Editorial Review

YieldStreet Review: Pros, Cons and How It Compares

YieldStreet is an online platform that offers investors access to alternative investments in commercial real estate, marine projects and even art. Investment minimums typically start at $10,000.

Kevin VoigtMarch 27, 2020

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Our Take

The bottom line: YieldStreet allows investors to participate in the crowdfunding for a wide array of alternative investments, ranging from real estate to a $200,000 loan to an NBA player. The platform is open only to accredited investors.

YieldStreet

YieldStreet

Fees

1% to 2%

management fees; other fees apply.

Account Minimum

$10,000

Promotion

None

no promotion at this time

Pros & Cons

Pros

  • Access to real estate, commercial, marine, legal and art investments.

  • Ability for individuals to invest in private structured credit deals.

  • Investments backed by assets, which may provide some protection in event of default.

Cons

  • Highly illiquid investments.

  • Open only to accredited investors.

  • Limited offerings available.

Compare to Similar Brokers

Fundrise
EquityMultiple
Fees

1%

other fees may apply

Fees

1%

other fees apply

Account Minimum

$500

Account Minimum

$5,000

Promotion

None

no promotion available at this time

Promotion

None

no promotion available at this time

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Full Review

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, and even a $200,000 loan to an undisclosed NBA player. Investors earn interest payments and return of principal investment over the life of the loans (although there’s always a risk of default).

As of 2019, more than $1 billion had been invested on the platform. YieldStreet was ranked 14th on the 2019 Inc. 5000, a list of the fastest-growing privately held companies in the U.S.

YieldStreet is best for 

  • Accredited investors looking to diversify their portfolio.

  • Investors who don’t need their cash back for years.

  • Investors looking for income-producing investments.

YieldStreet at a glance table

YieldStreet features you should know

Minimum investment: The company says the minimum investment is typically $10,000, but that can vary by offer. Some past deals have set investment minimums as low as $5,000 and as high as $60,000.

Investments offered: YieldStreet focuses on securing debt investments across a wide variety of real estate, marine, art, commercial loan and litigation deals. As of 2019, the company had invested in:

  • 58 real estate offerings.

  • 14 marine offerings.

  • 5 art offerings.

  • 68 litigation offerings.

  • 20 commercial offerings.

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, marine vessels or a legal settlement, which gives the company a way to potentially recoup defaulted loans.

As of February 2020, YieldStreet says it has returned at least full principal to investors on all fully completed investments. This includes four defaulted loans, which were resolved through foreclosure, a note sale or other workout measure, according to the company. 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 1% to 2% on average. YieldStreet may also charge the originator a listing fee.

Some types of investments may also carry a flat annual fee that ranges from $100 to $150 the first year, and $30 to $70 each subsequent year, depending on the structure of the deal. These expenses are deducted from initial interest payments. These fees are disclosed on the individual offering pages.

Available only to accredited investors: YieldStreet is 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.

Offers a self-directed IRA:  You can invest in YieldStreet through a self-directed IRA. The IRA must be set up through YieldStreet, which uses IRA Services as the custodian broker.  You can also invest with a trust, LLC or a solo 401(k) that is set up as a trust or LLC.

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.

Is YieldStreet right for you?

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

In the first five years of operation, the company has funded over $1 billion in deals and claims none of the investments so far have resulted in a loss of principal for investors, an impressive record. But there’s no guarantee the company can maintain that track record, especially if the economy sours.

One caution: NerdWallet advises investing 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. These brokers have a strong selection of mutual funds and index funds to build your nest egg: