I have a PeerStreet account, with a very small investment, not certain it meets my needs (which might be different from others) or if I will be adding more funds. I am getting the impression they have more investors than they have available investments. I don't like my money being idle. They also have relatively large minimal investment amount per loan ($1,000), I think that makes it very hard to be diversified across a number of investments (100s to 1000s of loans) unless you are investing large amounts. Most loans that are available seem to be "lower" interest: 7%-9%, for the risk, lack of liquidity, and lack of diversification, I would demand higher return. The automated investing tool rarely filled orders for me, probably a function of them having more investors than investments, but it also seems they seem to be targeting picking your own investments (i.e. sending me emails when new loans are available, reserving some portion of space away from automated investing). This is not how I want to do business: I want to set investment criteria and have it invested across as many loans as possible.
Only one person alluded to this above, but the tax situation for Peerstreet (and similar) isn't great, especially if you are moderate to high income. It's taxed as ordinary interest at your marginal tax rate. That could easily mean a 20% - 40% haircut on your returns or more, depending on your tax situation. The only way to shelter the income is to hold it in a self directed IRA. Peerstreet will reimburse the initial fees for setting up a SD IRA, but you are on the hook for the ongoing fees, $100-$200 annually, which is probably worth the tax savings, but expensive for small amounts (<$10,000). More importantly, I only have so much tax sheltered room, and it's already allocated to other purposes.
As part of my fixed income portfolio, I don't mind a small allocation to it. But I see little upside: you will never get more return than the posted interest rate. When taking early repayment, defaults, and collection fees into account, the anticipated return should be even lower than the posted interest rate. The after tax returns will be even worse.
In terms of alternatives, I do also have some research, and very small investment with Fundrise. You at least get some equity exposure with their investments, appears easier to diversify among investments, and some semblance of liquidity (quarterly redemption options). This is not to say it's a good investment necessarily, but an alternative roughly in the same space. I understand and assume both are very high risk, but I am willing to take on a bit more risk for exposure to the private market.
My main concern with any such investment is that you are taking platform/management risk, with very little history. I don't think there is a good way around that.