CrowdStreet Review: Pros And Cons Of The Popular Real Estate Crowdfunding Platform
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CrowdStreet allows unparalleled access to institutional real estate investing for accredited investors. While there are other real estate crowdfunding sites for non-accredited investors, CrowdStreet currently only accepts higher income or net worth investors.
As one of the higher volume platforms, CrowdStreet is friendly for both investors and project sponsors. Statistics on CrowdStreet include over 250 commercial real estate projects that have used the platform as well as 100,000 investors.
In 2020 alone, CrowdStreet brought 90 deals to their investment community. These projects included such commercial real estate projects such as charter schools, data centers, and micro-unit family developments.
Finally, CrowdStreet is very beginner friendly. Their site offers a number of educational tools that helps guide new investors through the world of crowdfunded real estate investing.
CrowdStreet Review: Platform Basics
Minimum investment requirements
The minimum investment requirement for CrowdStreet is $25,000. This is pretty high compared to other real estate investment platforms. CrowdStreet also offers private managed accounts which provide diversified real estate holdings selected by professional managers. The minimum for the managed service is $250,000.
Does CrowdStreet Have Fees?
CrowdStreet charges a management fee between .50% and 1.00% for its CrowdStreet blended portfolio. Fees for other offerings will vary depending on the deal. Typically, the yield on individual projects will range from .75% to 2.75%
What Is The Average Return On CrowdStreet?
CrowdStreet has a strong history of success and average returns, with an annualized Internal Rate of Return (IRR) of 18.7% from 2014 to October 2022 . This is 1% higher than the average IRR of 17.7% with an average hold period of 2.8 years reported across all real estate crowdfunding investments.
CrowdStreet Review: Pros And Cons
Pros of CrowdStreet
CrowdStreet has been in operation since 2013 making it one of the oldest crowdfunding real estate platforms.
Excellent deal flow and investment variety
There are always a wide range of deal opportunities on the platform. And with CrowdStreet, there isn’t a one-size-fits all approach. Depending on their risk profile and appetite, investors have the opportunity to invest in diversified funds and vehicles, individual investment deals, or work with a professional portfolio manager to help them tailor a portfolio specifically for them
To put it in their own words, Crowdstreet has an “uncompromising commitment to quality”. Sponsors are well vetted on many levels including background checks, track record review and responsiveness to investors.
Just because someone is an accredited investor, it doesn’t mean they are well versed in all investment classes. CrowdStreet’s educational tools help new investors navigate the world of real estate investing.
Cons of CrowdStreet
Not inclusive for all investors
As mentioned previously, you need to be an accredited investor to invest through CrowdStreet.
To be an accredited investor you either need…
- A net worth exceeding $1 million
- An annual income over $200,000 (if single) or $300,000 (for joint income) over the course of the last two years and the expectation that you will earn the same or more for the current year.
- Or hold current Series 7, Series 65, or Series 82 licenses.
High minimum investment
CrowdStreet requires a minimum investment of $25,000 which is higher than many other crowdfunded real estate platforms.
Not great for fast liquidity
On CrowdStreet, you are investing in specific projects and you must wait until the deal matures. This is not an ideal option if you ever need your money for an emergency.
Now that you know some pros and cons, let’s dive into a few questions you might have.
Can You Lose Money On CrowdStreet?
Does CrowdStreet Pay Monthly?
Yes, CrowdStreet pays on a monthly basis. The payment cadence is dependent on the particular offering however, with some investors receiving distributions very soon after the closing of the offering. Investors should review the offering’s details page to learn more about potential distributions. CrowdStreet is an online commercial real estate marketplace that allows accredited investors to add projects to their portfolio with ease. It’s important for investors to do their own research before investing, as there are no redemption options at this time.
Overall, CrowdStreet is a best-in-class platform for high net worth or high income earners who are looking to create a long term, diversified real estate investment portfolio. Join today!