Welcome to the first edition of our monthly newsletter, with all the real estate crowdfunding gossip and scuttlebutt that’s fit to print. We strive to offer the best lowdown on the real estate crowdfunding industry you’ll find on the internet, and your readership will enable us to keep at it for a long time to come. Despite some of the doom and gloom of recent news headlines, this industry isn’t going away anytime soon.
The End of Yieldstreet’s Debacle with Synapse?
Yieldstreet’s BaaS (“banking-as-a-service”) provider, Synapse, filed for Chapter 11 bankruptcy in April. That led to a host of problems over the past few months for Yieldstreet and the other fintech companies that relied on Synapse, like Yotta and Juno.
Synapse’s four partner banks, Evolve Bank & Trust, Lineage Bank, American Bank NA, and AMG National Trust Bank, held “roughly $180 million in cash of users' funds and reserves” when Synapse collapsed. Since Synapse acted as a middleman between Lineage and Yieldstreet, millions of Yieldstreet users saw their accounts freeze and were unable to access funds for several weeks. Now, there may finally be a light at the end of the tunnel.
On /r/yotta, a Redditor reported that Yieldstreet was finally beginning to return users’ deposits, “deeply apologiz[ing] for any inconvenience” and promising to return all funds within 30 days.
Although Yieldstreet may be saving some face with their efforts to return funds from Lineage, they’ve no doubt alienated a huge portion of their user base. Sophisticated investors will find it even harder to justify partnering with Yieldstreet now, and it’s not as if the company had a squeaky-clean record to begin with. SEC issues are one thing, and can be weighed against other considerations during a due diligence process, but literally blocking access to funds is a guaranteed source of anger and frustration for even the most loyal of users.
“I’m so happy for the Lineage and AMG end users! I hope they stay away from sketchy fin tech apps,” another commenter writes. Sketchy indeed. We’ll be sure to keep you posted with further updates on this saga.
The Aftermath of PeerStreet – Selling Customer Info to RealtyMogul?
Since PeerStreet filed for bankruptcy in June 2023, they’ve begun to sell some customer information as leads for RealtyMogul to capitalize on. Former PeerStreet users have discussed this recent development on a subreddit called /r/PeerStreet_Creditors.
In response to a thread titled “How did Realty Mogul [sic] get my info?”, a commenter writes: “Sold your data unless you opted out. They talked about it on several court calls and it was posted on Reddit on how to opt out.” The post in question can be found here, which screenshots an email from PeerStreet that provided a dedicated email address for opting out of the sale of customer info.
“The funny thing being, of course,” one commenter writes, “is that the list of Peerstreet creditors is essentially a list of people who are highly unlikely to be in the mood to engage in more fintech investment adventures. I suspect I'm not the only one who has had enough of that. Why would you pay to market to such a list?”
“Realty Mogul is a shit company run by a narcissist,” says another commenter.
New Fed Rate Cuts
On September 18, the Fed announced that it will cut its benchmark interest rate by half a percentage point amid a sluggish job market and sky-high interest rates. Everyone saw a rate cut coming, but the cut itself was significantly larger than anticipated. There’s no way for us to predict the future, but we have some ideas about the potential implications for the real estate crowdfunding industry.
Remember the housing boom of 2020? We might see echoes of that, but hopefully with a more measured pace. Lower rates typically boost buyer demand, which would bode well for users of real estate crowdfunding platforms, but there's a catch— home prices could steeply climb if supply doesn't keep up.
In general, though, we predict this will be a boon to real estate crowdfunding platforms. Falling interest rates drive up real estate values, and that is a timeless axiom of the market; buyers can pay more for property if it’s easier for them to borrow money.
Keep an eye on this space for further updates about rate cuts.
JD Vance’s Investments in AcreTrader
CivilEats reports that Republican vice presidential candidate JD Vance (Donald Trump's running mate) invested $65,000 in AcreTrader, a real estate crowdfunding platform focused specifically on farmland, through his venture capital firm Narya Capital. He appears to remain invested despite being an incumbent U.S. senator.
AcreTrader's model is an example of the growing trend of farmland financialization, with investor purchases in this sector surging by 231% from 2008 to 2023. We plan on reviewing AcreTrader in the coming weeks.
See You Next Month
Thanks for reading. Stay tuned for more gossip, slander, and scuttlebutt.