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A peer investor can be described as one who chooses to invest in a peer-to-peer lending program. It requires some education and information to dive into these opportunities as the only people who seem to be doing it successfully are banks and hard money lenders, but the returns on your investments are solid and predictable. When you decide to participate on a peer lending platform, you select a project that you would like to invest in then reserve the opportunity to exclusively review the supporting documents. Upon your approval, the borrower signs off on your term sheet; disclosing the loan terms and interest rate. Immediately afterward, a title company will review and approve the deal for lender insurance, an appraiser may value the subject property and write up a valuation report. Upon further review and approval, loan documents will be drawn and a closing occurs at the title company including the recording of the first lien against the property filed at the County Recorder’s Office. The beauty of this whole arrangement is there are indeed multiple levels of due diligence and security for these loans. Real property is put up as collateral against the loan amount (usually significantly greater than the loan), so they become secured investments. If anything goes wrong with the loan, you will have the collateral to recover your investment and any outstanding interest, and other fees associated with the collection as such. It serves as a big cushion against such eventualities. When the arrangement continues as planned, the peer investor earns monthly interest payments. The interest rates are higher than those offered by your typical bank account, so your earnings range between 6% - 11% and possibly higher. Additionally, you decide how long you like to lend for, which typically ranges from 12 - 24 months. The best part about this kind of lending is that it takes place online. The vetting and credit check is completed online, which is very crucial for such transactions. Whoever you end up selecting is pre-vetted or preapproved for the program, which reduces doubt and financial risk. You will not have to go through a great deal of paperwork or have never-ending meetings with your potential recipients. This makes the process much easier and faster. The recipient of the loan also gets terms that are more flexible than that of a bank, the interest rates are higher than a bank and lower than a hard money lender. Additionally, they can get their loans quicker and with less bureaucracy. The application process is also simple for them as well. Peer lenders benefit from the terms of the agreement and loan recipients get to leverage their real estate investment opportunity using credit that is available outside the bank. With peer-to-peer funding everyone is a winner. For more information please visit Commercial real estate investing
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