Intro — Yieldstreet's History
Since its founding in 2015, Yieldstreet has become a juggernaut of the real estate crowdfunding industry (which makes the disastrous collapse of Synapse — their BaaS provider — all the more humiliating, resulting in millions of Yieldstreet account funds frozen as of July 2024.)
In recent years, they’ve also styled themselves as an all-inclusive “alt investing” platform, not merely limiting their offerings to real estate. As we’ll soon discuss, they even used ships as collateral for an investment (which they didn’t even own), under the premise that they would own them...then the ships (literally) drifted away, which led to them getting charged with fraud by the SEC. Whoops.
In 2023, Yieldstreet acquired Cadre, one of their main competitors. The dog-eat-dog world of real estate crowdfunding just keeps shrinking as the small fry get weeded out.
On the surface, Yieldstreet is famous enough that people with no interest in investing have heard of them. That's quite the achievement, considering that online real estate crowdfunding is a relatively new concept. As PeerStreet demonstrated, however, no platform is too big to fail, and Yieldstreet has had its fair share of egg on its face.
(To assert their market dominance, Yieldstreet puts their logo on umbrellas at polo matches in affluent ZIP codes.)
Beyond the glossy veneer of name recognition — and ritzy marketing — how does Yieldstreet really stack up against its competitors (Fundrise, RealtyMogul, EquityMultiple, etc.)? Can we recommend the platform in good conscience? Could they eventually go down? After all, they’re no stranger to massive defaults and legal problems — the bankruptcy of Synapse is just the latest in a series of embarrassing mishaps for the company. Let’s take a closer look.
Key Features
Yieldstreet is a 506c platform, requiring verification of accreditation during signup. However, they have one offerings available to non-accredited investors — the Alternative Income Fund (formerly known as the Yieldstreet Prism Fund), which is a fund that includes every asset class currently on the platform. That means anyone with even a passing interest in alts—and $10,000 to spare—can try their hand at such investments. Individual deals, however, are only available to accredited investors.
(From February 2022 to August 2024, the Growth & Income REIT was also available to non-accredited investors on Yieldstreet; it was recently shut down due to poor performance.)
Investment Opportunities
At first glance, Yieldstreet is appealing because of its varied set of offerings — real estate, fine art, private credit, cryptocurrencies, structured notes, transportation, etc. They provide more investment types than competitors exclusively dedicated to real estate, like CrowdStreet and EquityMultiple.
Still, there’s something undeniably strange about investing in a plaintiff’s legal fees, or...uh...”a portfolio of 11,000 consumer loans backed by motorcycles, utility vehicles (UTVs), all-terrain vehicles (ATVs), tractors, trailers, personal watercraft (PWC), mowers, dirt bikes, golf carts, classic bikes, trikes, scooters, and snowmobiles.”
You have to assume they’re just throwing shit at the wall to see if it sticks. Maybe they’ll allow you to invest in a collection of rare Beanie Babies next.
Fee Structure
The platform's yearly management fees range from 1% to 4%, varying based on one’s chosen investments.
Minimum Investment
To begin investing with Yieldstreet, you need at least $10,000. That’s roughly the industry average for minimums, so the platform may appeal to moderately high-net-worth investors seeking solid exposure to diversification.
User Experience
Yieldstreet deserves a lot of credit for its sleek, ultramodern interface. They haven’t skimped on UX, and offer a free mobile app for iOS and Android as a companion to their website.
Customer Support
Customer support has been a pain point for many Yieldstreet investors. As indicated by reviews, Yieldstreet's support is perceived as unresponsive, ineffective, and lacking in transparency, with many customers reporting difficulties in obtaining timely information, assistance with withdrawals, or resolution of their concerns.
Investor Testimonials
Common Praise
- Great investment selection (“Excellent investment selection to supplement my stocks and CDs for diversity”)
- Streamlined and organized user experience (“The website is well-organized and easy to navigate”)
Common Complaints
As of 2024, Yieldstreet has a notably low score on Trustpilot (1.9 out of 5).
Recent reviews there highlight:
- Badly performing deals (“Burn your money instead”)
- Concerns that the company failed to conduct adequate due diligence or fully disclose risk (“They do really bad work vetting deals—run”)
- Allegations that the company was evasive about the performance of various deals (“I believe it is only a matter of time before someone goes to jail”)
Many reviews cite recent SEC fraud charges as relevant to their low opinion of the company.
Google reviews tell a similar story: “What kind of desperate company would rely on its employees’ five stars to make its rating not look awful?”
Similar Real Estate Crowdfunding Platform Comparison
Yieldstreet vs. Fundrise
Fundrise has a much lower investment minimum ($10) and generally lower fees, making them a superior choice for investors who are either new to investing or possess a relatively small amount of capital.
Yieldstreet vs. RealtyMogul
RealtyMogul is exclusively focused on real estate investing, and offers a mix of individual property investments and REITs. It has a lower minimum investment requirement of $1,000 for its REITs, making it more accessible than Yieldstreet. RealtyMogul’s customer support system has also received better reviews than Yieldstreet’s.
Yieldstreet vs. EquityMultiple
Like Yieldstreet, EquityMultiple also offers direct investments into equity deals, but unlike Yieldstreet, it is only open to accredited investors and only offers real estate investments. EquityMultiple also features generally lower investment minimums, which start at $5,000. The platform is also known for its staunch commitment to transparency, which is decidedly not the case for Yieldstreet.
The Dirty Dirt — Yieldstreet's Controversial Past
In Yieldstreet’s pursuit of relentless growth, it’s no secret that they’ve played fast and loose with regulations, making them a questionable company to partner with as an individual investor. They’ve consistently run afoul of the SEC: last year, that agency forced them to pay $1.9 million in order to settle charges that they failed to inform investors about an offering’s risks.
What happened, exactly? In September 2019, Yieldstreet let investors finance a loan it made to a group of companies for the purposes of transporting and deconstructing a retired ship. The ship itself ostensibly served as collateral. Yieldstreet failed to inform its investors of a heightened risk — that it would not be able to seize the ship if the borrowers defaulted.
Sure enough, that happened, and people were pissed off.
Scandals like that one put an additional burden of due diligence on an individual investor: you don’t really know what this company could be hiding from you. (Granted, after their recent legal troubles, Yieldstreet might play it safer going forward.)
Chronology of Yieldstreet's Legal Issues
2018-2020
2018-2019: Ship-Breaking Loans
Action: Yieldstreet sells notes linked to ship-breaking loans.
Details: Yieldstreet sold a series of notes, totaling about $90 million, linked to loans for ship-breaking starting in 2018.
March 2020: Disappearing Ships
Action: Ships used as collateral disappear.
Details: Yieldstreet informed investors that approximately a dozen ships serving as collateral for the underlying loans disappeared across international waters.
2020: The SEC and FBI Begin Their Investigation
Action: SEC and FBI investigations begin.
Details: The Securities and Exchange Commission (SEC) and Federal Bureau of Investigation (FBI) started examining Yieldstreet's investments and business practices.
2020: Yieldstreet Pursues Legal Action
Action: Yieldstreet pursues legal action against borrowers and loan originators.
Details: Yieldstreet initiated legal proceedings to seize vessels and freeze assets linked to the Lakhani family. The company also sued Four Wood Capital Advisors for alleged breach of contract.
April 2020: Investor Letter
Action: Investors send letter to YieldStreet executives.
Details: Dozens of investors sent a letter to YieldStreet executives questioning the quality of the firm's due diligence and requesting a fuller accounting of their investments.
2023-2024
September 2023: SEC’s Settled Action Announcement
Action: SEC announces settled action against Yieldstreet.
Details: The SEC charged Yieldstreet with failing to disclose critical information to investors in a $14.5 million asset-backed securities offering from September 2019.
September 2023: Yieldstreet Officially Settles with SEC
Action: Yieldstreet agrees to settlement with SEC.
Details: Without admitting or denying the findings, Yieldstreet consented to cease and desist from violations of certain antifraud (and other) provisions of federal securities laws. The company agreed to pay over $1.9 million in penalties, disgorgement, and interest.
May 2024: Synapse Goes Under
Action: Banking as a Service (BaaS) provider Synapse Financial Technologies, Inc. files for bankruptcy, affecting Yieldstreet, which was dependent on its services.
Details: Yieldstreet investors found themselves unable to access funds stored in their accounts, which caused huge turmoil amongst the platform’s investor community. Reddit comments indicated that some Yieldstreet investors were considering filing a class-action lawsuit.
August 2024: Yieldstreet Starts Returning Funds
Action: Yieldstreet reaches a resolution with Lineage Bank, allowing it to begin returning deposits to users.
Details: Yieldstreet emails investors with a promise to return all funds within 30 days, deeply apologizing for the inconvenience.
Track Record
Yieldstreet’s statistics page says “We are committed to transparency at Yieldstreet.” Yeah, right.
They allow you to look at the performance of individual offerings in several categories, including Transportation, Real Estate, Private Equity, and so on, but the data available only consists of recent investments. Fine-grained data on the 2018-2019 ship fiasco is nowhere to be seen.
That said, they do show (through a tooltip) that six of their Transportation deals have defaulted. They just don’t say which.
Their portfolio overview by dollars invested is as follows:
- Matured – 71.7%
- Active – 21.0%
- Modified Outlook – 4.4%
- Default – 3.0%
“Modified outlook” is a euphemistic way of saying “underperformed.” If you take Matured, Modified Outlook, and Default together, almost 10% of investors’ money has gone to investments that ultimately underperformed or defaulted.
Scoring Yieldstreet
Platform Details
- Years in Operation: 9
- Minimum Investment: $10,000
- Types of Investments Offered: Debt, Equity, Preferred Equity, Short Term Note
- Accreditation Requirement: No, but most investments are accredited-only
User Experience
- Ease of Use: 4 Stars ... Yieldstreet boasts a sleek interface that is user-friendly and aesthetically pleasing. The platform also offers a mobile app for both iOS and Android, enhancing accessibility. However, the minimum investment requirement of $10,000 can be a barrier for smaller investors.
- Account Setup: 4 Stars ... The registration and verification process on Yieldstreet is straightforward, but accreditation is necessary for most individual deals. Non-accredited investors can still participate through the Alternative Income Fund and the Growth & Income REIT.
- Customer Support: 2 Stars ... Customer support is a notable concern, with many investors reporting poor responsiveness and difficulties in obtaining timely assistance.
Investment Experience
- Investment Options: 4.5 Stars ... Yieldstreet stands out for its diverse investment opportunities, including real estate, fine art, private credit, cryptocurrencies, structured notes, legal finance, and transportation. This variety surpasses many competitors focused solely on real estate.
- Returns: 2 Stars ... While some investments have performed well, many have underperformed, resulting in significant financial losses for some investors. The company's controversial history and SEC issues further exacerbate concerns about the performance of their investments.
- Risk Management: 1.5 Stars ... Yieldstreet's risk management practices have been heavily criticized, particularly in light of their legal troubles and the SEC's charges. The company has faced allegations of inadequate due diligence and failure to disclose critical risks to investors, although they may eventually change their practices in response to this blowback.
Platform Transparency
- Disclosure of Information: 2 Stars ... Yieldstreet has faced significant scrutiny regarding transparency. The SEC's charges and ongoing legal issues may make investors concerned about the platform's communication and disclosure practices. Their track record page looks like an ad as opposed to a transparent overview of their historical performance.
- Fee Structure: 3 Stars ... Yieldstreet charges annual management fees ranging from 1% to 4%, depending on the investment type. These fees are relatively standard for the industry.
Overall Rating — 2.5 Stars
- Summary: Yieldstreet offers a robust platform with a wide range of investment options and a sleek user interface. However, issues with customer support, transparency, risk management, and investment performance significantly detract from the overall experience.
- Pros: Diverse investment options, educational resources, user-friendly platform.
- Cons: Poor customer support, relatively high minimum investment, transparency issues, underperforming investments, and significant legal troubles.
- Would Recommend? If you are a non-risk-averse investor with substantial capital and a keen interest in diversified alternative investments, Yieldstreet might appeal to you. However, it's crucial to keep an eye on the firm’s persistent legal issues.
Conclusion
Yieldstreet may offer an attractive variety of alts, but our verdict is that it’s difficult to justify investing with a company with a demonstrably worse legal record than its competitors. There may be some value for investors tolerant of a high degree of risk, but then again, there are better options out there. Consider staying away from Yieldstreet, and thank us later.