The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: htg123 on December 15, 2016, 06:18:54 AM

Title: P2P lending platform - sharestates
Post by: htg123 on December 15, 2016, 06:18:54 AM
Forgive me if this has been discussed, I haven't found it in the forums. I was wondering whether people have seen this and what their thoughts are...

They're offering double digit returns, but what bothers me is, that why would someone be willing to pay such a high interest rate for a collaterized loan? Surely even a non-mustachian wouldn't be that stupid.  What am I missing here?
Title: Re: P2P lending platform - sharestates
Post by: Car Jack on December 15, 2016, 09:31:06 AM
They use plenty of fancypants words in that there website.  From what I can figure, they loan money to house flippers who expect to make a killing.  The returns don't look tremendously different from LendingClub where MMM and I invest.  Realistic returns will depend on the risk of your loans but are fairly consistant.  I've noted MMM's spreadsheet with his returns on (in my opinion) exceptionally risky loans.  I'm on the opposite end of the spectrum with some C ratings but mostly B and A ratings, which give me lower interest rates on each note but I don't get the written off loans that the risky stuff gets.  We'll see when we get closer to 3 years (I'm into year 2 right now) to see if they all come through but again, my return matches MMM's returns at present.
Title: Re: P2P lending platform - sharestates
Post by: stogiemonster on December 30, 2016, 09:40:23 AM
@htg123 and @Car Jack
Thanks for your interest in 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