I’ve been investing in real estate through PeerStreet since January of 2018. During that time, I’ve invested in 87 properties, 60 of which have been paid off.
I just had my first loss on a PeerStreet investment. But here’s the beauty of investing in real estate-backed loans: you usually get at least some of your money back in case of a default.
In my case, I invested $2,346 in a home in Conroe, Texas. It went south quickly; the buyer stopped making payments after just two months. After the last interest payment on September 5, 2018, the homeowner failed to make any additional payments.
The home went into foreclosure and was sent to auction. PeerStreet was the winning bidder at the foreclosure sale in February of this year and then began marketing to home to sell.
Several offers came in prior to hiring a broker. The first offer ended up falling through after due diligence. The buyer couldn’t get financing because of an issue with the property elevation.
A second buyer came through and bought the house.
When everything was said and done, investors got 87% of their money back.
It took a while. Money wasn’t returned until October 30, 2019, so it was over a year since the buyer stopped making payments.
But losing a bit on one deal isn’t bad. Of the 60 loans I’ve invested in that have been paid off, this is the first to take a loss. The others paid at least 7% interest.
This is a lot better than my results with unsecured loans at LendingClub. My return there is less than 2% after accounting for all of the write-offs. I’ve earned more in my savings accounts.