via Reddit:
Yes, I know this is obvious to most but there’s still enough questions about these sorts of services (and wanting to invest because they think diversifying away from stocks is good or they are attracted to the novelty of asset classes previously unavailable to them with “invest like the 1%” tag lines, etc) that I thought this article was a worthwhile reminder of the risks of these sorts of services.
Even if something you wouldn’t invest in, fairly detailed and lengthy article that I thought was an interesting exploration of how (and how badly) some of these deals went wrong.
“When Justin Klish stumbled upon an ad for Yieldstreet in February 2022, he said, it was the company’s tagline that stuck in his head.
“Invest like the 1%,” the startup said.
The ad spoke to his desire to build wealth and diversify away from stocks, which were then in freefall, Klish said. Yieldstreet says it gives retail investors such as Klish access to the types of deals that were previously only the domain of Wall Street firms or the ultrarich.
So Klish, a 46-year-old financial services worker living in Miami, logged on to Yieldstreet’s platform, where a pair of offerings jumped out to him.
He invested $400,000 in two real estate projects: A luxury apartment building in downtown Nashville overseen by former WeWork CEO Adam Neumann’s family office, and a three-building renovation in the Chelsea neighborhood of New York. Each project had targeted annual returns of around 20%.
Three years later, Klish said he has little hope of ever seeing his money again. Yieldstreet declared the Nashville project a total loss in May, according to an investor letter, wiping out $300,000 of his funds. The Chelsea deal needs to raise fresh capital to avoid a similar fate, according to another letter. Both letters were reviewed by CNBC.”
And:
“In late 2022, Yieldstreet even told investors that real estate was a “safe(er) haven” asset during periods of rising rates and high inflation. By then, the Fed’s intent to squash inflation with higher rates was well understood.
“Real estate can be an effective inflation hedge, carries low correlation to traditional markets, and has even benefitted in times of market downturns, generating outsized returns,” the startup said in a blog post at the time.
In the post, Yieldstreet gave the example of the Alterra Apartments, a multifamily project in Tucson, Arizona, where it said rent increases and a contractual cap on interest rates protected it from the Fed hikes.
But this year, Yieldstreet told investors in the $23 million deal that the Tucson development was in technical default and headed for a full write-off.”
(https://www.cnbc.com/2025/08/18/yieldstreet-real-estate-bets-customer-losses.html)