noticed is that new investments come in waves and it does take some time to become fully invested. The hard money lending space is a $16B market, according to the founders of PeerStreet, and they are constantly working on the supply of loans for investors. As a new platform, with a growing user base, I can appreciate the challenge of doing this in a way that does not diminish the quality of the investments let through the funnel.

PeerStreet

When it comes to making investments, you have two options:

  1. You can manually invest in the loans that fit your requirements (I did this for the first 7 loans I invested in)
  2. You can set up automated investing

To give you an idea of how long it takes to become fully invested. My initial deposit into my self-directed IRA was $50,000 and it took about 3 weeks to become fully invested with the following automated investment criteria:

PeerStreet Automated Investing

As you can see from the screenshot above, I have set the following criteria for my investments:

  1. Interest rate of 7% or greater
  2. Max LTV of 75% or less
  3. Loan term of 12 months or less
  4. With $2,000 per loan

I’m confident that if I would have been open to longer term loans that the time to become fully invested would have taken less time.

The last piece of the platform that we will dive into is the Dashboard:

PeerStreet Dashboard 2

On the dashboard, you get a nice overview of your account along with a chart that shows you how much interest you have collected to date. You can see the lag time between when I opened my account sometime in March, to when interest started trickling in in April and building through June. Based on the mix of my current investments, I should be collecting about $400/month in interest.

Speaking of the mix of my investments, let’s take a look under the hood.

My Loan Portfolio on PeerStreet

When I first started writing this post, I was going to just take a screenshot directly from the “Positions” tab in the dashboard I shared above, but then realized that there were a few metrics that I wanted to be able to track and share with all of you. So, I exported the positions to Excel and added the information I wanted to see.

PeerStreet Portfolio

I should point out that I chose to use $2,000 per loan based on the size of the account. As I mentioned above, I opened this account with $50,000, and I decided that I didn’t want any one loan to make up more than 5% of the portfolio. At the time, this puts each loan at 4% of the total portfolio value. Since then I transferred another $19,000 and some change, which has diluted the size of each loan to about 2.8% of the total portfolio value.

In the screenshot above, with my current investments, I added in two columns that don’t exist on the PeerStreet platform:

LTV – You get to see the LTV on the investment page, but for some reason, the developers have not brought this over to the positions page once it becomes an investment. I brought this in not only to see what the individual LTV’s were for each loan but because I also wanted to see with the weighted portfolio LTV was. My current mix has a weighted average LTV of 69%, which tells me that I have a 31% equity cushion shielding me from potential losses. I like that margin of safety!

Estimated Interest – The positions tab shows you the cumulative interest collected on each loan, but I also wanted to see the annualized interest, to get an idea of what I could expect on a forward 12-month run rate.

Total – The total at the bottom has some of the data points you see at the top of the positions page, but I added this in order to see the following: Total Investment, Average LTV, Average Interest Rate, Average Duration, and Run Rate of Anticipated Interest.

Note: You may be wondering why the total in the positions summary is different than the total you see in the other screenshots. This is because the total investment column is displaying the original investment and not what the outstanding principal is. One of my loans paid off part of the principal early.

I do have another portfolio with PeerStreet that has about $7,000 in it. It is an after-tax account that I set up initially before my self-directed IRA. Because the interest on these investments will be taxed at ordinary income rates, I decided that it would be more efficient from a tax perspective, to make these investments in a pre-tax account, especially given the high marginal tax rate we are currently in. So, I will actually slowly wind down the after-tax account as the 7 $1,000 loans I made mature, and then transfer the money out for other investments.

At this point, I don’t plan to add to the self-directed IRA, but rather just leave the automated investing turned on, and see how it performs over the next 12-24 months.

Is anyone else investing on the PeerStreet platform? What else do you look at? Are you using the automated investing feature?

– Gen Y Finance Guy



Personal Capital allows you to aggregate your entire financial life into one account. All you need to do to see all your accounts in one place is log in to Personal Capital and voila! But it doesn’t stop there. They even automatically classify all your income and expenses for you. You get a FREE and fully AUTOMATED tracking system!

Comments

  1. I, myself, am a PeerStreet guy. I have been more than satisfied with the returns and the risk profile that I’ve been able to build based on LTV and tenor.

    One loan was repaid within 3 months with an ROI of 2.47%. Can’t get that at any bank right now. Just keep rolling the interest back into new investments.

    1. Author

      Church – it will be interesting to see how investments perform through the next major downturn.

      The equity cushion is huge!!! I can sleep pretty soundly knowing that on average I have a 31% equity cushion + Interest collected before any of my seed capital is at risk of loss.

      1. I agree, it will be interesting to see how this platform performs with a market downtown. Like any other investment, the due diligence up front can mitigate a ton of risk, should things go south. I am sure some throw money into whatever automated investment they get into. I automate, simply, to get a priority slot in the next great investment, but quickly cancel the order if I don’t like the analysis of the property – regardless of LTV or interest rate.

        Best of luck with it!

  2. I thought based on the title you meant you made 77k. You meant in five months time you invested that much, right? I am interested to see how these type of investments do long term.

    1. Author

      Hey Bunnyfreak – sorry for any confusion, the title might have been a little click bait(y) 😉

      Yes, I meant that I have invested $77,000 over the past 5 months. To date, I have earned a little of $1,200 in cumulative interest payments, but am on track for an annualized interest amount of about $5,000 between my two accounts.

  3. Nice wrap up on PeerStreet. I’ve been meaning to check them out now for some time.

    For me, I think I’d target a lower LTV max like 65%, only because I’m used to traditional trust deeds having a lower LTV. I guess the cool thing for you is the risk is spread out.

    I’ll definitely check them out soon since I have some stagnant capital lying around.

    1. Author

      Michael – This has really become my new favorite investment platform and asset class for 2017. I like the equity cushion and being in 1st lean position is the safest part of the equity stack.

      It’s funny you mention the LTV max of 65%, as now that I am fully invested, I have set all future investments to reinvest at a max LTV of 65%, max duration of 12 months, and a minimum 7% interest rate.

  4. Dom,
    I only move small amounts ($4,000) at a time to PS. This way I’m not in a big hurry to put the $ to work, allowing me to wait for the higher APR investments & lower LTVs. I’m currently averaging just over 9% APR with LTVs from 21%-70% (13 investments). Not sure if you supplied a referral link for readers to get an extra 1% yield bump on their first PS investment?

    1. Author

      Dave – that makes sense if that’s your hurdle to make investments.

      And yes, readers can click on any of the PeetStreet links above to get the 1% yield bump on their first investment.

  5. I’ve used automated investments only cause yield starved investors jump on offerings and it is subscribed in minutes.
    Can you do a post on setting up a self directed IRA. Who are the various providers, fees, complications and what criteria is used to select a particular provider.

    1. Author

      John – You are right, offerings go by fast, so automated investing can sometimes be the only way you can get in on the action. These new platforms are still working on imbalances between supply and demand.

      I just went the provider partnered with PeerStreet to set up my self-directed IRA. As long as you transferred in at least $5,000 PeerStreet reimbursed you the setup costs:

      Account set-up fee: $50
      Annual account fee: $100
      Processing fee: $50

      So, the $200 will be reimbursed through PeerStreet. They will also reimburse the $50 processing fee for each new transfer in, as long as it is at least $20,000.

      I honestly didn’t do much research beyond this. They use SD IRA Services as their partnered provider.

  6. I’ve had a good experience with Peerstreet so far. Butheir yields have dropped over the past year or so. Also heavy concentration of properties in CA. I wish they had feature to spread out risk by geography.

    1. Author

      Radcrowd – That would be a nice feature to add to the automated investing options, to spread geographical risk. 26 of the 36 investments in this particular account I shared are all in CA.

      Honestly, this wasn’t even something I was paying too much attention to, but I will now.

  7. I agree with the geographic concentration concern. I would love to see some of the properties in Texas, North Carolina, Alabama, and similar.

    Two things may contribute to this concentration:
    1) small overall sample size, even at 40 loans
    2) small time period

    It would be nice to see them add a geographic preference of filter to go with you other choices. Easier said than done when I think it out.

    Thanks for the detailed overview!

  8. Thanks for this – I’ve been meaning to get into crowdfunded real estate, but haven’t gotten started on the due diligence yet. A post like this helps, and I now need to figure out if I want to try it out from a post-tax account (and pay taxes at my marginal rate) or take on the extra effort of a self-directed IRA.

  9. Pingback: July 2017 - Detailed Financial Report #31 - Net Worth $600,108 | Income $46,442 - Gen Y Finance Guy

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