My Yieldstreet Experiment

I created this post to track the performance of my investments with Yieldstreet. (Check out my full review of Yieldstreet here.) If you didn’t read my review, Yieldstreet allows investors to pool their resources to fund real estate loans and litigation financing advances.

Although it offers great diversification benefits, and a high degree of current income, the Yieldstreet platform suffers from a lack of available investment offerings, and slow processing times for investments. This means that your money will spend more time in transit (if you can find an open investment), and less time earning interest. Hopefully Yieldstreet can increase their offerings, and work on speeding up the processing times for investments.

Also, returns cannot be reinvested, which means the interest and principal payments from investments will sit around until you amass enough to invest in a new offering (with a minimum of at least $5,000). The workaround I’ve used so far is to link my Yieldstreet account to a high-yield savings account, such as through Synchrony Bank (which currently pays around 1% interest). This cuts down on the time your money is sitting by uselessly, because although a 1% return isn’t great, it’s better than nothing. Just be sure that your Yieldstreet investments don’t throw a wrench in your savings plans. Yieldstreet investments are not liquid, and they are significantly more risky than an FDIC insured savings account. Taking all this into consideration, I set up my Yieldstreet investments to automatically withdraw and deposit money into my savings account, so the process is easy, and my money spends a minimal amount of time sitting by uselessly.

February 2017 Update

Performance:

So far, I have invested in only one of the litigation financing offerings, and I have received no payments or interest yet. The only frustration at this point has been the slow turnaround time. It took more than a week and a half for my investment to be debited from my bank account and start earning interest in my Yieldstreet account.

Current Thoughts:

Yieldstreet Litigation Financing
Litigation Financing Payments are “Event-Based”

Rather than pay on a set schedule, the litigation portfolio makes payments on an “event” basis, which means that every time a case settles, a portion of my principal investment and some interest will be deposited into my savings account. This is obviously less predictable than a regular monthly payment, but the investment should provide around a 13% return per year over the three-year investment term. Since I’m not relying on this money for income over the next three years, the erratic payments don’t bother me.

Investors rely on LawCash (the company that provides the loans to the litigants) to correctly structure the portfolio to include cases in different stages of litigation, to make sure that the portfolio can make somewhat regular periodic payments. I’ll try to track the regularity of the payments as I update this post. If you use Yieldstreet, let me know what your experience has been in the comments below!

March 2017 Update

investments:

I invested in a couple more offerings this month and late February:  One was a $5,000 real estate bridge loan that was just released. The other was a $20,000 commercial litigation financing offering. This offering was a bit unique. Instead of loans made to personal injury plaintiffs, it was a loan made to a top law firm that took several cases on contingency. The law firm is financing the up-front work, which reduces their risk and initial cash outlay, and in return, the investment is set up to provide upside potential to Yieldstreet investors. There is a 12% preferred return, and any additional recovery from the eight underlying lawsuits gets split among the various parties (the law firm, Yieldstreet, and Yieldstreet investors). I’m not expecting anything miraculous from this investment, but I wouldn’t be surprised if it returned around 20% annualized over the three-year term because of the upside participation.

Current Thoughts:

My original $5,000 litigation financing investment made its first payment (a whopping $3!). Evidently one of the smaller cases settled the day I made my initial investment, so this payment was applied completely to principal. Now that I have accrued interest on this investment, future payments will be allocated to outstanding interest first, because the underlying cases are all cross-collateralized, and then to the principal.

Also, if you’re interested in investing with Yieldstreet, I would recommend getting your account ready to go, because each new investment is selling out in a matter of minutes. The commercial litigation financing with upside that I described above had $3 million invested within the first 3 minutes! It was pretty crazy to watch. Yieldstreet has responded to some of the concerns I had by offering more investments (even though they sell out in a flash), and by being more proactive in letting investors know when something is going live. Since you need to be logged in the moment the investment opens, that communication makes planning easier. Let me know if you use Yieldstreet, and stay tuned for future updates!

4 thoughts on “My Yieldstreet Experiment”

  1. I experienced the selling out issue first hand about a week ago when they had announced a litigation offering at 13%. It was my first experience with Yieldstreet, and I have to admit I was very disappointed. The website crashed, and I was unable to invest, even though I was in there within the first 5 minutes. I ended up sending them an e-mail expressing my frustration, and they called me to try and make things right.

    I might try giving one of their next offerings a shot, but so far they seem pretty light on opportunities. I understand they’re working on incorporating some auto-investing features, and other enhancements. Just seems like they’re a bit behind the other guys in the same space on some of those features.

    1. Yeah, I hear you on that frustration. So far their website has crashed during two of the offerings I’ve tried to invest in, which seems like a pretty rudimentary issue for a company with millions under management to be having… I think the demand has just skyrocketed lately, so they’re playing a little bit of catch-up on the technology end of things. Let me know if you decide to give them another try–I’d be interested to hear your thoughts once you get past the technology issues. By the way, I just checked their website, and they have three “upcoming” offerings, so it might be a good chance to try again. I think I’m going to sit these out, since I’ve already invested around $50k with them so far this year, but they look like interesting offerings.

      1. I was able to invest in their recent accelerated pre-settlement portfolio IX. I’m going to test things out with a small investment and see how that one goes. I like that it’s not real estate related since I want to balance out my peerstreet experiment. I’ll probably do a write-up on it once it gets going, and I get a feel for how it works.

        1. Great! I’d like to read your write-up once it’s done. I invested in a prior accelerated portfolio, and spoke with a Yieldstreet representative who was unable to really give me a clear answer as to what makes the portfolio more risky (and therefore have a higher yield than the normal litigation portfolio), but I think it comes down to the proportion of the overall value that is accrued interest. They still buy the portfolio at a discount, but I think a bigger proportion of the accelerated portfolio is interest, which obviously makes it somewhat more risky. As far as I could tell, the underlying loans or cases were not more risky somehow.

          I really like that the litigation funding should not be tied to the performance of stocks or real estate. It has its own risks for sure, but I can’t really imagine a scenario that those risks are the same–except of course the pending zombie apocalypse 😉

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