Real estate investment platform PeerStreet has launched a new loan product for private lenders.
The Residential For Rent loans, which will vary from $75,000 to $1.5 million and come with an interest rate from 6.5 to 10 percent, are aimed at lenders hoping to reach borrowers in search of investment properties, PeerStreet co-founder Brett Crosby told Inman. PeerStreet, which was launched in 2014, aggregates loans from private lenders, accredited investors or entrepreneurs in order to offer them at a lower cost.
The new loan product is meant to tap into the market of people who want to buy properties with the specific aim of renting them out, Crosby said. As home values and rent prices rise, more homeowners are considering buying second properties as an extra source of passive income.
“Investors do not want to be locked up in a 30-year loan,” Crosby told Inman, adding that they are not likely to put the loan out directly to retail customers. “Now we can allow borrowers to access more capital both through our existing lender base and through our new lender bases.”
At the moment, PeerStreet is asking its institutional investors to support the product, but it declined to reveal any specific backers to Inman.
The loans are also meant to reach those who need long-term financing to buy an investment property rather than those who are looking to close the gap between the sale of one property and the purchase of another – a buyer class that is often underserved by traditional lenders.
“It is hard for people to find passive income anywhere these days,” said Crosby, whose web analytics company was acquired and turned into what is now known as Google Analytics. “It is getting harder to find and that asset class has been interesting to people for that reason.”
PeerStreet began by offering residential bridge loans (temporary loans that allow buyers to close their new home before selling the old one). In the last four years, it has also expanded to offer multifamily and small balance commercial bridge loans. According to the company, PeerStreet has originated $1 billion in debt-based financing in 2018 and $2 billion since its launch.
“If you look at how the stock market performed in 2018, real estate debt performed quite well,” Crosby said. “We’re seeing a lot of interest in this asset class.”