So a good friend of mine from high school started working for Yieldstreet.com last summer. Basically they invest in asset backed loans and then chop the loans up and let people buy into them for $10k+. Most of the loans are for 1-3 years and pay 8-12% interest. Being the good friend that I am I put in a little money and made one investment. I have money in there to make a second investment but haven't done it yet.
To me it seems like a pretty good deal, but I haven't done much research. The way the investments are described on the website they make it sound like there is almost no chance of default/loss. But most of these things pay 8-12%. Having an investment that pays that high of a rate seems to imply that there is significant risk.
To make investments you have to confirm yourself as an accredited investor, which was a bit annoying but wasn't that difficult. Then when the deals "go live" they sell out immediately. So if you don't set your alarm and log in the exact minute the deal starts you can't get in.
The fees seem about in line with what I would expect. They take 1% plus a flat $100 fee at origination of the deal. The $100 ends up being significant if you are investing in the 10k range, another 1%. Obviously if you are putting in 100k then it is less of a deal.
Just curious about what you guys think of this company. From a business standpoint it seems like a good model. Find the deals, chop them up, take 1% with the customer taking all the risk and providing all the capital.
From the investor standpoint it all depends how high the risk of default is. Time will tell for that.

Sounds like same thing as prosper or lending club. There is a thread on here about that, somewhere. Statistics from established sites like this do show a low default rate. You can definitely make money doing it. Obviously know nothing about this site, but the precedent is there. You might be better off investing in a site with more history

This may not be the thread, but I'd recommend against prosper/lending club for anyone considering it. The default rate is too high, they are taxed as normal income, and are likely to perform very poorly in a recession. I've been doing p2p lending for 5 years, letting my loans run out and putting the money in index funds.

The idea is similar to prosper and lending club. Difference is that yieldstreet invests in large loans (2-20 million) to real estate developers, shipping companies, etc and not small loans to individuals and small businesses.

I'm not planning to put any significant part of my money in this. Just signed up as moral support for my friendbworking there. Seemed like almost a can't lose from their side so I was wondering if I was missing something.

No, that's good insight. It's been a significant amount of time since I've looked into it.

OP, what you are missing is no one is going to take an 8-12% loan on millions if they can get a better rate elsewhere, which means the lendee's aren't going to be prime. Conversely, no one would crowd source 8-12% out of the goodness of their heart

This

If you do due diligence and find a good deal that's cool, but the big players grab all the good stuff before you even hear about it

In general I hate this mindset so much. In life the pie is big my friend, there are plenty to go around for everyone. Plus 8-12% private money is fairly cheap as someone whos going to be on the market for private money. Here in canada you would need a relationship with the "private money" to borrow at 12%, let alone 8%, in fact sign me the hell up I will have deals for you.

Anybody who wants to loan at 8% backed up by quebec city real estate equity/collaterals needs to private message me. No amount under 50k CAD, short term loans (3 years - 5 years max).

Lets go.

Pretzel, I don't understand what exactly you're trying to get out of this thread. It doesn't sound like you're all that interested in partaking in the service they offer, although it looks like most of the responses here deal with that. Are you looking to invest in Yieldstreet? Are you interested to know if your friend will have to look for a new job in a couple years should Yieldstreet crumble?

I'm reading your post as analogous to: My friend got a job at eBay, so I sold something there and may sell something else. Seems like eBay has a sweet business model just facilitating transactions while not needing any inventory. What do you guys think of eBay? // And then you get a bunch of responses telling you that it may or may not be worth it to sell on eBay because of chargebacks and Amazon and Walmart.

Fair point about not having a clear question.

The deals described are pretty high returns (8-12%) but sound like really low risk based on the descriptions. It seemed a little too good to be true to me. I wondered if people had experience with these types of loans to get a sense of how risky they really are.

There is definitely risk involved. You don't get a nice investment wrapped up in a cute box that gives high return without risk.

Yieldstreet checks out as trusted on scamadviser.com. I also skimmed the website. In the FAQ it says that the asset classes are real estate, litigation finance, marine finance, and commercial finance.

I also read that they charge a 1-4% annual management fee. Yikes. This to me would be a deal breaker. It could make sense to scout out good deals and contact the borrowers directly.

Need some context on default rates. Default rates in the longest bull market in human history vs in a correction, recession, or worse will be very different things...

They are transparent with the fees and most of the deals I have seen are 1% plus $100 the first year and $30 each additional year. Yeah, if they were 3-4% I would stay away

That's a good point. They claim to have "low correlation to the stock market" but if the world economy tanks like it did in '07 i'm sure the default rates would skyrocket.

Hey everyone, first time posting. Helped develop the WPT video game for Playstation some years back, as well as other titles.

So one of my clients for the last 5 years is one of the companies that you would be investing in if you invested in Yieldstreet, and I can tell you from first hand experience that the interest rates are not only real, they're on the lower end when you look at the full picture, meaning if you had industry knowledge and the capital to invest, you can get even higher rates than that going right to the source.

If you're making 8%, my client is making 3 - 4 times that. I was bringing him the customers that he was making loans and advances to, being paid low 6 figures to do so, working part time.

His default rates were 6% to 8%, industry average is about 13%, but it goes up as the credit quality of the borrower drops. The loans / advances are priced higher to account for the high default rate, traditional banks are around 2% default rates

Many of these loans are short term, 2 to 6 months. He was making so much because he's flipping that money multiple times a year, so while you're making interest once, he's making it a few times.

The key to making more than what you would make on Yieldstreet is having access to a continuous flow of customers, which is what I did for him.

Not sure if anyone cares but just thought I would follow up on my yieldstreet experience.

I invested in 3 deals that were real estate backed. Two deals had an expected duration of about 12 months, one deal had an expected duration of 20 months. All were expected to pay around 8% interest. I invested the minimum of 10k in each.

All 3 investments were repaid way early. The 12 month ones were repaid in 3 and 5 months. The 20 month was repaid in 7 months. Almost certainly this means the borrower refinanced.

They take the $100 flat fee (which is in addition to a 1% fee that reduces the interest) out of the first interest payments, so when it pays off early you still pay the full $100 so it comes out to a very large percentage. For example the loan that was repaid in 3 months produced $242 of interest, but $100 went to fees so I only made $142. The other two were a little better but still poor returns.

Also, the new deals appear infrequently. After the first deal was repaid, I had 10k sitting there for about 6 weeks and not a single new deal was posted. Then a new deal did post and I tried to click on it and didn't get in. So I just gave up and withdrew my money.

I think if you are investing larger amounts, say 50-100k or more, then the $100 flat fee wouldn't take such a big bite and it wouldn't be bad. But for the amounts I was investing it was a fair amount of hassle for pretty weak returns after fees.