I’m Cassidy Horton, a personal finance freelance copywriter. I craft action-worthy content for financial services companies. My #1 goal is helping people break the paycheck-to-paycheck cycle and experience financial freedom.
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The Bottom Line: YieldStreet allows regular investors to invest in assets that hedge funds and institutional investors have been taking advantage of these opportunities for years, now they are available to you.
How would you feel if you could make some passive income every month?
If there was a way you could earn money without adding more work to your already too-busy-to-function schedule?
That’d be a dream, right?
Imagine what you could with a little extra money every month.
Send the kids to college...
Buy that sports car you’ve been eyeing…
Finally quit your job and retire early.
Yeah, that sounds nice.
But some passive income ideas, like managing a rental property or starting a blog, require too much extra work upfront (even if it is passive down the road).
You’re super busy (as we mentioned earlier) and don’t have time to wait while a side project gets up and going.
You have goals to accomplish and dreams to reach right now.
If you’re someone who has some extra cash lying around and qualifies as an accredited investor, there’s never been a better time to generate passive income through alternative investments—one of the only truly effortless ways to earn extra money.
Now I know what you’re thinking…
It seems as though alternative investment platforms are cropping up everywhere for accredited investors. (It’s true. There are more platforms out now than there have ever been).
So, how do you differentiate between all of them to find one that works for you?
Today we’re going to talk about YieldStreet—a platform that lets you generate passive income through asset-based investments that were once only accessible to hedge fund and institutional investors.
Quick Summary
Minimum Investment: $5,000
Fees: Averages 2%/year; depends upon deal
Promotion: No current promo
What Is YieldStreet?
YieldStreet is an online alternative investment platform for accredited investors looking to generate passive income.
The company marries technology and investing to bring individuals an affordable way to invest in assets across multiple classes.
Unlike other alternative investment platforms that specialize in one thing—say real estate or commercial use—YieldStreet offers 5 unique alternative investments including real estate, legal assets, art, and more.
For as little as $5,000, you can diversify your alternative investments all in one place.
Gone are the days when you need to open an account with 5 different companies to diversify with 5 different asset classes (who has time for that anyway?)
YieldStreet prides itself on a symbiotic relationship (that’s actually the story behind its logo featuring an impala and oxpecker).
When you fund offerings with YieldStreet, everyone wins. Investors gain access to sought-after investments and borrowers receive payouts to help them accomplish their goals.
It’s a win-win.
As of 2019 its made over 400,000 payouts and returned nearly $400 million to investors.
The average YieldStreet investor carries 4 investments with the company and the average return has been $12.28%.
History of YieldStreet
YieldStreet was started in 2014 by tech entrepreneur, Milind Mehere after he noticed a glaring problem…
The alternative investment industry was dominated by companies that required high minimums and long holding periods.
These unreachable standards shut out everyday investors—even accredited ones like himself.
On a mission, he teamed up with Michael Weisz and Dennis Shields—two guys who spent their careers identifying ultra high worth individuals in the fixed income space—to create a solution.
These three guys believe the path to financial independence isn’t with a ton of investments in the stock market.
It’s with the same investment products used by hedge funds and institutions.
YielldStreet Investment Opportunities
YieldStreet has 5 different types of alternative investments:
Real estate (commercial and multi-use properties)
Legal (future case proceeds, law firm assets, or receivables)
Marine (vessel acquisition, construction, or deconstruction)
Commercial (equipment, vehicles, or accounts receivable)
Art (modern pieces)
There are tons of crowdfunding platforms out there for real estate. But what happens if the housing market takes a dip?
All your investments are wrapped up in the same asset class. Thanks to YieldStreet, you can diversify among 5 different classes.
So, go ahead. Fund an offering for marine and commercial equipment in the same place you fund real estate.
The screenshot above shows a list of current YieldStreet offerings.
Types Of Legal Structures Used By YieldStreet
When you invest through YieldStreet, your money either goes into a Special Purpose Vehicle (SPV) or a Borrower Payment Dependent Note (BPDN).
Those who invest in an SPV offering receive a K-1 tax form at the end of the year.
Offerings under this structure typically have higher minimums and fewer investors.
Because of this, YieldStreet splits ownership of the SPV among investors.
For example, if the overall investment deal costs $500,000 and you invest $50,000, then you own 10% of the SPV. If the loan pays 12% interest per year, you earn $6,000 each year.
BPDN offerings come with a 1099 tax form. These typically have lower minimums and more investors. In fact, BPDN offers are required to have at least 99 investors.
Each investment offering clearly states whether it’s an SPV or BPDN, so you’ll know ahead of time which one you’re funding.
YieldStreet Fees
Expect to pay the following fees when you invest with YieldStreet:
Type of Fee | Annual Cost |
|---|---|
Management Fee | 1% to 3% (Varies by investment deal) |
Flat Expense Fee (SPV investments) | $150 for first year $70 for subsequent years |
Flat Expense Fee (BPDN investments) | $100 for first year $30 for subsequent years |
Listing Fee | Varies by investment deal |
Who Is YieldStreet Best For?
YieldStreet is perfect for accredited investors who want to use alternative investments to diversify their portfolios and accomplish their financial goals.
Whether you want to generate enough passive income to send your kids to college or go on your next adventure, YieldStreet has you covered.
What Is An Accredited Investor?
YieldStreet manages funds and issues securities under rule 506(c), which requires by law that all investors be accredited.
An accredited investor is someone who meets one of the following requirements:
- Has an individual or joint net worth exceeding $1 million (excluding your primary residence)
- Has made at least $200,000 (single) or $300,000 (jointly) for the past two years
- Owns a trust with more than $5 million in assets
So, if you’re married and you and your spouse have a combined annual income of at least $300,000, you qualify as an accredited investor even if you don’t have a high net worth.
On the contrary, if you make $100,000 per year but have a net worth of $1 million, you qualify as an accredited investor.
How Do I Become An Accredited Investor?
There isn’t actually an official accreditation process. Verification of your accreditation status falls on the company you wish to invest with.
So, if you want to invest with YieldStreet, the company uses a third party agent to confirm your status.
These agents could include a Certified Public Accountant (CPA), licensed attorney, SEC or FINRA licensed and registered broker-dealer, or an investment advisor.
Once your status is verified, you’ll reverify it once a year with YieldStreet.
What If I’m Not An Accredited Investor?
Good news!
You don’t have to be an accredited investor to use YieldStreet Wallet—an FDIC-insured savings account that earns 1.70% interest.
YieldStreet is actively working to add investment options for non-accredited investors, but it doesn’t like any offerings will be available in the near future.
YieldStreet's Customer Reviews
YieldStreet has a 3.5 out of 5-Star rating on Trustpilot and a 4 out of 5-star rating on the BBB. Customers love the platform’s broad range of asset classes, attractive yields, and short-term holdings.
Another plus?
Investors love that their investments are weakly correlated with the stock market.
They claim they have a little more peace of mind knowing their holdings can withstand a potential crash.
YieldStreet is wildly popular, so some investors hate how some offerings fill up within minutes. This makes it hard to grab investments you truly want and makes it even harder to do due diligence before you commit.
The only other common complaint among investors is YieldStreet’s limited customer service options.
As of right now, customer support is email only. Because of the platform’s popularity, it can sometimes take a few days to hear back from a representative.
What Makes YieldStreet Unique?
YieldStreet Wallet
YieldStreet Wallet is a FDIC-insured savings account through Evolve Bank & Trust.
This account allows investors to fund offerings quicker because they don’t have to wait on ACH transfers from a bank (which can take anywhere from 1-2 days).
As long as you have the full amount in your YieldStreet Wallet, you can fund an investment offering almost instantaneously.
This screenshot from YieldStreet shows what the Wallet looks like in the mobile app.
Invest With An IRA
Want to diversify your retirement account with alternative investments?
YieldStreet lets you do that. Anyone with a self-directed IRA or Checkbook IRA can use their funds on YieldStreet.
There are a few caveats, however. You need to confirm that your IRA custodian is compatible with the platform.
And you need to make sure your payouts go directly to your IRA, so you don’t get a surprise tax bill from the IRS.
Regular Payouts
How often you receive payouts depends on the type of investment.
Some offerings have predefined payouts (i.e. monthly, bi-weekly, or quarterly) while others are event-based payouts (i.e. you receive payment as soon as the event occurs).
Predefined payouts are most popular with real estate while event-based payouts are more common with legal assets.
Pre-Funded Offerings
Instead of having to wait for an offering to be fully funded to earn interest (which could take weeks), YieldStreet pre-funds its offerings.
This means you begin earning interest immediately after the investment becomes active in your account
Investments Backed By Collateral
Every investment has its risks, but YieldStreet tries to limit this risk by only offering pre-funded investments backed by collateral.
Why collateral?
If a default occurs, YieldStreet takes legal action against the borrower to recoup as much of the remaining principal and interest as possible.
Shorter Holding Terms
Although investments made through YieldStreet are illiquid (meaning you can’t take the money out before the term ends), it does have shorter terms than other platforms.
It's terms are as short as 12 months, while other platforms make you invest money for at least 10 years.
So, although you can’t cash out your investment early, you don’t have to invest your money for long.
Benefits Of Investing With YieldStreet?
Let’s reiterate why an investor may choose YieldStreet over another investing platform:
- Multiple asset-based investments. Stop wasting your time opening alternative investment accounts with several different platforms. YieldStreet brings the variety to you, so you can diversify however you see fit.
- Passive income. Wouldn’t it be nice to have some extra spending money slip into your account every month or every quarter without having to work for it?
- Tighter turnaround times. Let’s face it, sometimes you don’t have 10+ years to wait to get your principal back. You want higher returns than those offered by traditional brokerages, but you need your money quicker.
How Does Investing With YieldStreet Work?
YieldStreet merges technology and asset-based investments to bring you an all-inclusive platform where you can fund offerings and track earnings all in one place.
The process looks like this:
- Create your account (steps on how to do this are below)
- Fund investments (search current offerings until you find one that suits you)
Pros & Cons
YieldStreet
YieldStreet allows regular investors to invest in assets that hedge funds and institutional investors have been taking advantage of these opportunities for years, now they are available to you.
How Do I Get Started With YieldStreet?
Want to invest with YieldStreet? You’re in luck. The signup process if free and easy.
Go to the YieldStreet website and click Sign Up.
Answer a few quick questions about your investment history, financial goals, and timeline.
Enter your name, email, phone number, and password and click Create My Account Now.
After you create your account you’ll gain access to the portal where you can view current offerings.
Should I Use YieldStreet?
If you’re an accredited investor who wants to take advantage of 8% to 15% potential returns and regular passive income, then YieldStreet is a good choice.
Investors have seen an average 12.28% return over the past five years with this platform, which is higher than the historical return of the stock market.
With plenty of variety and low investment minimums, YieldStreet is a great way to diversify with alternative assets. The company pre-vets and pre-funds all offerings.
Plus, you can take advantage of an additional 1.70% interest on earnings when you use YieldStreet Wallet.
I’m Cassidy Horton, a personal finance freelance copywriter. I craft action-worthy content for financial services companies. My #1 goal is helping people break the paycheck-to-paycheck cycle and experience financial freedom.
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