PeerStreet Review – Scam or Legit? Truth Exposed!

Are you looking for a PeerStreet review? But you may wonder if it is a scam.

Invest in real estate without the time and money involved in property management; that’s the promise at the top of PeerStreet’s home page.

Since PeerStreet is not like any other site where you can buy “fractional shares” of a building, this is more than a little deceptive (and cashes in on partial rents).

But that’s not the point of PeerStreet either.

PeerStreet lets you invest in real estate loans with interest rates ranging from 6% to 12% APR and terms between 6 and 24 months. Your loan is secured by the underlying property, but whether you are actually making an investment in the real estate market is debatable.

How exactly does PeerStreet work, misleading advertising notwithstanding? Is investing with PeerStreet preferable to investing in fractional real estate, and what are the risks associated with the double-digit returns?

As a disclaimer, I’m not affiliated with PeerStreet. It means I’m not paid to write this review. So you can rest assured that you will get an honest and unbiased review from me.

At the end of this review, I’ll also tell you the best alternative to PeerStreet that has enabled me to make a full-time passive income online.

What Is PeerStreet?

PeerStreet can be used for P2P lending and crowdsourcing. It could be a way for borrowers to find lenders like you who are willing to make short-term real estate loans. Successful loan investments are a core competency of the platform.

Real estate investors are the borrowers who purchase properties at a discount, make necessary repairs, and then sell them for a profit.

PeerStreet investors receive first lien rights on mortgages secured by real estate for their loans. As a first lien holder, you have a better chance of getting your money back in the event of a default or other catastrophic event.

Compared to a traditional REIT, this investment provides investors with more information and more options. PeerStreet offers a number of real estate loan portfolios to choose from. These hard money loans vary widely in terms of property type, location, loan term and other criteria.

Investors can reportedly benefit from PeerStreet’s higher yields while paying lower fees than a regular REIT. PeerStreet loans often come with an origination fee of between 0.25 and 1 percent.

All PeerStreet real estate loans originate from reputable private U.S. banks. Well-known individuals in the real estate industry make up your pool of potential borrowers.

Not all types of investors should use PeerStreet. The investors they work with have a long list of expectations. Approved investors fit this profile.

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How Does PeerStreet Work?

What follows is a comprehensive explanation of how PeerStreet works.

1. PeerStreet Sources the Loans

PeerStreet receives its loan money either from its private lending network or directly from borrowers. offers a short online application for potential borrowers.

PeerStreet selects only the best loans based on a combination of “thorough human inspection,” an “underwriting engine” and “old-school on-the-ground values”

Chief Executive Officer Brew Johnson also hinted at a possible focus on loans that help revitalize older properties.

“As a company, we can either upcycle and renew aging and deteriorating housing, or we can continue to build new housing and take over green places.”

PeerStreet’s borrowers are typically experienced property managers who invest in equity. 

Private lenders like PeerStreet are faster and allow them to take advantage of favorable business opportunities, so the higher 11% APR is acceptable to them.

2. Loans Are Then Published to the Marketplace for Investing

After a loan is approved by PeerStreet, it is published on the platform where qualified investors can view it and make a funding decision.

The borrower’s credit history and financing terms, including APR (APR), loan-to-value ratio, term, and number of other investors, are part of the due diligence process.

3. PeerStreet Distributes Borrower Payments With Interest to Investors

Once the loan is disbursed to the borrower and monthly payments begin, PeerStreet collects the principal, interest, and fees and distributes them to investors on a predetermined schedule. 

Generally, interest rates are around 8%.

Now that the main purpose of PeerStreet has been discussed, we can move on to its additional features.

Learn more: Legit Ways To Make Money Online

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PeerStreet Features

Invest in Real Estate Loans (Not Real Estate Itself)

It should be noted again that PeerStreet isn’t a fractional property acquisition platform. PeerStreet investors assume the role of lender, not landlord.

More specifically, PeerStreet investors don’t benefit from the rent and appreciation of properties. In other words, they don’t get a share of the $300,000 profit a borrower makes if he or she pays $200,000 for a house, rents it out for $2,000 a month, and then sells it.

You don’t actually own any of the borrower’s property, only a portion of his or her debt, so all of PeerStreet’s income comes from the interest payments you receive.

Do you think this is a terrible thing? A scam?

Absolutely not, one way or the other. Contrary to what PeerStreet’s marketing would have you believe, investing in private real estate debt is a separate subsector.

Automated Investing

Worried about missing out on a hot new investment opportunity before your loan closes?

PeerStreet offers an easy-to-use, automated investment platform that asks you for the type of investment you want (maximum term, loan-to-value ratio, minimum yield) and then suggests appropriate investment opportunities. may not be as advanced as a true robo-advisor, but the fact that it updates automatically is a godsend for those who prefer to sit back and let their money grow.

PeerStreet Pocket (HYSA Alternative)

You may have to wait a few weeks or months after depositing funds into your PeerStreet account to find a suitable investment opportunity. Any experienced investor will tell you that waiting for cash is not a good idea, especially in times of high inflation.

To encourage investors to keep their money within the PeerStreet ecosystem, the company has developed “Pocket,” its version of a traditional savings account.

Currently, Pocket offers a competitive 3.50% APR, but there’s a catch: withdrawals can only be made on the first of the month and only after giving PeerStreet 15 days’ notice.

The annual percentage yield of 3.5% is about 30 times better than the average savings account in 2019, but the inflexibility of the investment might be too much for some traders.

Self-Directed IRAs

Through STRATA Trust Company, PeerStreet provides access to self-directed IRAs. When you consider the tax benefits, lower costs and asset customizability that this account type offers, it’s a great thing.

And PeerStreet even waives its modest cost ($200) if you fund your account with an initial investment of $5,000 or more.

Only Available to Accredited Investors

Not everyone can buy and sell assets that are not registered with the government, but accredited investors can. An accredited investor is someone who has a net worth of at least $1 million or has had an annual income of $200,000 or more for the previous two years, as defined in SEC Regulation D.

PeerStreet requires you to be an accredited investor because the term “accredited investor” was created to protect low net worth investors from the potentially catastrophic losses associated with trading unregistered securities.

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The Fees and Costs of Using PeerStreet

To give you an idea of what you will have to pay at PeerStreet, here are the details of the company’s rates:

In short, “the spread” PeerStreet takes on each loan it offers for investment is often less than 1%.

It goes on to say that investors can see a breakdown of interest rates with each offer, so there are no surprises. There is also no initial cost to participate.

Below are the costs associated with funding a self-directed IRA:

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

Those who open a self-directed IRA with an initial balance of $5,000 or more will receive a one-time reimbursement from PeerStreet for the costs associated with the above services. 

However, in the second year and beyond, the annual account fee will continue to apply.

After reviewing the basics, key features, and costs, the next logical question is: What are the potential dangers of investing with PeerStreet?

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What Are the Risks of Investing With PeerStreet?

While PeerStreet does a commendable job of protecting its investors, it also has some vulnerabilities.

What Happens if a Loan Defaults?

PeerStreet has dedicated an entire Frequently Asked Questions section to this topic, detailing how its experienced in-house servicing and asset management team will quickly intervene to protect investors’ funds.

PeerStreet will advance the money for all costs associated with the foreclosure. Then, the remaining funds will be divided equitably among investors in the form of principal, interest, and default payments (i.e., in proportion to their investment).

PeerStreet considers requests for loan extensions on an individual basis and does not appear to put the matter to a vote among investors. PeerStreet keeps 50% of the default interest for itself and passes the remainder on to investors.

Can I Resell My Debt Holdings on a Secondary Market?

Currently, we do not have the resources to do this. Investors in PeerStreet real estate loans should consider their money “fixed” until the loan matures and the final principal and interest payment is made.

PeerStreet is said to be developing a secondary market, but no release date or other information has been announced yet.

What Happens if PeerStreet Goes Out of Business?

First of all, all cash balances deposited with PeerStreet are FDIC-insured up to $250,000. However, your investment in PeerStreet borrower debt voids the FDIC insurance on your money.

Anyone familiar with investing in small financial businesses should take this as a warning sign. Because it can be extremely difficult to get your money back if the startup goes under or is restricted by the SEC.

Lofty, a fintech company, is aware of this and has safeguards in place to protect investor funds, such as splitting properties into separate limited liability companies.

In contrast, PeerStreet seems to have no will. While I don’t expect SEC to come knocking on PeerStreet’s door anytime soon, my concerns would be allayed if the company had a more robust strategy to protect investors’ funds after their deaths.

PeerStreet’s Investing Options

This terrible investment platform only covers real estate debt. The platform’s bidirectional marketplace makes previously inaccessible asset classes more accessible to retail investors. It also facilitates the development and delivery of finance to local communities by connecting a certified network of private lenders with multiple sources of finance.

With few exceptions, most loans are used to finance the purchase, refinance, or investment in residential real estate. 

PeerStreet’s automated investing feature allows users to set their investment and reinvestment preferences, which are then automatically applied to loans that meet their needs (e.g., interest rate, LTV, term, and investment type). 

The average loan term is approximately 24 months, with the longest term at the time of writing being 36 months. The average loan-to-value (LTV) ratio is less than 75%.

In April 2019, investors can have their balances of at least $100 automatically reinvested in new loans. This allows them to easily reinvest interest payments and multiply their returns even if they can’t afford the full $1,000 for a new loan.

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How Does PeerStreet Make Money?

PeerStreet’s fees are calculated as the “spread” between the amount repaid by the borrower and the amount repaid to the investor. In order for PeerStreet to receive compensation, investors must first receive their funds. 

Compared to other platforms, PeerStreet’s costs are quite reasonable, typically ranging from 0.25 to 1 percent. (If the borrower pays 9% interest on the loan you invested in and the fee is 1%, you will receive 8% interest) When discussing investments, the fee is always mentioned along with the details.

How To Contact PeerStreet

PeerStreet has both an email and a phone number:

Email: [email protected]

Telephone: 844-733-7787

There is no indication of when the phone lines are open, but they are probably busy during normal business hours (M-F).

In addition, the company offers an extensive Frequently Asked Questions page with hundreds of clear and concise explanations, an open and accessible management team, and 190 employees listed on LinkedIn.

Although it does not advertise “customer support,” PeerStreet does offer this service to its users.

How Safe Is PeerStreet?

Default is a risk in any P2P lending system. If borrowers default on their payments, interest payments to investors may be suspended. Every loan on PeerStreet is secured by real estate for this eventuality.

If a borrower defaults, PeerStreet takes care of repaying the loan. In addition to the real estate team, PeerStreet also has a legal and regulatory team that works to protect investors’ rights and get their money back if something goes wrong.

In general, PeerStreet has proven to be a safe site. More than 95% of the loans provided to investors on the platform have been repaid in full without any foreclosure, as mentioned earlier. 

For this reason, most investors have achieved returns that were in line with their expectations. 

PeerStreet’s impressive performance history makes it an attractive choice for accredited investors looking to earn passive income from real estate loans.

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Is PeerStreet A Scam?

I cannot say PeerStreet is a scam. You can make money with PeerStreet, but it’s not as easy as they make it sound.

To begin with, you need to invest a lot of time and effort, and like any other business, there is no chance of success.

Moreover, the profit margins are often small.

Alternatives to PeerStreet

For REITs: Fundrise

Fundrise’s main selling point is its electronic Real Estate Investment Trust (eREIT), which operates similarly to a traditional REIT, but with fewer intermediaries. 

Because there are fewer parties involved, there are also fewer fees, which is a big advantage for REIT investors.

An eREIT investment can be made with as little as $10, and Fundrise’s asset management fees are only 0.85%.

Fundrise may keep your money longer than PeerStreet, but you are investing it in real buildings, not just real estate debt.

For Fractional Real Estate Investing: Lofty

By allowing investors to purchase shares in real estate, Lofty pioneered the “tokenized” (i.e., blockchain-based) market for partial investments.

In addition to rental payments, Lofty investors will soon be able to exchange their equity “tokens” on the platform’s secondary market.

To top it all off, while I have previously praised Lofty for its “living will,” COO has stated that the company has done little to prepare for the upcoming scrutiny of the tokenized real estate investment industry by SEC.

Lofty may offer more direct investments than PeerStreet and greater liquidity than Fundrise, but investors may be navigating uncharted regulatory waters.

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PeerStreet Pros and Cons


  • Invest in Real Estate Loans – Although you will never own all or part of a property, some people believe that investing in real estate loans is a more practical and less volatile way to enter the RE market.
  • Start with $100 – PeerStreet’s low minimum investment (previously $1,000) allows certified investors to build a diverse portfolio of loans.
  • Shorter Maturities – PeerStreet loans offer a unique, risk-adjusted alternative to I-Bonds to generate substantial returns in a short period of time, with maturities as short as one month.
  • PeerStreet automatically searches and reserves your place in investments that meet your pre-defined criteria (maximum maturity, LTV, minimum yield).
  • Secured loans – PeerStreet lenders get the first lien, which means you are less likely to suffer a loss in case of default.


  • PeerStreet, unlike some of its competitors, is available only to accredited investors.
  • PeerStreet is apparently working on a secondary marketplace, but until then, you’ll have to wait until your loans mature to get out.
  • Knowledge of private lending is required – Private lending is a less regulated specialty in real estate that PeerStreet investors should explore before building a portfolio.
  • Withdrawals from Funds in Pocket (PeerStreet’s HYSA) require 15 days notice – Money stashed in PeerStreet’s internal savings account may be too inaccessible to capitalize on investment opportunities.

PeerStreet Review: Final Verdict

PeerStreet is the place to go if you want to earn high single-digit returns over a relatively short period of time. 

Since PeerStreet investments are similar to bonds in their behavior, they could be a good option when the bond market is performing poorly.

Plus, you feel good about “upcycling” an older home for a new generation with your investment.

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Best Alternative of PeerStreet to Make Passive Income

If you want to make a stable and secure stream of passive income, I would suggest you start an affiliate marketing business online.

Affiliate Marketing is perfect for anyone who is new to online business. 

In fact, of all the online business models I’ve tried, affiliate marketing is the easiest and most rewarding so far.  

In affiliate marketing, you can actually run your business almost with zero cost and achieve a steady and sustainable passive income to pay for your bills. You don’t need any initial capital and can even do it as a side hustle.

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But How Much Can You Earn with Wealthy Affiliate?

A 21-year old student from Wealthy Affiliate was able to earn $7,395 in just 1 week, which means he made more than $1k a day…all while using free traffic methods.

PeerStreet Review

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To give you more examples, here are some of the other inspiring success stories of Wealthy Affiliate members.

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