Yieldstreet Review 2023: Pros, Cons and How It Compares

While some crowdfunded real estate sites allow you to purchase a piece of commercial real estate properties, Yieldstreet instead crowdfunds the debt taken on to finance those investments — and a host of other deals.

Yieldstreet launched its first offering in 2015 in litigation finance, which pairs investors with a plaintiff looking to borrow cash to cover expenses before an expected lawsuit settlement arrives. It has since branched out into a variety of offerings, including financing industrial and residential property deals, commercial loans such as merchant cash advances, the purchase of oil tankers and fine art. Investors earn interest payments and return of principal investment over the life of the loans (although there’s always a risk of default).

While most deals are for accredited investors only, Yieldstreet in August 2020 launched the Prism Fund, which is open to nonaccredited investors.

As of December 2023, more than $4 billion had been invested on the platform.

• Accredited and nonaccredited investors looking to diversify their portfolio.

• Investors who are comfortable locking up their cash, sometimes for years.

• Investors looking for income-producing investments.

Minimum investment: The company says the minimum investment is typically $10,000.

Investments offered: Yieldstreet focuses on securing debt investments across a variety of real estate, art, commercial loan and litigation deals.

Each investment offering is featured on the company’s website with important details, including the total offering size, minimum and maximum investment accepted, duration and expected annual investment return. Yieldstreet also details why the company likes the investment, the expenses, risks (and how it is attempting to mitigate those risks) and expected time schedule for repayments.

Asset-based investments: All offerings on Yieldstreet are backed by an underlying asset such as real estate or a legal settlement, which gives the company a way to potentially recoup defaulted loans. Still, the return of your investment is not guaranteed, and all investing involves risk, including the possibility of losing your principal investment.

Fees: Yieldstreet collects an annual management fee that ranges from 0% to 2.5% on average. Yieldstreet may also charge the originator a listing fee.

Some types of investments may also carry a flat annual fee that ranges, depending on the structure of the deal. These expenses are deducted from initial interest payments. These fees are disclosed on the individual offering pages.

Most offerings for accredited investors only: Most investment deals on Yieldstreet are available only to accredited investors. The Securities and Exchange Commission defines these investors as those with a net worth of more than $1 million (not including the value of a primary residence) or annual income in each of the last two years of at least $200,000 for individuals or $300,000 for a couple.

Fund for nonaccredited investors: In 2020, Yieldstreet launched its Prism Fund, a fixed-income portfolio across five asset classes: art, commercial, legal, private business credit, real estate and corporate preferred bonds. The fund pays quarterly distributions set at an annualized rate of 8%, the company says. Investors will pay up to 1.5% in annual fees for the fund. The fund’s termination date is March 2024, but the company notes that liquidation of fund assets may take up to an additional 12 months.

Offers a self-directed IRA: You can invest in Yieldstreet through an IRA, though the account must be set up with Yieldstreet, which offers its plan through Pacific Premier Trust.

Illiquid investments: Once you commit to a Yieldstreet opportunity, the investment can’t be redeemed for the duration of the offering, which can extend beyond the planned “target duration,” Yieldstreet notes. So once your money is in, you’re committed to seeing the investment through.

Limited availability of investments: Each deal is open for investment for a limited period of time on a first-come, first-served basis, so you may walk away empty-handed, even if you come to the site ready to invest.

Yieldstreet offers individual investors an opportunity to invest in private structured credit deals, offerings usually reserved for hedge funds and institutional investors.

One caution: A rule of thumb is to invest no more than 10% of your portfolio in alternative investments such as the ones Yieldstreet offers. It’s generally considered wise to focus the bulk of your portfolio on index funds or mutual funds, which give you broad and diversified exposure to the stock market.