PeerStreet offers real estate loan investments with returns ranging from 7-12%. All loans are backed by an underlying property with a maximum loan to value ratio of 75%. The typical duration of the loan is 12-24 months.
They've been around for a few years and have repaid every single loan they've given out. With returns up to 12%, this seems like a great deal to me.
With an LTV maximum of 75%, that means the property can drop in value by 25%, and the investors won't lose a cent.
What does everyone else think? On the surface, this seems too good to be true.
Edit: It seems there were some flags marking this as potential spam. My question was mainly about how this investment firm can offer investments with 6-12% returns on real estate when a typical new mortgage nowadays has a 30-year interest rate of 3.5% or better. The answer about the hard money loans is excellent, but I still wonder why they can't just get a regular mortgage? Is it that difficult to get one without credit history?
Also, what is the risk to the lender? How likely is it that they won't receive the principal or interest back?