A Real Estate Investment Alternative

October 18, 2007 by

Prosper LendersIf you’re like me, you’re trying to figure out the best way to take advantage of the high inventory real estate foreclosure market but you’re a little cautious. You’ve got some cash sitting in your bank account earning a respectable 5% interest but you’d really like to buy some property. The only problem is you don’t know how much worse this market is going to get or when it’s going to recover. So what do you do?

One alternative is joining an online lending community where people can borrow and lend money essentially bypassing the banks thus getting better rates. You’d be the lender and sites like Prosper.com (aff) and Lendingclub.com would help you build diversified portfolios based on lender preferences. They speak of returns anywhere from 9% to 14% all depending on the amount of risk you decide to take. Here’s an example (aff) of how it works. Lendingclub also has a blog which has some good financial articles.

I think it’s a pretty good idea if you’re looking for a higher return and want a place to park your money until the real estate market settles down. I have signed up for a prosper.com account and started browsing the borrowers but have not yet loaned any money out. If you’ve used either one of these sites before, please let me know how it’s worked out for you.

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10 Responses to “A Real Estate Investment Alternative”

  1. E on October 22nd, 2007 12:21 pm

    what are the risks if you lend to someone who defaults? do the websites have a way of dealing with that or does the individual lender have to go after delinquent or defaulting borrowers?

  2. Adam on October 24th, 2007 5:11 am

    We’ ve partnered with Lending Club on facebook with our Cribs application, which lets you post properties on facebook… for free.

    We’ve just launched our beta, and we’re looking for feedback.


    Let me know what you think!

  3. Canton foreclosures on February 8th, 2009 11:28 am

    This looks interesting. How long has the Lending Club been in business? Does anyone know?

  4. Signalizacijos on February 26th, 2009 7:15 am

    Very thanks for the information.

  5. prashant on July 15th, 2009 3:52 am

    Real estate is very good investment business.
    keep it up.
    Boise real estate

  6. Staten Island Real Estate Agent on August 5th, 2009 5:58 am

    That is an interesting idea. The internet has brought out more and more of these sites/companies that provide great services. This seems like another one. I wonder what qualification need to be provided to obtain a loan.

  7. mortgage loan modification on August 13th, 2009 1:37 pm

    Wowo! Starting an investment group online is a great idea; its basically like starting your own hedge fund. I love it, but am saddened that I didn’t think of it first!

  8. Scott Nachatilo on November 29th, 2009 5:47 pm

    That was a nice idea, can we borrow money to cover up mortgage from the bank to avoid foreclosure?

  9. Adam Davis on January 4th, 2010 6:12 am

    This business model works – but be careful in what type of deals you use it on.

  10. dzoyce on November 23rd, 2010 10:17 pm

    i think this gonna work.. i have here my source of cheap foreclosure just CLICK HERE
    It’s free to join and they actually own their homes and not just a broker.

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