LendingHome review - Invest in fully funded US real estate deals

Access short-term, fully funded real estate investments all across the US.
Receive steady, monthly cash flows from coupon payments.
Auto-invest in real estate deals per your specific risk parameters and capacity.

If you are an accredited investor, chances are you already have a large percentage of your wealth in real estate. If you don't, you could be missing out on one of the better-performing asset classes for growing your investment portfolio.

LendingHome offers you an opportunity to gain exposure to the real estate market with minimal risk. Find out how it works, advantages, disadvantages, and more in our review.

What is LendingHome?

Don't confuse LendingHome with a traditional crowdfunding business opportunity. With LendingHome, you get access to fully funded deals, and there's no waiting for enough investors to join the pool before LendingHome makes the investment.

LendingHome is what's known as a "direct lender," meaning it uses company capital to fund loans, not investors' money.

After LendingHome closes on a deal, it offers accredited investors and institutions the chance to buy into the real estate investment. Institutions can buy the entire deal outright, or LendingHome will make it available to individual investors through the use of "platform notes."

The loans give the company and investors access to the cash flow in the deal, helping them earn a passive income from their investment.

Individual accredited investors can access the portfolio of investment opportunities through the company’s website and select the deals they think fit their investment criteria.

LendingHome requires a $50,000 minimum capital investment to use the retail platform. However, investors can also access Platform Notes for investments as low as $5,000.

Where is it available?

LendingHome is only available for residents of the United States. It's not available for foreign investment, even if you're from Canada.

If you are not US-resident and want to use a service like LendingHome, then you could try Streitwise, which does allow international investors to join.

Who is it designed for?

LendingHome is an investment opportunity available to institutional and accredited investors. Therefore, you must meet the criteria set for accredited investors, including income and net worth requirements.

LendingHome verifies the financial status of all its investors before welcoming them to the platform. If your status as an accredited investor lapses at any stage, the site asks you to reconfirm your accredited status to remain in the deal.

How does it work?

LendingHome offers accredited investors bridge loan finance for fixing and flipping properties. It also offers rental loans for non-owner occupied properties. Once LendingHome funds the loans, they issue Platform Notes, which are an unsecured obligation of LendingHome Funding Corporation tied to an underlying mortgage loan originated on their platform.

Payments to investors under the Platform Note are contingent on payments collected by LendingHome under the underlying mortgage loan, net of any transaction costs. If the mortgage loan is delinquent or in default, LendingHome handles the servicing and you get whatever payoff is finalized.

Investors can invest directly in specific platform notes by reviewing property deals on the site that are already looking for investment. Sign up for the site to start searching through deals that meet your investment criteria or use LendingHome’s autoInvest feature to build a portfolio of real estate investments based on your preferred level of risk and return.

LendingHome has two types of loans - bridge loans and rental loans.

Bridge loans are essentially short-term loans designed for purchasing properties right away. Typically, this financing model is available for resolving financial acquisitions before locating permanent financing or selling the home. The LendingHome bridge financing program is available for investors looking to source funding for their next real estate deal.

For rental loans, landlords can borrow money based on the debt service coverage ratio (DSCR) of the property. The Debt Service Coverage Ratio (DSCR) measures the ability to pay the property’s monthly mortgage payments from the cash generated from rental income. LendingHome’s minimum DSCR of 1.0x requires rental income to cover the total property expenses including principal, interest, taxes, insurance, association dues.

Fees

LendingHome charges a servicing fee of 10% on the coupon rate the investor receives on their Platform Note, which is determined by the property’s risk profile.

LendingHome also charges a performance-based fee collected from its investors' monthly interest payment. Typically, the costs fall in the range of 1.15% to 2.6%.

These incentive fees help to offset potential future losses, and if the investment isn't performing as expected, LendingHome won’t charge the performance fee.

You can sign up directly through the official company website, provided you have accredited investor status. After registering, LendingHome uses its third-party sources to verify your investor status.

While LendingHome reviews your application, you have full access to the platform. Browse the investment opportunities and platform notes available, and select deals that you feel meet your investment criteria.

After accepting your application, LendingHome requires investors to connect their bank account to the platform and specify a figure for LendingHome to pull from your account into your investment of choice.

Once LendingHome verifies your account, you can purchase platform notes, and start earning cash flow from day one.

Follow these four steps to opening your account with LendingHome.

Create your account on the website.
Verify your accredited investor status.
Link your nominated bank account.
Fund the account, browse platform notes, make your investment.

Pros & cons

Pros

Prefunded deals reduce investor risk.
Immediate cash flow after investing in a platform note.
Diverse portfolio of investments across the US.
Auto investment option customizes portfolios based on preferred level of risk and return.
Access to dedicated investor support.
Platform notes available for as low as $5,000.

Cons

Only suitable for accredited investors and high-net-worth individuals.
Minimum investment requirement of $50,000 to start.
Taxes on capital gains as interest income.
Unsecured platform notes may be risky for some strategies.

Alternatives

Fundrise. An online real estate platform that offers you access to private real estate deals. Beware of underlying fees.
PeerStreet. A real estate crowdfunding site provides accredited investors the opportunity to invest in real estate loans.
Streitwise. A real estate investment website that focuses on commercial real estate deals. Accredited investor status is not a requirement for investing through this platform, with a low minimum investment requirement.
RealtyMogul. One of the most established real estate crowdfunding platforms. You get deals available for both accredited and non-accredited investors at a range of price points. You have options for investing in standalone property deals or diversified non-traded REITs.

Verdict

LendingHome is not for everyone. As investment requires accredited investor status to invest in their platform notes, these are fairly complex and high risk investment products. LendingHome’s business model is to finance real estate investors who fix and flip homes, which are riskier properties that often cannot get approved for traditional mortgages. Bridge loan and platform note repayment is contingent on selling the underlying property or obtaining permanent financing.

That said, LendingHome’s investment model compensates for that risk, giving investors the option to invest in short-term bridge loans which have historically earned 8.75% over an average 7 month maturity. A diverse portfolio of investments and low minimum investment also help limit your risk.