Investing > CrowdStreet Review

CrowdStreet Review

CrowdStreet is a great crowdfunded real estate investment platform for accredited investors who want to diversify their portfolio.

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Real estate investing is often heralded as the end-all, be-all for long-term investing, and for good reason. The real estate market is arguably the most stable in the world, and it’ll likely stay that way – after all, doesn’t everyone always need a place to live?

But breaking into real estate investing is tough, especially if you don’t know where to start. What deals are lucrative and what are the signs of an investment deal you should avoid?

Even worse, many would-be investors look at the prices for investing in a property by themselves and recoil. It’d be nice if there was a way you could pool your money with other investors with safe, vetted real estate deals… right?

Enter crowdfunded real estate investment platforms.

Though the name is a bit wordy, these platforms are becoming more and more popular, especially in the COVID-19 era. These days, tons of accredited investors are trying out Crowdstreet: one of the most well-known crowdfunded investment platforms.

In this review, we’ll break down everything you need to know about Crowdstreet, including how it works and whether it will be a great fit for your investment objectives.

CrowdStreet is one of the biggest players in crowdfunded real estate investment and provides a free, easy-to-use platform for accredited investors. It’s one of the best options if you’re looking for long-term and potentially high-value investments without needing to deal with a traditional middleman.

Fast Facts

  • Fees: No account fees for investors
  • Account Minimum: $25,000 on average
  • Best For: Accredited investors
  • Highlight: Great for crowdfunded commercial real estate

Ratings

  • Investment Quality: 9/10
  • Investment Options/Variety: 5/10
  • Ease of Use: 8/10
  • Fees/Costs: 7/10
  • Educational Materials: 7/10
  • Account Options: 8/10
  • Overall: 8/10
Visit CrowdStreet on CrowdStreet’s website

What is CrowdStreet?

In a nutshell, CrowdStreet is a crowdfunding real estate investment platform. This allows you to invest in real estate investment opportunities and projects by networking you directly with project sponsors or developers.

CrowdStreet Homepage

Said sponsors and developers gather the funding they need to bring their projects to life through crowdfunding – you and other investors essentially share the financial burden for a project, making it less financially risky for any individual party.

Since real estate is still a solid investment choice during COVID-19, many people are jumping on these platforms and the opportunities they provide.

As an online investment platform, CrowdStreet allows investors and project developers to meet, decide on terms, and fulfill investment agreements almost instantaneously, and much more efficiently than in the past. Furthermore, by providing an investment marketplace/browsing screen, CrowdStreet provides easy investment options for those who don’t know where to go for their next great investment deal.

Such a direct-to-investor platform is valuable because it represents a lower overall risk to investors on average. Since there isn’t a middleman or special purpose vehicle acting as an intermediary (like a bank), marketplace insolvency is less of an issue, and investors and project developers can continue working together as it suits them.

CrowdStreet is particularly notable because they provide tons of in-depth information and several documents on each project before you have to invest. Furthermore, CrowdStreet does an excellent job of due diligence, and only showcases worthwhile and legitimate real estate investment opportunities.

Overview and Summary

These are the primary aspects that define CrowdStreet and its potential value:

  1. Since its founding in 2013, CrowdStreet has grown to become one of the top crowdfunded real estate investment providers.
  2. They offer an easy to use platform interface and let users access tons of high quality commercial real estate investment opportunities.
  3. CrowdStreet features high average project values and equities per offering at nearly $36 million and $16.5 million, respectively. They’ve become even more successful recently.
  4. CrowdStreet requires high average investments for its projects at around $25,000, though the investment required can be as low as $10,000. 
  5. CrowdStreet is a good choice if you’re already an accredited investor and are interested in putting your capital toward long-term investments. 

CrowdStreet: A Short History

CrowdStreet was founded in 2013 in Portland, Oregon, as a crowdfunding real estate platform. Over the last few years, CrowdStreet’s investor community has grown to over 100,000 strong. It has facilitated total investments of over $300 million in value across over 250 offerings. These investments are secured with real estate totaling more than $8 billion in value.

Reported investor earnings vary depending on the source, but CrowdStreet itself claims that investors have earned over 22% in returns thus far altogether.

Pros

  • Allows access to top-tier commercial real estate deals
  • Provides tons of resources for user due diligence
  • No fees for investors
  • Has educational materials
  • User interface is easy to use
  • Stable, long-term investment options

Cons

  • Investments are illiquid
  • Only available to accredited investors
  • Minimum investments are quite high

How Does CrowdStreet Work?

To understand how CrowdStreet works, you need to understand crowdfunding real estate investing. Platforms like CrowdStreet act as peer-to-peer or P2P marketplaces.

Crowdstreet Investments

In other words, they connect real estate sponsors or developers with investors in a networking capacity and provide a digital platform through which investment can take place.

Put another way:

  • Sponsors (those looking to invest in real estate) post a potential deal on CrowdStreet
  • Investors provide the sponsors with cash, who invest in the property
  • As the sponsor makes money, they make payments to their investors, which are the returns

The advantage of this process is that bankers, who are traditionally middlemen in the real estate investing process, aren’t part of the equation. This results in developers paying lower interest rates and investors enjoying potentially higher returns on all of their investments.

Signing up for CrowdStreet is fairly simple, and upon opening the platform, users will immediately find a selection of carefully and professionally vetted investment choices. As a result, both beginner and experienced real estate investors will be able to find some offerings suitable for their risk tolerances or experience levels.

This is partly because CrowdStreet reviews every potential deal through a 26-point process before offering it to its member investors. This results in less than 3% of all potential deals offered to CrowdStreet ever showing up on the platform. CrowdStreet checks a variety of things including:

  • investor references
  • legal references
  • Google and LinkedIn searches
  • banking references
  • spot audits
  • and more

CrowdStreet also performs a detailed investigation on each potential real estate offering, including verifying the address of the attached businesses, doing bankruptcy searches, searching for professional licenses, and so on. This makes it easy for investors to get their hands on potentially lucrative real estate investment opportunities without having to do as much background research themselves. 

Why CrowdStreet’s Due Diligence Matters So Much

The excessive due diligence that CrowdStreet performs on every investment they list on their marketplace is excellent for your convenience. But the fact that they provide project documents and comprehensive contact information means that you can do your own research to verify their conclusions if you so choose.

In essence, they create trust by not only doing a great job of vetting every investment opportunity themselves, but also by letting people double-check their work. In fact, you should still do your own due diligence and ensure that a real estate investment opportunity will be a good fit for your portfolio.

What About CrowdStreet Funds?

These are alternative investment opportunities that you can buy into. These are somewhat similar to mutual funds, and are comprised of several real estate projects in a bundle.

The projects are typically quite diverse for portfolio security. It’s just another way to invest in real estate without necessarily paying as much attention to the specifics of each property pick.

Is CrowdStreet for Accredited Investors Only?

Although CrowdStreet is a great tool for beginning and experienced real estate investors, you still need to be an accredited investor to qualify in the first place. However, this is a shared requirement for many other real estate crowdfunding platforms.

What Is An Accredited Investor Under Rule 501?

The specific requirements to become an accredited investor in the United States include:

  • income that exceeds $200,000 individually or $300,000 combined with a spouse each of the past two years and expected for the current year, OR
  • a net worth of over $1 million either individually or with your spouse – note that this net worth cannot include the value of your main residence

As a result, CrowdStreet can be good for beginner investors… but only if they have plenty of cash on hand. It’s not a great platform for investors looking to start their first real estate deal with $100,000 to their name, and it essentially restricts activity on the platform to larger or more financially secure investors.

Looking to start with lower minimum investments? See our top stock brokers for beginners to see if stocks are a good fit.

How Do You Become an Investor with CrowdStreet?

If you’re already an accredited investor, you can begin investing with CrowdStreet by creating an account using Google or LinkedIn.

Crowdstreet Investor Management Services

You can alternatively provide specific information using CrowdStreet’s platform, which includes information like:

  • your first and last name
  • email
  • password

After providing all the relevant information, you’ll accept the terms of service and provide some necessary documentation to prove your income or net worth (to establish you as an accredited investor). After registering for CrowdStreet, you’ll be able to instantly monitor how your investments are performing using the main platform dashboard.

How Much Does CrowdStreet Cost?

The great news is that investors don’t need to pay CrowdStreet a dime to access their excellent browser of investment deals. Instead, sponsors need to pay small fees that range between 0.5% and 2.5% depending on deal specifics or the number of investors attached to a project. Sponsors also have to pay annual fees to CrowdStreet so they can continue to access the marketplace.

So for investors, CrowdStreet costs nothing.

CrowdStreet’s User Interface

CrowdStreet features a relatively intuitive user interface that gives you a quick overview of all your investment properties and their progress on the main dashboard. This dashboard also comes with pages where you can view updates on particular projects or track how your investments are performing versus their targets.

Furthermore, the CrowdStreet dashboard makes it easy to download specific documents for projects/investments. 

More importantly, the CrowdStreet interface makes it easy to browse through various investment opportunities. You’ll be able to split these between existing investment opportunities and brand-new projects that are looking for “ground-floor” investors.

There’s always plenty of information available so you see all the details about a particular deal, including how many investors are currently participating and how much money has been raised so far (which can be good to gauge other investors’ confidence in a particular project).

The platform also includes a marketplace performance page where you can see how different completed deals have shaken out over time. You’ll even be able to directly compare their actual returns versus their targeted returns to see the aforementioned value of CrowdStreet’s rigorous deal-vetting process for yourself.

Actually selecting and investing in a project or opportunity is fairly straightforward. Select the deal you want to invest in, choose how much money you want to invest, then submit the offer. Remember, CrowdStreet is a peer-to-peer marketplace, so you invest personally with the project sponsor instead of a bank.

Lastly, we’d be remiss not to mention the “Resources” section you can find on every project page. This section contains instructional articles and videos you can use to become a better investor and make sure you understand the investing topics surrounding the platform. It’s a fantastic resource for beginning investors.

What Deals Can You Make with CrowdStreet?

There are two broad types of real estate investment: residential and commercial. CrowdStreet only provides investment opportunities for commercial real estate, which is distinctly different compared to many other real estate crowdfunding platforms. 

CrowdStreet provides deals across a wide range of requirements, values, and criteria, including:

Property Types 

  • investments across several property types, retail, office, industrial, hospitality, senior housing, storage facility, mixed-use, multifamily or apartment buildings
  • investments may be offered as individual properties or may be offered as REITs, or real estate investment trusts – these are essentially bundles of multiple similar properties that you can invest in as a group

Property Values

  • investments are offered across multiple values ranging between $5 million and $30 million, although you can occasionally invest in property worth more than this upper amount
  • deals feature minimum investment requirements that may be between $10,000 and $50,000

Expected Returns/Terms

  • investment returns range from 7.6% to over 23%
  • investment terms range between two and ten years, although most average around five

Markets

  • investors will find CrowdStreet investment opportunities from primary, secondary and tertiary markets across all 50 United States
  • market selected demonstrate positive demographic and economic trends, allowing investors to diversify holdings between either property types or geographically

Who Should Use CrowdStreet?

Ultimately, one of the biggest reasons to invest in CrowdStreet (or any excellent real estate crowdfunding platform, really) is because it lets you diversify your investment portfolio. Many people, especially those with net worths in the low millions, primarily hold portfolios with stocks and bonds.

Real estate is arguably the best type of asset to invest in for long-term financial returns, however, and diversifying your portfolio using a real estate investment crowdfunding platform is a smart way to protect your portfolio from diminishing in value.

Furthermore, investing in commercial real estate (like the kind that CrowdStreet offers) provides returns differently compared to traditional stocks and bonds. Commercial real estate will often continue to pay out or rise in value even while the stock market falls. In fact, this has happened several times throughout history when investors left stocks, bonds, and other financial assets en masse in order to secure their wealth with brick-and-mortar real estate.

Commercial real estate usually outperforms stocks and bonds over the long term, which is why many extraordinarily wealthy people are primarily real estate investors.

In summary, CrowdStreet is great for:

  • any accredited investor wanting to diversify their portfolio
  • investors interested in long-term returns
  • risk-tolerant investors
  • investors that want help finding good real estate deals with a reasonable assumption of legitimacy

Who’s CrowdStreet Not Great For?

While there’s a lot to like about CrowdStreet, it’s also not the perfect investment platform for everyone. Remember that you have to be an accredited investor to make an account on the platform, so it’s obviously not a great choice if you don’t have the required capital or net worth.

Furthermore, CrowdStreet only offers a limited variety of commercial projects, and these projects may take quite a while before you see any kind of return. Therefore, it’s a poor platform for short-term investment needs or if you want to play with the greater stock market.

Additionally, given that CrowdStreet has you invest in commercial real estate, your liquidity for those investments is practically nonexistent. You’re committed to the investments you make for the entire duration of the project in most cases, and you won’t be able to sell your investment to others given the lack of a middleman.

CrowdStreet isn’t the best choice for:

  • investors without a lot of capital or net worth
  • investors interested in short-term returns
  • investors that want to invest in assets with some liquidity or flexibility

Final Thoughts

CrowdStreet is just one part of a greater evolution of the investment market. Where real estate investing use to demand a certain level of individual investigation, now it’s easier than ever to use their marketplace to find decent real estate investment deals and try to attain that elusive long-term financial security. We think CrowdStreet is a great platform to at least try out, given that you’re an accredited investor… but what do you think? Let us know and we’d be happy to discuss.

CrowdStreet FAQs

How Does CrowdStreet Make Money?

CrowdStreet makes about 70% of its revenue from the fees that sponsors have to pay every project or year. The rest of its income likely comes from investors or other sources.

Is Crowdfunded Real Estate Worth It?

In our eyes, yes, although the type of platform you choose to pursue it can have a big effect on your overall returns or experience. Crowdfunded real estate provides several advantages:

  • Crowdfunded real estate companies let investors pick and choose what properties they want to pour their money into. This is instead of having to buy into publicly traded real estate companies that may own tons of properties with low value or buying mutual funds that include multiple real estate companies. Essentially, it provides greater control over your investment portfolio
  • Furthermore, crowdfunding real estate platforms like CrowdStreet offer online convenience and extremely efficient investment information dispersal. You can get project files and make a snap decision on whether or not you want to invest in a property in minutes, and all from the comfort of your home
  • CrowdStreet and other crowdfunding real estate platforms allow you to compare and contrast different investments, so you’ll always be able to choose the best investment at a particular time
  • Don’t discount how valuable it is to get access to deals are project developers that you might not be able to meet or contact otherwise. This is particularly true if you’re a beginning real estate investor and don’t have a contact network to fall back on, or if you just don’t know where to start looking for excellent real estate deals in the first place
  • The very crowdfunding model that diversifies risk across all the investors also makes it relatively inexpensive to invest in real estate. While you do need to be an accredited investor to use CrowdStreet, you can sometimes get great deals (relatively speaking) and potentially secret returns for an investment of as little as $10,000

Ultimately, crowdfunded real estate investment is incredibly worthwhile if you use a platform like CrowdStreet and you’re interested in diversifying your portfolio. Of course, you don’t get as much control over your investment opportunities as if you hit the road and sought out properties yourself to buy, but that comes with its own set of risks and hazards.

Is CrowdStreet a Legit Platform?

Yes, both as far as their general due diligence toward the properties they choose and as a company. They also only offer investment opportunities under Rule 506 of Regulation D since they’re only offered to accredited investors.

How do CrowdStreet’s Investment Differ from REITs?

CrowdStreet is a peer-to-peer marketplace that connects investors to project developers. An REIT is a corporation that takes your money and invests it across several real estate properties. However, you don’t actually put your money into any of those properties like you do with a CrowdStreet-type platform; instead, with an REIT, you buy a share in the collective real estate company. It’s a lot more similar to traditional stock market buying and selling in this way.

Are CrowdStreet’s REITs Riskier Investments Than Stocks?

The types of REITs that CrowdStreet offers are explicitly non-traded REITs. This means that the REITs in question aren’t traded on securities exchanges, so they aren’t liquid for long periods of time. As a result, they’re more (though not entirely) immune to market shifts and are best for investors looking for consistent and long-term income.

Of course, whether a stock is risky depends on the stock in question. So the real answer is that CrowdStreet’s REITs are safer than some stocks on average, but not all.

Are REITs Good Investments During a Recession?

Since REITs let you purchase a share in a company that owns multiple properties, they let you essentially invest in real estate without having to own the property directly yourself. This does make them somewhat of a good investment choice during a recession, and they’re a fine way to diversify your portfolio.

Note that this doesn’t mean that they make your portfolio truly recession-proof, but they arguably do a better job than regular stocks and bonds. There are also strategies to follow regarding buying investment properties during a recession that might make your choices wiser.

Which is Better: CrowdStreet or Fundrise?

Fundrise is pretty similar to CrowdStreet, but they have much lower minimum investments of $500. Thus, it’s an ideal crowdfunding real estate investment platform for nonaccredited or new investors looking for smaller-scale investment opportunities. Fundrise also deals with commercial and residential properties instead of just commercial.

However, CrowdStreet offers different types of investments compared to Fundrise, which only offers portfolio-based investing. These are discussed further in our in-depth Fundrise review. It should be noted however, that CrowdStreet has a generally higher average annual return for its investors.

All in all, the two platforms are for different investors entirely. CrowdStreet is better if you are an accredited investor and are looking for larger long-term gains. Fundrise is better if you aren’t an accredited investor but still want to take advantage of the benefits of crowdfunded real estate investing.

What is the Average Return on CrowdStreet?

You can look at the average returns other investors get from CrowdStreet to estimate what you might see if you decide to invest using their platform.

  • Investment Amount: $25,000
  • CrowdStreet’s Average Rate of Return: 15%
  • Return on Investment 1-Year (Total Investment Amount): $28,750
  • ROI (3-Years): $36,250
  • ROI (5-Years): $43,760

CrowdStreet and the Competition

See how CrowdStreet compares to the top real estate investing platforms by reading one of the reviews below.

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on TheTokenist.io. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

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