Crowdfunded real estate has been a popular investment trend for the past decade, as individual investors can directly invest in commercial and residential properties with fractional ownership. However, no asset class is risk-free, and real estate platforms fail periodically.
PeerStreet is the latest casualty of rising interest rates and changing market conditions. Unfortunately, the platform declared Chapter 11 bankruptcy in June 2023 and has paused new offerings.
Here are several PeerStreet alternatives to consider if you wish to earn passive income from real estate.
Table of Contents
What was PeerStreet?
PeerStreet offered the opportunity to invest in real estate loans for single-family homes across the United States. These loans were sourced from a network of lending partners, and the platform had a first-lien position.
The average investment term was 12-36 months with a $1,000 investment minimum.
During the investment term, the borrower would make improvements or prepare it to become a rental property. Investors would be repaid with monthly interest payments. As this was debt-based investing instead of equity-based, income projections didn’t include property appreciation by selling the home to another buyer.
PeerStreet also hosted Pocket accounts, an alternative to high-yield savings accounts. Investors could earn 4% annual interest with a one-month or three-month term. These accounts are not FDIC-insured, and withdrawals were halted as the company prepared for bankruptcy.
Single-family homes can be a profitable investment idea. However, rapidly rising interest rates paired with drops in mortgage demand and venture capital funding caused PeerStreet to stop new offerings earlier in 2023.
Initial bankruptcy proceedings indicated approximately 57% of the outstanding loans were non-performing, indicating operational flaws which have been known to impact alternative investments.
While PeerStreet’s bankruptcy isn’t a complete surprise, it’s an excellent reminder for investors to practice risk management and spread out their assets. This platform was one of the more-respected real estate crowdfunding sites as its investment model did many things correctly, such as holding real estate debt which carries less risk, and it was only open to accredited investors.
Top PeerStreet Alternatives
The following real estate crowdfunding platforms offer exposure to commercial and multifamily properties with debt or equity deal structures. The investment minimums and investor requirements vary, but we’ll compare the similarities and differences to PeerStreet.
1. Fundrise
Fundrise is one of the largest real estate investing services that lets you pursue various strategies. The minimum investment starts at $10, and the platform is open to accredited and non-accredited investors.
According to Fundrise, there were more than 1.9 million investors at the end of Q1 2023. The platform’s total portfolio value exceeds $7 billion and consists of nearly 300 projects across the United States, including:
- Multifamily
- Industrial
- Single-family rentals
Most investors will purchase shares in managed portfolios that provide exposure to multiple properties and real estate markets rather than individual properties. Additional opportunities are available to high net worth investors.
Fundrise also offers private credit and technology offerings to eligible investors. You can schedule one-time or recurring investments.
In addition, users can enroll in Fundrise Pro for $10/month or $99 yearly. Premium Members also get access to exclusive real estate investment data.
You can purchase income-producing assets by investing in debt repayments for predictable interest income. You can also pursue value-add and equity-structured deals (opportunistic funds) if you have more risk tolerance.
It’s possible to redeem your shares quarterly, although an early redemption penalty applies during the first five years.
Similarities to PeerStreet
- Opportunity for dividend income
- Invests in single-family properties
- Exclusive offerings for accredited investors
Differences from PeerStreet
- Open to unaccredited investors
- Portfolios have multiple properties
- Multi-year investment horizon
Why Choose Fundrise
Fundrise is attractive because of its $10 minimum investment and because they allow you to take advantage of multiple investment strategies, including multi-tenant portfolios. And you don’t need to wait for new offerings to invest.
High net worth investors can receive hands-on service to build a personalized portfolio. Regarding single-family rentals, Fundrise partners with developers so you invest in multiple homes in the same subdivision instead of solo properties. Learn more in our Fundrise review.
2. Arrived
Arrived offers exposure to vacation rentals and single-family properties, and you can start by investing as little as $100. Accredited and non-accredited investors have access to individual offerings.
Investors can commit funds to new listings during the funding period. Each listing includes a property summary along with information about the area. You can also see the property address, which is handy if you live nearby and want to inspect the area for yourself. For instance, one listing is 20 minutes from the author’s house in a subdivision under construction.
The anticipated holding period varies by property but is usually 5-7 years for long-term rentals and 5-15 for vacation rentals. Any free cash flow is distributed as dividends during the investment window. Early redemptions are not possible at this time.
Unlike other platforms, Arrived doesn’t offer managed portfolios. As a result, you must be comfortable investing in single projects and holding the positions for several years.
Arrived began offering homes to investors in late 2022. As of July 2023, there are over 200 properties funded from over 344,000 registered users.
Our Arrived review goes into more detail about how the platform works.
Similarities to PeerStreet
- Invest in single-family homes
- Offers individual projects instead of curated portfolios
- Low minimum investment ($100)
Differences from PeerStreet
- Multi-year holding period with no liquidity
- Offers vacation rental investments
- Open to unaccredited investors
Why Choose Arrived
Consider Arrived to invest directly in long-term rentals and vacation rentals with a long-term commitment. You can receive a portion of the tenant income, and the $100 investment minimum makes it easy to diversify.
Learn More About Arrived Homes
3. RealtyMogul
RealtyMogul offers two REITs open to all investors and individual placements for accredited investors.
Both REITs have a $5,000 minimum investment but pursue different investment strategies:
- Growth REIT: Holds multifamily apartments and makes quarterly distributions.
- Income REIT: Receive monthly cash distributions from a portfolio of multifamily, industrial, and retail holdings.
Accredited investors have exclusive access to individual properties with an investment minimum from $25,000 to $50,000. The average holding period is 3-7 years. Most offerings are multifamily or retail complexes, giving you the additional stability of having several tenants pay rent at any given time.
Our RealtyMogul review dives deeper into the investment process.
Similarities to PeerStreet
- Individual offerings for accredited investors
- Can invest in residential properties
- Debt-structured deals are available
Differences from PeerStreet
- Offers two REITs
- The higher minimum investment for private placements ($25,000+)
- Unaccredited investors can join.
Why Choose RealtyMogul
Consider RealtyMogul if you want access to REITs and single offerings on the same platform. You may also like getting exposure to multi-tenant real estate, which can be less volatile than single-family housing.
4. YieldStreet
YieldStreet is an alternative investment marketplace offering accredited investors access to various asset classes, including real estate, artwork, and business loans.
The real estate offerings can be for individual properties or a REIT. Most investment terms are 2-3 years with a $15,000 minimum investment.
While most offerings are for accredited investors only, non-accredited investors can get indirect access through the Yieldstreet Prism Fund. The fund holds positions in the platform’s various offerings but has a high minimum investment of $10,000.
Our Yieldstreet review looks closely at recent offerings.
Similarities to PeerStreet
- Accredited investors only
- Can invest in individual offerings
- Managed short-term fund for recurring income (Prism Fund)
Differences from PeerStreet
- Multi-year holding period
- Higher minimum investments
- Multiple asset classes
Why Choose Yieldstreet
You want access to various alternative investments. The holding period is shorter than most crowdfunded offerings.
5. EquityMultiple
EquityMultiple provides accredited investors with short-term, intermediate, and long-term real estate offerings:
- Keep: Six-month Alpine Notes with a competitive yield to compete with no-penalty CDs
- Earn: Senior debt or preferred equity offerings with a term of 36 months or less
- Grow: Growth-focused value-add and opportunistic offerings
The minimum investment varies by offering and starts at $5,000 for Alpine Notes and $10,000 for individual projects.
Investors have access to a dedicated investor relations team and other benefits mentioned in our EquityMultiple review.
Similarities to PeerStreet
- Individual offerings
- Short-term and intermediate holding periods
- Accredited investors only
Differences from PeerStreet
- Higher minimum investment (starts at $5,000)
- Offers long-term equity structure deals
- Commercial real estate investments
Why Choose EquityMultiple
EquityMultiple lets you pursue short-term investments and longer-dated projects. You can also invest in commercial real estate versus single-family mortgages.
Learn More About EquityMultiple
6. AcreTrader
AcreTrader approaches crowdfunded real estate differently, as you can invest in farmland and timberland instead of dwellings. The service is designed for accredited investors, and the minimum investment varies by offering.
In most cases, the target hold period is 3-5 years, although several successful exits have been closer to one or two years. Tenant farmers pay annual rent, and you can earn additional returns from property value appreciation.
Our AcreTrader review helps you learn how farmland investing works.
Similarities to PeerStreet
- Accredited investors only
- Earn dividend income
- Individual offerings
Differences from PeerStreet
- Raw farmland and timberland only
- Multi-year holding period
- No short-term interest-bearing account
Why Choose AcreTrader
You may like AcreTrader if you want to expand your existing real estate portfolio beyond commercial and residential properties and start investing in farmland. These properties can also use less leverage than PeerStreet offerings making it easier for the tenant to afford the annual rent agreement.
7. CrowdStreet
CrowdStreet lets accredited investors invest in individual multifamily and commercial properties, such as apartments, student housing, and hotels. Growth-focused REITs are also available. The minimum investment is $25,000 per offering with an average holding period of 2 to 6 years.
Privately managed accounts holding multiple assets are available with a minimum $250,000 balance. This investment option lets you obtain a personalized portfolio.
Similarities to PeerStreet
- Accredited investors only
- Individual offerings
- Invests in markets across the US
Differences from PeerStreet
- Offers managed funds too
- Commercial and multifamily offerings
- Requires multi-year commitment
Why Choose CrowdStreet
This investment platform provides many individual offerings and managed funds for various types of commercial real estate. You can enjoy earning investment income from multifamily apartments too. Our CrowdStreet review lists additional investor benefits.
8. HoneyBricks
HoneyBricks uses tokenized real estate technology to help you invest in commercial offerings, which can be more efficient than traditional crowdfunded real estate investing.
The minimum investment starts at $5,000 but varies by project. Further, having no investor fees can optimize your potential returns. All offerings are for accredited investors only. You can invest in multifamily apartments located across the country.
This platform is still relatively young (it launched in 2022), but it has supported over $136 million in deals by more than 3,000 investors.
Our HoneyBricks review highlights this platform’s unique features.
Similarities to PeerStreet
- Individual offerings
- Low minimum investment
- Accredited investors only
Differences from PeerStreet
- Multifamily properties only
- No investor fees
- Longer holding period
Why Choose HoneyBricks
Investors can choose from growth or income-focused offerings with multifamily apartments. There are no investor fees which makes the potential returns more transparent.
Final Thoughts
If you’re looking for a suitable alternative to PeerStreet, trying one or several of the investing platforms mentioned above can give you access to a wider variety of investments.
Some will be income-focused, like PeerStreet, and others will be growth-focused but provide the relative stability of having multiple families or commercial tenants.
If you’re an unaccredited investor, several of these platforms are also open and have flexible minimums and redemption options to earn a competitive yield along with “safe” investments.
Whatever you do, remember that all of these investing platforms carry a level of risk, and you should never invest more than you can afford to lose. Having a well-diversified portfolio remains your best bet.
The post PeerStreet Alternatives: Top Real Estate Crowdfunding Platforms appeared first on Best Wallet Hacks.
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