CrowdStreet is best for active and passive accredited investors who want access to a wide range of commercial real estate investments. But investors need to do their own research and be ready for their money to be locked up for years at a time.
If you’re an investor, you’ve probably thought a lot about adding some commercial real estate (CRE) to your stock portfolio if you haven’t already. After all, CRE investments are much more stable than cryptocurrency and can give you more options and a better return than residential investments.
But the hardest part of CRE investments has always been finding the right property. This is because there are so many factors to consider, such as cyclical markets, sector stagnation, and the reputation of the developer.
CrowdStreet makes it easy for people all over the country to invest in commercial real estate projects by putting them in touch with project developers. They review developers, including checking their background and references. This helps investors who may not have the time or desire to do this first round of review on their own narrow down the list of commercial real estate opportunities.
As an investor, you can choose individual properties and work directly with the project sponsor, or you can buy into CrowdStreet-backed funds, which are made up of a variety of real estate projects like a mutual fund.
Investors should be ready to put their money away for three to seven years. Most investments are illiquid, which means you can’t easily cash out like you can with stocks or ETFs.
The minimum investment is set by the sponsor and varies from offer to offer. Most of the projects and real estate funds on CrowdStreet require a minimum investment of $25,000.
CrowdStreet is just one of the many companies in the real estate crowdfunding market. But because of its thorough marketplace and thorough screening process, it is one of the best places to invest in commercial real estate. However, some investors might be put off by the high minimum funding requirements and low liquidity.
In our CrowdStreet review, we talk about how the platform works, what you need to do to use it, and how you can decide if it’s a good investment for you.
CrowdStreet Background
CrowdStreet was started in 2014 in Portland, Oregon. It connects accredited investors with commercial real estate investment opportunities that have already been checked out.
CrowdStreet is a middleman, not a single purpose vehicle (SPV). This means that they will take a small cut, but you will be able to talk to project sponsors directly. This is a big deal because SPVs can make it hard to communicate or slow down funding. CrowdStreet lets you handle your relationship with your project sponsor on your own.
Even though CrowdStreet has the most investment opportunities on the market at any given time, don’t think that it gives up quality for quantity.
CrowdStreet’s sponsor vetting process is, to say the least, thorough. Background checks, checking references, and more are all part of this process. Only 5% of the deals that CrowdStreet looks at are good enough to be accepted.
What You Should Know About CrowdStreet
CrowdStreet’s Research
On CrowdStreet’s website, each investment opportunity comes with a detailed video webinar about the project. This is a good way for investors to learn more about the specifics of the development and make sure it fits in their portfolio.
Its Investment Thesis feature shows investors how potential deals are being evaluated, as well as Crowdstreet’s thoughts on different asset classes (e.g. hospitality, industrial, medical office, multifamily, office, retail, self storage, senior housing, student housing, etc.) and locations in the real estate industry.
How-To Section
Each project page has a resources section with how-to videos and articles about investing in general, as well as a link to CrowdStreet’s “Quick Start Guide” to help you get started.
More Ideal For Accredited Investors
In general, accredited investors can access all of CrowdStreet’s offerings, such as single property offerings, funds, and their own product, The Blended Portfolio.
Accredited investors are those that have a net worth of at least $1 million or an annual income of at least $200,000 if single or $300,000 if married. If you’re not an accredited investor, check out our reviews of Fundrise and DiversyFund, which both let people who aren’t accredited investors invest in real estate.
Only certain properties or funds are open to investors who are not accredited.
Things To Remember
- Each CrowdStreet project is different, and you need to do your own research on each one, in addition to CrowdStreet’s review process, to make sure it fits with the rest of your investments.
- You can’t easily get your money out of these real estate investments, so be ready to leave it there for a few years.
- Some projects might start to pay off quickly, while others might take years.
- If a project doesn’t get enough money, you’ll get your money back.
You can lose money with any investment. CrowdStreet shows the results of deals that have already ended, so you can see how well they did in the past. But remember that past results can’t tell you how you’ll do in the future.
Should You Use CrowdStreet?
There’s no doubt that adding real estate to your portfolio can be a good idea. Real estate is a good way to spread out your investments and make them less risky. The easiest way to do this is with a publicly traded real estate investment trust, or REIT, which you can trade like a stock, or a REIT mutual fund.
REITs can be invested in by anyone, and they have lower minimums than CrowdStreet projects. Also, publicly traded REITs can be easily sold, which makes them a liquid investment. A REIT mutual fund is a one-stop shop for a diversified real estate investment.
But it’s also true that the prices of shares in publicly traded REITs tend to move in a way that’s similar to how the stock market as a whole does. Investing directly in real estate through a site like CrowdStreet could be a better way to spread out your money. Even when the prices of REITs go down, the value of new developments could stay the same or even go up.
If you have time to research the projects on CrowdStreet, can let your money sit for a few years, and are an accredited investor, then CrowdStreet is a useful and easy way to invest in commercial real estate projects.
How To Invest With CrowdStreet
CrowdStreet lets you start investing in three easy steps:
- Sign up for an account.
- Fill out your profile as an investor.
- Look at deals and buy.
If you want to look at deals before giving all of your information, CrowdStreet lets you start browsing as soon as you enter your name, email, and password.
When you start looking at deals, you’ll see how easy it is. As a possible investor about to spend money on a new investment, you can find all the information you could want on a given deal, such as:
- The business plan
- Photos and videos
- The capital stack
- Live webinars and recordings
- Site plan, unit plans, amenities, etc.
- Sponsor info with track records
- Q&A forms
- And much more
CrowdStreet has done a great job with the difficult task of making it easier to invest in commercial real estate. The site is surprisingly well-built and easy to use.
How Much Does It Cost?
Making an account is free. CrowdStreet’s investment vehicle, the CrowdStreet Blended Portfolio, has a management fee of 1%.
Fees for all other offerings that aren’t from CrowdStreet vary by deal and are shown on the page for each offering.
What’s The Blended Portfolio?
The CrowdStreet Blended Portfolio (CSBP) is a type of investment fund.
Want to add commercial real estate to your portfolio but don’t have the time or patience to do research on each possible deal? This is where the Blended Portfolio comes into play.
The CSBP is made up of more than 25 real estate offerings from the CrowdStreet Marketplace. These were chosen by a special algorithm that keeps a mix of property types, risk profiles, and locations.
How Does CrowdStreet Stand Out?
- Commercial real estate variety. With CrowdStreet, you can invest in a wide range of commercial real estate projects, such as office buildings, shopping centers, and properties with more than one unit.
- Get in touch with sponsors. CrowdStreet connects investors directly to project sponsors, which can make the process much smoother.
- Institutional-grade products. CrowdStreet doesn’t have any opportunities for residential or “fix-and-flip” investments. Through a thorough screening process that includes reference and background checks, they get rid of 95% of the developer applications they get.
- The marketplace. You can sign up for an account and start looking at CrowdStreet’s deals right away. Also, the site is very well organized and simple to use.
Who Is CrowdStreet For?
People with a lot of money who want to diversify their investments
CrowdStreet doesn’t hide what it has to offer or who it’s for. CrowdStreet’s ideal client is an accredited investor who can put at least $25,000 into a commercial real estate deal and forget about it for at least five years.
But even if that doesn’t sound like you, you can still use the platform to your advantage.
People who want to get into commercial real estate
Platforms for investing in commercial real estate like Crowdstreet give investors a unique way to get into the real estate market.
Crowdfunded real estate platforms are able to fund projects that would be out of reach for individual investors if they had to pay for them on their own. They do this by combining the money from many investors into a single real estate investment.
By investing in commercial real estate through a platform like Crowdstreet, investors can avoid many of the usual hassles and headaches that come with real estate investing, such as managing the property and negotiating the lease.
People who want to talk to real estate properties directly
Crowdstreet is a great platform for real estate investors who want to connect directly with real estate pros. It has deals on office buildings, shopping centers, apartments, and storage units, among other types of real estate.
It’s easy to find deals and compare them because it’s an online market. Also, you can put as much or as little money into each deal as you want.
Who’s Not A Good Fit For CrowdStreet?
People who want to invest for the short-term
The average investment period on CrowdStreet is five years. CrowdStreet and commercial real estate in general might not be for you if you want to get in and out quickly.
Non-accredited investors
On CrowdStreet’s platform, the least you can spend on a deal is $25,000. The platform is more tailored to accredited investors.
Still, CrowdStreet has had a few Regulation A+ deals over the years that were open to non-accredited investors. So, if you are not an accredited investor, you may still be able to use CrowdStreet to invest, but you’ll have fewer options.
Investors seeking liquidity
As you may have guessed, commercial real estate transactions are not very liquid. Even with CrowdStreet’s direct connection, it’s very hard, and often impossible, to get cash out of a CRE investment, especially one with a long Target Investment Period (TIP).
You should only put money into commercial real estate that you won’t need for a very long time.
CrowdStreet vs. Competitors
The most important thing about CrowdStreet is that it has the most to offer accredited investors. Over the years, CrowdStreet’s competitors have given more opportunities to people who aren’t accredited.
Realty Mogul
Realty Mogul, a competitor of CrowdStreet, has non-traded REITs, which are better for investors who are not accredited. These risky, unregulated investments can sometimes give you the same high returns as single-sponsor deals but with a lower initial investment.
But Realty Mogul doesn’t say much about how they choose what to show on their site. Also, Realty Mogul is known for having a complicated fee structure. CrowdStreet’s fees can be summed up in a few sentences, but Realty Mogul has different project and management fees for each type of asset.
RealCrowd
RealCrowd is the only other platform that connects accredited investors and sponsors directly without any middlemen, fees, or complicated details. Because of this, it’s probably the most direct competitor to CrowdStreet. The advantage of RealCrowd is that it gives users access to RealCrowd University, which is a six-week online course on real estate investing.
CrowdStreet beats RealCrowd because it has options for investors who aren’t accredited and because it has a few more deals going on at any given time.
EquityMultiple
EquityMultiple and CrowdStreet are both options for accredited investors.
With EquityMultiple, you only need $5,000 to make an investment. CrowdStreet’s minimum is $25,000.
EquityMultiple’s fee structure is pretty clear and easy to understand, but EquityMultiple does keep a part of the investment through profit sharing. CrowdStreet’s fees depend on the type of investment vehicle.
Overall, EquityMultiple is worth a look for comparison purposes.
What’s Reddit Think?
Reddit is a great place to read about individual user experiences with CrowdStreet. You can get a lot of tips on how others are using the platform. You can find the CrowdStreet subreddit here.
Here are a few bits from users over at reddit:
“My biggest complaint with CrowdStreet is that they are very hands-off. They are a bulletin board for real estate investment deals, their due diligence is lacking, and they don’t do anything to help manage failing investments.”
“I wouldn’t say that I won’t invest with them again… I still want to keep a portion of my investments somewhere other than the stock market. But I think CrowdStreet is best suited to experienced investors who have the time and ability to do proper due diligence on deals and sponsors. Don’t assume that CrowdStreet is sourcing top quality deals.”
“What I like about Crowdstreet has been a solid/user friendly platform, and many large and established sponsors. I think the distributions are typically not that great, likely due to the fees that the sponsor is paying to Crowdstreet, however the accessibility to deals at 25K lets you spread out the risk. I don’t have any real expectations of their support if a deal goes south. I do see some case studies for deals gone bad, but not sure if that covers all the deals on their platform.”
“Best way to think is – are you a mutual fund investor or stocks investor. I always invest in stocks hence I like crowdstreet. I just started on CS so cannot speak for the return but my expectation is well north of 7%.”
“I have done a few of their fund deals and I like the built in diversity of projects. Their last fund was not fully deployed before the pandemic started, so they looked at the landscape and said, ‘well, the market is crazy we don’t think we will be able to deploy this capital responsibly.’ So they partially refunded all of the investors what they hadn’t committed to projects yet. That’s a high integrity company.”
Bottom Line
CrowdStreet is a very well thought out platform that speeds up the due diligence process by giving you all the information you could want in a clear, concise way. Or, you can invest in the CrowdStreet Blended Portfolio to save time and trade potential yield for diversification.
If you’re an accredited investor who wants to put at least $25,000 into a high-yield, long-term investment, CrowdStreet is the place to do it. Commercial real estate is a great way to diversify your portfolio, and it’s a great place to invest.
When efficiency, scalability, and choice come to a market, most of the time consumers win. As the online real estate investment market continues to grow, the choices and terms of investments are likely to get better as more investors join online marketplaces and more sponsors compete to get their attention.
In the end, CrowdStreet gives investors access to a large number of screened equity and debt deals in commercial real estate, and it doesn’t charge investors any direct fees. It’s a great place to invest if you meet the requirements for accreditation and have enough money. Learn more about CrowdStreet…
Find more real estate offers here…
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