Instalend Review: Invest In Real Estate Senior Debt (2024)

There are a lot of real estate crowdfunding platforms available nowadays. Picking one can be difficult and time-consuming. However, no one said you have to invest in just one.

In this article, we’re bringing you yet another real estate crowdfunding platform. This one is only available to accredited investors. Instead of investing in equity, you’ll invest in senior debt, which can provide more protection than equity if things go wrong. Let’s dig into the details and see what Instalend is all about.

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Because these are senior debt deals, Instaland places a first lien on the property in each deal. This provides investors with some protection should the borrower default. The arrangement is similar to hard money lending.

Since Instaland is not focused on equity deals, there is no appreciation involved. Just like a bond, the investor receives only their principal once the investment is sold. Instaland secures funding for each deal after there are enough investors. This is different from many other platforms that secure funding first and then seek investors.

Instaland investments are short-term. Rather than waiting years for the investment to play out, investments are concluded in 12 to 24 months. Because of the short-term nature of these loans, they carry a high-interest rate. Instalend says investors can expect an interest rate of 9-12% on most deals.

When you invest in an Instalend deal, you aren’t directly investing in real estate. Instead, you're taking an interest in the company behind the deal (i.e., the LLC). This is done through a BPDN or borrower payment dependent note, which is a promissory note. It’s an agreement between you and Instalend that you’ll receive regular payments and a return of principal, assuming the borrower makes payments and eventually pays off the loan.

To invest in Instalend deals, you must be an accredited investor. That means you'll need a net worth of $1 million (excluding your primary residence) or $200,000 in income for the last two years (if single). The minimum investment is $5,000.

Instaland’s crowdfunding platform is technology-focused. Investors can log onto the platform and view the performance of their investments.

Instalend also brings institutional-level real estate analysis to each of its deals. Analyzing deals is very time-consuming. To be successful at it, a high level of analytical expertise is needed. Investors get that expertise by investing in Instalend opportunities.