One of the key benefits of investing in commercial real estate is the potential for attractive returns. This asset class often provides steady cash flow through dividends, adding diversity to your investment portfolio with tangible assets. By diversifying into commercial real estate, investors can access a market that is the third-largest after equities and bonds.
Making the transition from single-family real estate to commercial properties may seem daunting at first. Investing in commercial real estate through platforms like CrowdStreet can provide investors with access to a wide range of opportunities across different property types and markets.
CrowdStreet offers a platform where investors can browse and select specific commercial real estate projects to invest in, allowing for greater control over their investment decisions.
- User-friendly interface
- Diverse investment offerings
- Great investor resources
- Proven performance history
- Many offerings eligible for inclusion in self-directed IRA
- Accredited investors only
- Most offerings require a $25,000 minimum investment
- Open to Non-Accredited?: No
CrowdStreet Ratings at a Glance
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Crowdstreet: The Basics
Real estate investing has come a long way in the digital era. In what seems like the drop of a hat, buying property has gone from a highly localized endeavor where investors primarily sought out opportunities in areas they were familiar with to a multinational affair where many investors never even visit the properties they own. Some people might have simply invested in a REIT, but they wanted more than what looked like a hedge fund that might manage a rental property or two.
Perhaps no company typifies this brave new world of investing better than Crowdstreet. Since its founding in 2013, Crowdstreet has become a popular and well-respected online real estate crowdfunding platform.
Crowdstreet allows investors to buy into everything from managed funds to specific building projects all over the country. To date, hundreds of developers have raised funds through CrowdStreet offerings, and tens of thousands of Crowdstreet investors have made money investing in those offerings.
Crowdstreet has also made over $250 million for its investors since it was launched, shirking the traditional real estate investment trust model, making it even easier to take on the ideal real estate project, helping people like you earn money and accessing real estate deals large and small.
Crowdstreet's solid performance record and the growing popularity of online investing means it's time to take a look under the hood and see whether it's the right real estate investment platform for you.
How Does Crowdstreet Work?
At its core, Crowdstreet is a crowdfunding platform for investment properties you can't buy on your own, which is where it gets its name from. Developers, builders and other entities who need funding for real estate projects apply directly to Crowdstreet to see if they can raise funds on the platform.
After this application is made, Crowdstreet's team of fund managers and executives put the developer (and their project) through an intense vetting process to make sure the proposed investment meets Crowdstreet's criteria.
Crowdstreet might be more amenable to a risky deal with high upside than a traditional bank, but they aren't in the business of asking investors to take wild punts on bad deals. It still does the due diligence, formulates a proper investment strategy and gives you an investment opportunity that's truly affordable. That's why less than 5% of the applications made to Crowdstreet will meet its qualifications and appear as offerings on the website. After the applications are approved, they appear as offerings on the Crowdstreet website.
These offerings can be everything from equity in a new mixed-use development to shares in an opportunity zone fund and everything in between. Crowdstreet investors can then sign into their brokerage account, browse the site for an investment opportunity and look for the type of investments they would like to make.
It doesn't matter whether you prefer light industrial, residential or commercial developments — Crowdstreet is almost bound to have an offering that strikes your fancy, which means you don't need to hunt the stock market for price movement or take out hard money loans to buy properties on your own.
Aside from the risk of loss and tax exposure, the biggest potential downside of any investment is investor fees. One of the best aspects of Crowdstreet is that about 70% of its fee structure is paid by the developers, builders and sponsors whose proposals appear on the site. What that means for investors is they get to keep more of the profits they make off of Crowdstreet investments. That's why Crowdstreet rates highly for investor fees.
Using Crowdstreet is an absolute breeze. Investor signup is incredibly simple and you can even sign up for a Crowdstreet account using your email address. Because Crowdstreet offerings are only available to accredited investors, you will have to provide it with verification that you've been accredited by the Securities and Exchange Commission (SEC) before you can invest.
Once that's done, the site has a simple-to-use scroll-down menu that allows you to choose investments and tailor a portfolio to your individual preferences. Crowdstreet is incredibly easy to navigate and picking investments feels a lot like picking flights, dates and times on common travel sites.
It doesn't take a lot of time spent on Crowdstreet to see that investor education is a point of focus. At the top of the website, there is a prominently featured scroll-down tab for investor resources. The first section is dedicated to new investor orientation and a quick start guide where you learn about the investment fund, your account minimum and the investment vehicles offered.
Both the orientation and quick start guide are powered by live Zoom lessons, the dates of which will pop up the minute you click on them. If you miss a lesson, it's not a problem. Just scroll down to the Events tab and you will find these lessons available on-demand.
There is also a Streetbeat section, which is a library of Zoom webinars from Crowdstreet professionals that will provide investor insight into just about whatever type of real estate deal you want to make. In this section, you'll find pages upon pages of webinars that will walk you through everything from learning the basics of local markets to offering expert insights on how capital markets affect your real estate investments.
This is the best place to look for alternative investment strategies, learn how rental income is parsed amongst investors, read articles by investment professionals, and learn to see what a project developer or property manager sees.
Crowdstreet also has a well-stocked Investor Resource Center, the very first section of which is Crowdstreet's guide to 2024's best real estate investments. On top of that, Crowdstreet's investor education area has three excellent sections that are chock full of information on the following subjects:
- A How To: Baseline info (why real estate is a good investment and ways to invest in real estate)
- New Investor Orientation: Commercial Real Estate 101: A primer on what commercial real estate is and how it works
- Nuances of Asset Classes: Provides investors with the ins and outs of the different real estate asset class investments
Finally, Crowdstreet has a great Investor Help Center where investors can find guidance on a wide range of topics, from tax planning and investor accreditation to sponsor relations. Crowdstreet prides itself on making real estate investments as easy to understand as possible for both its members and potential investors.
This goes a long way toward explaining why Crowdstreet is such a popular online real estate investing platform. Crowdstreet's commitment to customer service and investor education is obvious on every page of its website, from the landing page to the Frequently Asked Questions section.
Customer support is a key plank of any online platform, and that goes doubly so for a real estate investment crowdfunding platform. CrowdStreet does fairly well here. The Crowdstreet Assistant tab is a live chat window that appears on the site's landing page where investors (or potential investors) can engage with a Crowdstreet representative regarding any questions they might have. However, there may not always be a live assistant available to help.
Check out the “Ask a Question” and “Contact Us” tabs at the bottom of every page on Crowdstreet. Email queries are responded to in a reasonable time with specific answers to your questions or step-by-step guidance as to where you can find the answers on the site.
The diversity of Crowdstreet's offerings is another huge strength, given its assessment process, variety of investment products and investment managers who keep the portfolio in top condition. When it comes to brick-and-mortar real estate, the Crowdstreet marketplace offers a full range of investments, which include the following:
- Commercial buildings
- Multifamily real estate
- Hotels
- Mixed-use developments
- Single-family home developments
Most of the offerings on Crowdstreet are from sponsors or developers looking to raise funds for the types of projects listed above. These are typically direct equity investments. However, Crowdstreet also features 3rd-party Opportunity Zone Funds, and now Crowdstreet has some of its own managed-fund offerings for investors.
Crowdstreet is a well-run platform with a solid history of returns. The company updates its performance metrics each month along with a breakdown of historical performance for each investment category. Since its founding, 157 of CrowdStreet's 650-plus offerings have been fully realized and netted an internal rate of return averaging over 19%.
From top to bottom, Crowdstreet is a very well-run operation with an incredibly user-friendly website. It's easy to see that a great deal of thought went into the flow of information and how to provide investors with the resources they need to use the site effectively. If you're an accredited investor who is curious about real estate crowdfunding, or you've been wanting to look at some out-of-the-box ways to diversify your portfolio, Crowdstreet is a great option to consider.
The diversity of investment offerings, intense vetting process and top-level user interface all come together to form a top-notch online real estate investment platform. Perhaps the only significant downsides of Crowdstreet's offerings are the investor accreditation requirement and high minimum buy-in combined to limit access. All things considered, it's a solid 4-star platform.
Should You Use CrowdStreet to Diversify Your Portfolio?
One key advantage of using CrowdStreet is the ability to gain exposure to real estate markets that have historically provided stable returns and acted as a hedge against inflation. Additionally, CrowdStreet allows you to invest in specific properties that align with your investment goals and risk tolerance, giving you more control over your investment decisions.
However, it is important to carefully research and evaluate the available opportunities on CrowdStreet to ensure they align with your investment objectives and overall financial strategy.
Frequently Asked Questions
How risky is CrowdStreet?
While CrowdStreet thoroughly vets the sponsors and developers behind each offering on its platform, there is always a risk that a project may not perform as expected. It’s important for investors to carefully consider their risk tolerance and investment goals before committing funds to any platform, including CrowdStreet.
What is the minimum investment for CrowdStreet?
Most of CrowdStreet’s offerings require a minimum investment of $25,000.
What is the average return on CrowdStreet?
CrowdStreet has an average internal rate of return of over 19%