Meet PeerStreet: The Firm That Wants To Democratize Real Estate Debt

This week's Fintech Focus podcast takes a look at how one fintech startup is changing the way we invest in real estate.

Yes, people have always been able to invest in private real estate equity, which has proven to be an attractive venture for most. But it's real estate debt, an asset usually controlled by banks as institutional products, that is now stepping in as an enticing investment.

That's where Brett Crosby of PeerStreet saw an opportunity to bring accredited investors into the octagon of real estate-backed loans.

Listen to our interview with the fintech company's co-founder here. Here are some of our favorite moments from the interview:

What were some roadblocks people were having in terms of accessing certain assets?

Until previously, lenders didn't have a secondary market. They were very capital constrained. So, what we realized is that, in the meantime, investors had access to their asset classes, really interesting assets, but were very hard to access; very hard to aggregate enough uproar even institutional investors et cetera. So, it was a space that really needed technology in a marketplace to connect both sides. We put PeerStreet there as a conduit between the world wide capital markets and local private loaners who understand their local real estate market.

All of a sudden what's happened is that investors can access an asset class that they couldn't access easily before. They can diversify it in a way never before possible. If something goes wrong in the investment, instead of them having to put together a team of people to try and solve the problem, we already have that team in place, then we work with external professionals in the local markets to handle things....To me it's a very, very positive thing, and something that if we power one borrower to do that, that's great, but now we're powering thousands of borrowers to do that sort of thing. It's starting to have an impact on the housing stock of the nation, so it's getting pretty exciting.

Imagine we're in investor looking to put that capital into real estate. Walk us through how we onboard.

Yeah, so from an investor perspective, investing in loans that have already been made on PeerStreet, it's basically like E*TRADE for real estate debt. What I mean by that, is you go on to PeerStreet, you create an account, you fund that account, and then as deals come up, and new deals are launched every day, new investment opportunities, you can pick and choose. So, you are not investing in a REIT or a fund, you're picking and choosing the investments you want to make. The $1000 a minimum per investment. For each investment, we give a very high level, what are the kind of few basic things you need to know. What's the yield, what's the LTV, what's the term? Then like a photo of the property, that's the underlying collateral...All the information you would wanna know to basically do a deep dive on the investment is all at your fingertips, very simple.

You can just click invest, and then the minimum investment's a thousand dollars. There's no longer the days where you have to put this huge investment in a single deal. The beauty is instead of putting $100,000 into one deal, for example, as you might have had to have done previously, now you can take that same $100,000 and spread it out across a hundred investments. Now you have diversification across geography, lender, loan, borrower, et cetera. That's just never been available to investors like this before, especially where they can pick and choose their deals.

Listen to the full interview with PeerStreet co-founder Brett Crosby here.