This post was written by one of PeerStreet’s summer interns, Brendan Raney. For more information about Brendan, read a brief bio here. It is the second of two parts in this blog series.
Our Loan Details page contains a lot of useful information to help outline PeerStreet investments. If you have not read the first part of our explanation, you may want to do so as both posts help guide you through the various sections of these writeups.
Investment Overview and Valuation
The Investment Overview section provides more details on the loan itself, the lender and the borrower’s planned use for the financing.
As most investment professionals will tell you, determining your risk tolerance before making an investment is of high priority. PeerStreet investments are no different.
One of the key risk metrics is the loan-to-value (LTV), which, in our reported calculation, represents the total loan amount divided by the “As Is” value of the property. To validate the property value, PeerStreet uses a third-party appraisal or broker’s price opinion (BPO). We outline the key valuation points and also provide copies of the documents in the writeups. To learn more about how we calculate LTV, you can read our prior post.
Maps & Comps and Property Details
We also include an interactive map of the property and comparable properties in the area. The properties are compared based on the number of bedrooms, bathrooms, total square feet and distance from the PeerStreet subject property. We want to make it easy for our investors to get to know the area and see where similar properties have transacted in the market.
Next, we run through a brief description of the property and its surrounding neighborhood. We use big data analytics, including 20 years of historical data, to analyze submarket and zip code trends, as well as inflection points. In this section, we outline the key findings of what our process tells us. The “Stressed LTV” tells our investors what the LTV would be if the worst case scenario in our data were to happen again.
Payment Terms & Extension Options
The Payment Terms and Extension Options section gives investors a better sense of loan term, with details about the original term, extension options, prepayment options, etc. Investors will make decisions based on how long they think their capital will be committed, so these details are important. If you’re looking for more information about loan term, I recommend reading part 1 and part 2 of our educational blog series about extensions.
Borrower Credit History
A brief credit history of the borrower can be found in the Borrower section. If our lending partner has not provided us a credit report on the borrower, we run our own, posting the results here.
The Loan Details page was a critical part of my learning experience, and we hope it is a valuable resource to our investors. If you have any further questions, always feel free to reach out to firstname.lastname@example.org and our team will be more than happy to assist you.
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