On-probation (3 out of 10 stars)
What is Sharestates?
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Update February 12, 2021: in the last update, Sharestates had been ranked in the "contender" category.
So a new survey was just done to see what the current investor sentiment is. When asked the question "Would you recommend that your friend or family member invest with Share States?" 0% answered "yes", 100% answered "no" and 0% answered "not sure".
One of the biggest complaints was about how Sharestates allegedly handles loans that have gone bad (i.e. stopped making payments/default). Numerous investors claimed that the platform is very slow in pursuing deadbeat borrowers versus other platforms (one investor called the process "excruciatingly slow" and another claimed a loan had been in default for multiple years). If accurate, perhaps this is due to the fact that so many of their loans are in judicial-only states (see main review for more on how this might affect the speed).
Other investors claimed that when things go wrong, the communication was poor and that they were unsatisfied with the amount of details.
As a result, Share States has been downgraded to "on probation". Hopefully they will be able to turn things around and score higher on the next review.
Sharestates specializes in commercial and residential real estate debt.
Sharestates says that it plans to release it's performance history publicly, very soon. If it does so, that would be great for investor transparency and would move them up the rankings.
Temporarily, they agreed to send me their statistics, and if accurate they're very impressive. They claim to have an uncured default rate of 0.76% in 2017 (1 out of 131 loans) which may be one of the best in the industry (note: we are still waiting to see the uncured default rate through history to make a final determination. See further information below.). Additionally, they claim that on 1 of those uncured defaults, investors got back all their principal and interest, and the 2nd foreclosure is still pending.
On the downside, the vast majority of their loans are made in New York and New Jersey which are states which do not have a nonjudicial option for foreclosure. Investors who do experience foreclosures in these states face the possibility of extremely lengthy (years instead of months) and expensive (have to pay to fight it out in court) processes. The site says they intend to expand into other states in the future. If so, investors may wish to cherry pick only the loans from states that have nonjudicial foreclosure.
Their investment volume is adequate (5 open investments when we looked). Although, investors with a large portfolio will need to find other options, such as a hard money loan fund.
(They claim that they're one of the largest originators in the industry and that in the sampling month they originated 67 deals. However, they also claim that the vast majority went to institutional investors and only 18 were made available on the platform to retail accredited investors. Since this website is from the point of view of an accredited investor, that is how they are being judged on volume).
They have a fairly low investment minimum of $1,000.
Advantages: Low investment minimum of $1,000.
Disadvantages: Mostly lending in states without a nonjudicial option,, which means significantly more expensive and time-consuming foreclosures..
Alleged problematic investments (as reported by investors)
2017-11-01: June 2016 loan at 224 Erie Street, Elizabeth, NJ 07206 went into default, uncured default and is now in foreclosure.
For more raw data on the site (including investor and sponsor fees, legal structure etc.), or to easily compare it with the data of competitors, see the feature by feature comparison matrix.
Where can I discuss other ShareStates deals?
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Who are ShareStates Competitors?
Here are the reviews and rankings for other residential debt sites:
To compare this site directly with competitors, see the
feature by feature comparison matrix.
OR...if you're looking for more volume and/or more conservative LTV's than most crowdfunding sites provide, then a fund might be a better choice for you. If so, here is our Guide to the Top 15 Hard Money Loan Funds (and honors).
How to pick?
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About Ian Ippolito
Ian Ippolito is an investor and serial entrepreneur. He has been interviewed by the Wall Street Journal, Business Week, Forbes, TIME, Fast Company, TechCrunch, CBS News, FOX News, USA Today, Bloomberg News, Realtor.com, CoStar News, Curbed and more.
Ian was impressed by the potential of real estate crowdfunding, but frustrated by the lack of quality site reviews and investment analysis. He created The Real Estate Crowdfunding Review to fill that gap.
Code of Ethics: To maintain objectivity, I do NOT accept any money from any outside sponsor or platform for ANYTHING (including but not limited to affiliate ads, advertising etc.). See code of ethics for more.
Personal opinion only: All info is my personal opinion only as an investor. I am not an attorney, nor an accountant, nor your financial advisor. Always do your own due diligence and consult with your own licensed professionals before making any investment decision. Information is believed to be correct but may have errors, so use at your own risk. If you find an error, please let me know.
Ratings are general: In my opinion, every investor comes from a different risk tolerance and financial situation, so there's no such thing as a single investment or platform that's great for everyone. There are many deals that aggressive investors love, which I won't touch, and vice versa. And every investor has their own way of doing due diligence. I believe there's no one right way to do it.
So, the site ratings are based on criteria which I feel are important to the broadest range of investors (transparency, volume, bankruptcy protection, etc). And even though I have my own personal, conservative, due diligence method (and talk about how the site's deals measure up in the "deep dive section"), I don't use my personal criteria as a factor in the ratings. So for example, a high ranking/rating doesn't mean that I would personally invest in a site (and vice versa). Click here to see what's in my own portfolio.
Have you used the above site before? What was your experience?
This site has been ranked and reviewed as part of our in-depth, 100+ site industry review. All data is believed to be correct, but may have mistakes. Please contact us if you notice one. All non-data (including rankings, investor comment summaries, etc.) are my opinion only. I'm just an investor and not an attorney, accountant, or certified financial advisor. To maintain neutrality: I do not own a portion of any of the companies reviewed.