CrowdStreet Review 2023: Features, Pros, and Cons
CrowdStreet is a platform allowing accredited investors access to commercial real estate investment opportunities.
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CrowdStreet provides a modern and transparent platform for investors who want to invest in real estate but don’t have the hundreds of thousands of dollars necessary to invest in private offerings.
Thanks to new technologies and the internet, investors can now conveniently use crowdfunding platforms like CrowdStreet to access real estate deals nationwide. They can invest directly in commercial properties and compare offerings to find the deals that fit their investment criteria.
This review will dive into CrowdStreet, how it works, the account opening process, and the features they offer. Moreover, we will check its pricing, security, customer service, pros and cons, and who should invest in CrowdStreet.
Quick Summary: CrowdStreet is an online platform allowing accredited investors access to commercial real estate investment opportunities. Investors are able to diversify their portfolios across several projects and geographic markets.
- Direct real estate investments
- Deep and transparent screening
- IRA accounts available
- Excellent deal flow
- Robust educational resources
- High minimum investment
- Limited liquidity
- Accredited investors only
What Is CrowdStreet?
CrowdStreet is an online investing platform for real estate projects across the United States. The crowdfunding platform offers unparalleled access to institutional-quality commercial real estate deals and brings accredited individuals and project sponsors together.
On the user-friendly Marketplace, investors will find different investment opportunities to review, compare, and invest in. They can also invest in managed funds or use the firm’s advisory service if they don’t want to create a real estate portfolio independently.
CrowdStreet checks every sponsor and project application to determine whether a deal is suitable for its investor audience or not. A robust track record and a strong management team are two massive selling points for sponsors who want to raise equity on the platform.
How Does CrowdStreet Work?
After creating an account, investors have full access to the platform’s commercial real estate offering. The appealing Marketplace is the heart of CrowdStreet, where investors can browse and filter investment opportunities, get to know the sponsors, review deal details, and sign legal documents. From there, investors pick their investments, fund their transactions, and monitor their performance.
How to Open a CrowdStreet Account
Opening an account with CrowdStreet is quick and easy, just click on the ‘create an account‘ button on the website’s top right corner. From there, the site redirects you to a new tab. Enter your first and last name, email address, password, and answer the accreditation question. Then, agree to the platform’s terms of service and sign up. After that, fill in your personal information and provide any required documents.
However, only accredited investors can invest on the CrowdStreet Marketplace. To become an accredited investor, you must meet one of two criteria:
- Earned $200,000 in annual income per year in the last two years ($300,000 with a spouse)
- Have $1 million in net worth excluding your primary residence
And even if you are an accredited investor, your minimum investment will be at least $25,000 per real estate project.
CrowdStreet offers different features for investing in commercial real estate deals, checking their past performance and deal review process, and deepening your financial knowledge on the topic of real estate investing.
|Account Fees||0.50% to 2.5% (Funds); Project Fees Vary|
|Time Commitment||2-10 years|
|Offering Types||Debt, Equity and Preferred Equity|
|Property Types||Commercial Real Estate (CRE)|
|Advertised Returns||11.8% to 20.2% (Average returns)|
|Distributions||Varies by Project|
|Regions Served||50 States|
|Support||Phone, Email and Chat|
Investors who prefer investing in direct real estate investment opportunities should choose one (or more) of the individual deals listed on CrowdStreet’s Marketplace. There, you can pick the real estate deal that fits your investment strategy and invest directly into the project’s equity. Your capital will go directly to the deal sponsor because CrowdStreet doesn’t act as a middleman. This means you alone are in total control of your investment.
Investing in individual deals has many advantages. You gain access to one of the largest institutional-caliber real estate marketplaces online and can design your real estate portfolio to your liking. CrowdStreet, on the other hand, will support you with detailed and transparent deal documents and sponsor history.
The team at CrowdStreet conducts a thorough pre-screening process on every sponsor and property to offer only those individual real estate deals investors want to invest in.
If investing your capital one-on-one with a deal sponsor is too risky for you, you should consider a commercial real estate fund. By making one single investment into a real estate fund, your capital will be diversified across multiple properties at once, resulting in less risk of losing everything. You also don’t have to spend time and energy building a portfolio.
With CrowdStreet, you can invest in two professionally managed, institutional quality real estate funds: single-sponsor and CrowdStreet funds. The Single-Sponsor funds focus on the real estate specialty of one sponsor, which can include real estate in a particular region or specific asset classes. In contrast, CrowdStreet funds are managed by the platform’s professionals. They diversify across various property types as well as deal sponsors.
A third investment option at CrowdStreet is investing in a professionally managed real estate investment portfolio tailored to your financial situation. Therefore, the experienced CrowdStreet Advisory Service Team will get to know you and your goals, select the property deals that align perfectly with your strategy, and build a customized real estate portfolio for you.
After you have agreed to the proposed strategy, the platform’s advisors will invest in property deals on the Marketplace on your behalf and manage your account. This service is available to investors who can afford a starting account balance of at least $250,000. The accompanying fees will depend on the size of the investment.
The platform regularly publishes its performance for its fully realized real estate deals. Since launching in 2014, CrowdStreet has closed 488 deals and realized 54 of them. The overall IRR amounts to 17.1%, the equity multiple was 1.39x, and the average hold period was 2.3 years.
Moreover, CrowdStreet publishes its returns for the four risk profiles tracked in commercial real estate: opportunistic, value-add, core-plus, and core.
- Opportunistic Deals: These deals have the potential for the highest returns but also carry the highest amount of risk. These deals usually have little or no cash flow and complex business plans.
The website states that investors invested in 154 opportunistic deals and have fully realized ten. The lowest return was -66.2%, the highest return was 88.4%, and the average return was 11.8%.
- Value-Add Deals: Value-add deals aim to drastically increase the property’s cash flows and value over time by making significant improvements. Value-Add is also one of the most common risk profiles.
Until today, investors have invested in 247 deals. 35 have been fully realized with the lowest return being a complete loss, the highest was 42.8%, and the average was 20.2%.
- Core-Plus Deals: Core-plus deals include high-quality occupied properties that provide monthly cash flows for maintenance and future upgrades, resulting in lower cash flows for investors.
According to CrowdStreet, investors invested in 84 core-plus deals and six have fully realized. The lowest return was 7.5%, the highest 19.7%, and the average 12.6%.
- Core Deals: Core deals have a stable, predictable cash flow and are considered a safe bet. They usually run on full occupancy, don’t need major upgrades, and are situated in top markets. Only 11 of all deals were Core Deals, and none has fully realized. Therefore, there is no performance data available so far.
Deal Review Process
Once a sponsor makes it through the initial sponsor review, the CrowdStreet investment team will review every individual deal and check it against their standard deal term criteria. They want to know whether:
- The project belongs to the sponsor’s core competency, aligns with their background, and shows a positive track record for the specific property type;
- The submitted documents display professionalism and meet industry standards;
- Third-party and market data back up the assumptions of the deal; and
- An investor audience and preferences like returns, location, asset class are met.
From there, CrowdStreet will review the deal’s legal documents to ensure there are no issues or discrepancies between the documents or conversations between the sponsor and CrowdStreet.
The platform also has an extensive investor resources section. There, investors can read articles about investing in commercial real estate, including specific corner topics. New investors can join orientation events or go through a quick start guide to understand the platform’s Marketplace and make their first real estate investment.
Moreover, investors have access to StreetBeats, which are videos where investors, sponsors, and industry leaders talk about the real estate market. There are also webinars where sponsors present themselves and their property deals to inform others about investment opportunities.
CrowdStreet Pricing and Fees
CrowdStreet is unique compared to other crowdfunding platforms because investors don’t pay any fees for joining and accessing its real estate deals. Typically, the deal sponsors pay the fees, including a subscription fee for using CrowdStreet’s software and a fee to raise capital. Still, sponsors may choose to charge investors management fees for their deals.
Additionally, CrowdStreet’s two real estate funds and the managed portfolio option carry individual fees depending on the project (between 0.50% to 2.5% of invested capital on an annual basis). Moreover, CrowdStreet Advisors charge investors a fee if they require extra help from the team.
The platform takes security very seriously. Therefore, all client information is encrypted to industry standards and only certain CrowdStreet employees have access to user data. In addition, all deal sponsors must undergo a background check.
CrowdStreet is not a registered broker-dealer or investment advisor. The deals on the Marketplace are speculative and involve substantial risk, meaning that you shouldn’t invest unless you can sustain the risk of a total capital loss. Still, you invest with the deal sponsor and a CrowdStreet failure wouldn’t directly impact your real estate investments.
CrowdStreet Customer Service
Investors can reach the CrowdStreet customer service team by phone, email, contact form, or chatbot. While sending a message and chatting with the CrowdStreet assistant are possible 24/7, reaching the support team is only possible during regular business hours Monday to Friday.
However, the platform has an extensive help center that makes it easy to inform yourself about various issues you might come across.
- One of the largest online commercial real estate marketplaces
- Direct access to different types of real estate and sponsors
- Track record of over 520 closed real estate deals, including 50+ fully realized ones
- No fees for investors
- Impressive track record and high returns
- Thorough pre-screening process of sponsors
- Excellent transparency for every real estate project
- Robust and easy-to-use dashboard
- Self-directed IRA investing is supported
- Extensive quality educational resources and help center
- Real estate investments are very illiquid
- Only accredited investors can invest
- High minimum investment of $25,000 per deal
- The invested capital is locked up for years
If you aren’t an accredited investor or don’t have $25,000 to invest right away, have a look at the two alternatives below:
Fundrise is a similar online platform where investors can invest in commercial and residential real estate. However, they do it through investment portfolios, which can also be liquidated prematurely. In contrast to CrowdStreet, the offering is available to every investor, not just the accredited ones.
The platform’s Starter portfolio only requires a minimum investment of $10, a fraction of CrowdStreet’s $25,000. This is a huge benefit for low-net-worth investors who want to add another layer of diversification to their investment portfolio.
Investors can also upgrade their accounts to any of the available five account levels, providing access to different investment options. Only the premium level requires a higher minimum investment than CrowdStreet.
One advantage CrowdStreet has over Fundrise is pricing. While investors don’t pay fees on CrowdStreet, Fundrise’s investors face a 1% management fee. Read our full Fundrise review to learn more.
Another real estate crowdfunding platform where investors can deploy their capital is RealtyMogul. The platform is open to accredited and non-accredited investors. However, non-accredited investors can only invest in two privately traded REITs. Accredited investors also have access to individual deals and 1031 exchanges.
Besides, investing on RealtyMogul has many benefits. Their REITs require only $5,000 as a minimum investment which is a fifth of what CrowdStreet asks. Moreover, investors can sell their REIT shares back to the platform after holding them for 12 months, which gives them at least some flexibility in an otherwise illiquid market. The platform also has one of the best due diligence processes in the real estate space. Read our full RealtyMogul review to learn more.
|Fees||0.50% to 2.5% (Funds); Project fees vary||1.0% per year||1.00% to -1.25% per year asset management fee|
|Promotion||None||Advisory fee waived (*12 months)||None|
|Highlight||Access to commercial real estate investment opportunities||Access to private real estate deals||Invest in real estate beyond publicly traded REITs|
|Best For||High net-worth individuals||Long term investors||Long term investors|
Find out how CrowdSreet stacks up against the competition.
Who Is CrowdStreet Best For?
CrowdStreet is an excellent choice if you are an accredited investor and high-net-worth individual who wants to add commercial real estate to diversify your investment portfolio with more than $25,000 in capital. The platform offers a great deal flow and consistently provides you with new investment opportunities in different real estate asset classes.
Besides, the crowdfunding platform is useful for real estate investments if you are a risk-tolerant investor who can allow his or her money to sit for three or more years without having access to it.
CrowdStreet Review FAQ
Below, you will find some frequently asked questions and our answers regarding CrowdStreet and its real estate platform offering.
Is CrowdStreet Legit?
The platform is legit and one of the most respected crowdfunding platforms in the real estate space. CrowdStreet has offered more than 520 investment opportunities, completed more than 50, and experienced only four losses. They have raised $2.1 billion in capital and distributed $240 million to their investors. CrowdStreet also provides all the necessary information to help you determine if an investment is right for you or not.
Do You Have to be Accredited to Invest with CrowdStreet?
Currently, all investors must be qualified as accredited investors. This means you must have had an annual income of $200,000 ($300,000 with a spouse) in the past two years or have a net worth of at least $1 million, excluding your primary residence’s value. If you don’t meet one of these two requirements, check out the alternatives mentioned in this CrowdStreet review.
Is CrowdStreet a Good Investment?
CrowdStreet is one of the largest commercial real estate crowdfunding platforms and can be a good investment. Thanks to their experience in real estate, they approve only the most suitable deals. The platform has an impressive track record, excellent deal flow and offers accredited investors the chance to invest in various real estate deals. These deals can generate high returns, have steady cash flows, and be vital to your investment portfolio.
How Much Does CrowdStreet Cost?
Opening an account and browsing the Marketplace listings doesn’t cost investors anything. However, each investment may carry a fee depending on the sponsor.
How Does CrowdStreet Make Money?
The platform earns about 70% of its money from deal sponsors. CrowdStreet sells its software as a subscription to them and charges deal sponsors fees to raise money on the platform. CrowdStreet also generates revenue by charging investors who need additional help from the platform’s advisory team a fee.
What Makes CrowdStreet Different Than the Competition?
There are three areas where CrowdStreet sees itself ahead of its competition: Deal flow, platform transparency, and diversification.
Investors have the chance to participate in a large amount of curated real estate deals and hand-pick those that fit their investment strategy. A higher deal flow is also great for diversification because investors aren’t forced to put all their money into one property. Spreading your capital across asset classes, risk profiles, and locations can diminish the risk of losing everything. Ultimately, CrowdStreet is transparent about individual deal details, its performance metrics, and sponsors so that investors can make informed decisions.
What Is the Average Return on CrowdStreet?
The average return on CrowdStreet varies by the underlying risk profile. The riskiest profile (Opportunistic Deals) has an average return of 11.8%, while the safer Core-Plus Deal profile averages 12.6%. Value-Add Deals are located between the two in terms of risk and have an impressive average return of 20.2%. The safest, Core Deals, have no average return data yet. Ultimately, the overall IRR for all profiles is 17.1%.
In A Nutshell
- Minimum Investment: $25,000
- Fees: 0.50% to 2.5% (funds), project fees vary
- Promotion: None
Adding real estate to diversify your investment portfolio further is an intelligent move. While you can invest in publicly traded Real Estate Investment Trusts (REITs), they tend to move in lockstep with stock markets. Therefore, investing in real estate directly can be an alternative to avoid stock market fluctuations, although it can lock up your capital for years.
CrowdStreet created a modern and digitalized way for investors to identify real estate deals previously unavailable to them. Still, coming up with the steep minimum investment of $25,000 per project will cut out many investors.
However, investors that have this capital will benefit from the deal-vetting process and an investment team that has lost money on only four of the fully realized deals, resulting in an impressive track record and high returns. Moreover, you don’t have to pay fees for their service.
Ultimately, CrowdStreet uses its extensive educational resources section to support investors with the onboarding process, educate them on various real estate topics, and help them become better real estate investors through multiple formats.
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Carsten is a Freelance Copywriter with a personal interest in money management and investing. Besides taking care of his investments, he loves traveling, reading books, and working out (calisthenics & yoga).
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