@htg123 and @Car Jack
Thanks for your interest in Sharestates.com. I run Capital Markets at Sharestates and am happy to explain why our returns/interest rates are as high as they are. You may be familiar with the term hard money lending. Hard money lending is private lending (alternative to the bank) that is offered to borrowers, mainly in the real estate world. It's been around for a very long time and is usually part of a family office investment strategy. These private lenders exist for a few reasons: Borrower needs to close on a property rapidly (days or a couple weeks), Property does not qualify for traditional financing (ex: no Certificate of Occupancy or no cash flow on the property), Borrower needs to season their property's cash flow (some banks require 6-18 months of cash flow to lend on an investment property) Borrower's credit is below the limit and many other variables that may come into play that will not qualify the loan at a traditional bank.
Sharestates focuses on investment properties only (non-owner occupied) for borrowers that need to close loans rapidly, or for properties that do not qualify for traditional financing. Our borrowers are experienced real estate developers who are doing multiple projects a year. Our borrowers take this high interest rate, knowing that they'll be paying it back within 12 months after they refinance with traditional funding or sell the property.
When comparing this type of loan to a consumer debt loan, please remember that Sharestates loans are collateralized by the property and have corporate and personal guarantees. If a loan were to go into default and then foreclosure, there is a real, tangible asset that the lender now owns. To date, Sharestates has provided it's investors an avg north of 10% net returns, with zero loss of principle. Our investors include a multitude of individual accredited investors as well as some of the largest institutional funds in the country. Nearly every investment has at least one institutional investor who has completed underwriting on our loans, our company and our processes. As an individual investor, you're investing alongside those institutional investors.
If you have any additional questions, please email us at hello@sharestates.com