Frequently Asked Questions
Are the offerings on InstaLend debt or equity?
All of the offerings on the platform are senior debt. We believe this creates the simplest and most efficient way for investors to understand the risks and returns associated with each deal. Each investment you make is associated with a first position lien on the underlying asset (real estate). This provides downside protection, and should the borrower default on their loan this creates an opportunity for you to potentially recoup your investment. All said, this type of investing is risky and you could lose 100% of your investment. We encourage you to always consult with you investment advisors prior to making an investment.
What am I investing in? Do I own a piece of property now?
When you invest in an InstaLend offering, you are investing in a borrower payment dependent note (“BPDN”)—a promissory note in which the investor receives a stated interest rate for a stated term that is dependent on payment of the underlying loan between InstaLend and the property developer. The BPDN is a contract between the investor and InstaLend. Although the investor does not own any equity in the underlying property and their name is not on the property title, the BDPN gives the investor an interest—shared with the other investors who have funded the project—in the underlying property. The interest in the property is the right to receive monthly interest distributions as well as the return of principal upon the borrower's full payment of the underlying loan.
What are the interest rates on your offerings?
Since our loans are for short-term real estate rehabilitation projects, they generally carry higher interest rates than other debt instruments. Because each loan is unique, the interest rate is determined based on many factors. Most loans tend to carry an interest rate of 9-12%.
Are there any fees charged to investors?
While there are no out-of-pocket fees for investors, we may try to collect a spread on each loan to cover ongoing investor reporting and communications relating to the investment. The interest rate you see for each deal is the annual interest rate you collect NET of any spreads we may collect.
What is the minimum investment?
The minimum investment is $5,000.
How are you able to offer such high rates?
InstaLend offers short-term loans to real estate developers for real estate projects for refinance, property rehabilitation, bridge loans, and short-term purchases. Short-term loans tend to command higher rates of return.