Crowdfunded real estate platforms make it easier for individuals to invest in commercial real estate and multifamily apartments. Typically, these projects are only available to investors with deep cash reserves.
CrowdStreet is a real estate investing platform for accredited investors. High net worth households can use the site to invest in individual projects and managed portfolios.
This CrowdStreet review can help you decide if their investment options deserve a spot in your portfolio.
CrowdStreet provides individual offerings and managed funds for commercial and multifamily real estate. The fees and potential returns are competitive. However, only accredited investors can invest in offerings.
- Many investment options
- Competitive fees
- Custom portfolios available
- Accredited investors only
- High investment minimums
- Multi-year investment periods
In This Article
- What is CrowdStreet?
- Who is CrowdStreet For?
- How Does CrowdStreet Work?
- CrowdStreet Features
- How Much Does CrowdStreet Cost?
- CrowdStreet Competitors
What is CrowdStreet?
CrowdStreet is a crowdfunded real estate platform that offers individual placements and managed portfolios.
Qualified investors can invest in these asset types:
- Multifamily apartments
- Student housing
There are also managed funds if you want to quickly diversify your investments or prefer the convenience of having a professional investor curate your portfolio.
If you use Millionacres to find real estate investment ideas, the Mogul service may feature attractive upcoming projects on CrowdStreet.
Who is CrowdStreet For?
CrowdStreet is only available to accredited investors meeting specific income or liquid net worth criteria.
You can invest on this platform if you meet one of these qualifications:
- A liquid net worth of at least $1 million (excluding your primary residence value)
- Minimum $200,000 annual income ($300,000 for married investors) for the last two years
International citizens that meet the above financial tests can join the platform as well.
Non-accredited investors can join the platform for free to browse the investment offerings. However, they cannot invest funds.
If you’re a qualified investor, this site can be an excellent way to get exposure to commercial and multifamily real estate deals with a relatively low investment minimum.
Keep in mind that you will need to be comfortable with a multi-year investment commitment of at least five years for most projects.
Most offerings require a minimum $25,000 investment. While this is higher than most crowdfund real estate sites, it can be lower than buying a property by yourself or with a private investing group.
You should consider a different service if you want to invest in single-family rentals or are looking for lower investment minimums.
How Does CrowdStreet Work?
It’s free to join CrowdStreet and research potential investments or view past offerings.
Keep in mind that you will need to verify your accreditation status before you can start investing funds.
The available investment offerings change regularly, but there are usually several projects accepting new investors at any time.
CrowdStreet has a strict screening process for new and existing sponsors. This helps the platform avoid crowdfunding scams and unnecessary risks.
Additionally, they state that they only accept up to 5% of funding proposals.
There are several ways to invest on CrowdStreet.
Diversified Funds and Vehicles
The diversified funds let you invest in multiple projects with a single investment. This investment option is similar to an ETF or mutual fund.
There is an investment minimum of $25,000 for most funds, which is similar to individual offerings. Some funds may have a $150,000 investment minimum.
There are two different fund types:
- Single-sponsor funds: Includes projects from the same developer or firm
- CrowdStreet funds: Portfolios of multiple projects from various sponsors
You will see the asset class for each fund’s offerings. Some examples include medical, storage and multifamily properties.
Each offering also displays four key financial performance targets. These goals can help you find investments matching your desired rate of return.
The metrics may include:
- Targeted internal rate of return (IRR): The projected investment growth
- Targeted hold period: The estimated minimum investment period
- Target equity multiple: The potential total rate of return
- Minimum investment: The minimum initial investment to open a position
Some funds might post even the target cash return.
You may be able to earn monthly income from dividend payments. CrowdStreet states most projects award quarterly distributions.
In addition to the financial metrics, each fund offering displays these details:
- Offering summary: Key features, financial details and fees
- Business plan: Revenue generation, exit strategies and sponsor assets
- Documents: Documents and videos that can make research easier
Individual offerings have similar metrics and details as the funds.
Investing in individual deals is another reason to consider CrowdStreet since some platforms only offer managed funds.
The investment minimum is $25,000 for most offerings.
In addition to the projected investment returns, evaluate the target holding period. Most projects have a minimum investment period of up to five years without an early redemption option.
Many projects pay quarterly dividends, but you may not receive most of the proceeds for equity financing deals until the property sells at the end of the investment period.
You will be able to view documents and videos about the investment strategy and financial strength of the sponsor.
Like any investment, performing additional research outside of CrowdStreet is an excellent idea to identify all potential risks and rewards.
If you can invest at least $250,000, you qualify for the Tailored Portfolios feature. An advisor will recommend a custom portfolio that may invest in individual offerings and funds.
Some of the elite benefits include:
- Personalized investment strategy
- Dedicated support representative
- Online performance tracking
The advisory fees for this portfolio are between 2% and 2.5% during the first year and 0.25% in subsequent years. Your investment amount determines your fees.
In addition to the many investment options, here are some of the other features that can help improve your investment experience.
Events and Webinars
The platform offers weekly new investor orientation sessions online to help you navigate the CrowdStreet web platform.
Each new offering also has a webinar where potential investors can learn more about the project before committing funds.
The best part is that these online events are free.
Quick Start Guide
The online Quick Start Guide offers a step-by-step process to join CrowdStreet and make your first real estate investment.
Some of the actions include:
- Confirming your accreditation status
- Attending a new investor orientation webinar
- Creating an investing entity (i.e., individual, joint, IRA, LLC)
This guide can ensure you don’t overlook any platform options that may impact your investment performance.
For example, the guide can help you invest with a self-directed IRA to increase your tax benefits from any investment income you earn.
StreetBeats: Expert Insights
Members can watch the recurring StreetBeats video interviews to get insights into different real estate niches.
The interviewee might be a sponsor, investor or industry expert.
A sample of the interview topics include:
- Multifamily real estate investing
- The impact of inflation on real estate
- Sponsor updates
- Capital market updates
These interviews are relatively brief and last 30 minutes or less. You can easily watch past interviews on demand in your free time.
Investing in commercial real estate can be a different experience than traditional real estate investments and stocks.
Investor education articles cover the basics of how commercial real estate starts.
You can also find articles and videos focusing on in-depth topics. Some of the examples include the best real estate markets by asset class and investment strategies.
How Much Does CrowdStreet Cost?
The investment fee structure is similar to other crowdfunding sites for real estate.
Your investment fees vary by offering. The upfront and ongoing fees the project sponsor collects can be found in the offering summary.
Standard fees can include:
- Organization and initial offering expenses: 2% (one-time fee)
- Offering management fee: 1% to 2%
- Refinance fee: Up to 1%
- Acquisition fee: Varies
- Disposition fee: Varies
- Construction management fee: Varies
- Financing fee: Varies
Each offering may charge differing miscellaneous fees in addition to the initial organization fee and the ongoing management fee.
For example, the sponsor may collect a construction fee during the first phase if they build a new structure. However, the fee disappears when construction finishes in this case.
The offering summary and the in-depth offering circular list any potential fees you might pay.
CrowdStreet doesn’t charge account service fees to open or maintain an account. The one exception to this is the Tailored Portfolios since you get a dedicated investment advisor.
Third-party self-directed IRA fees may also apply if you hold CrowdStreet assets in a retirement account.
Other platforms might offer investment options that are a better fit for your investment goals. Here are a few competitors that are worth considering.
RealtyMogul is open to all investors and offers funds and individual placements.
Non-accredited investors can invest in two different MogulREITs that focus on income or growth. The investment minimum is $5,000, which can be more budget-friendly for accredited investors as well.
Accredited investors can also invest in individual offerings with minimum initial investments starting at $25,000. The asset classes are similar to CrowdStreet with commercial and multifamily properties.
Additionally, RealtyMogul is more likely to offer 1031 Exchange-eligible offers than CrowdStreet.
Farmland investing can be another lucrative asset class. AcreTrader lets accredited investors invest in farmland across the United States.
Most investment minimums are between $10,000 and $25,000. With AcreTrader, you lease farmland to the farmer and collect rental income.
Fundrise accepts accredited and non-accredited investors. The low investment minimums make this a popular platform for real estate investing.
The site offers several managed funds. Investments start at $1,000, but advanced strategies that focus on income or growth strategies require a minimum $5,000 balance.
This platform doesn’t offer individual properties. However, a minimum $100,000 investment lets you invest in illiquid funds on Fundrise that require a long-term investment horizon.
These can have above-average returns with the help of an advisory team.
Roofstock provides access to a real estate sector most crowdfunding platforms don’t. This sector includes turnkey single-family rental homes.
You can buy individual properties in many markets across the United States. Roofstock can make it easier to find out-of-state rental properties.
Accredited investors may also appreciate the Roofstock One managed portfolio. A minimum $5,000 investment lets you invest in a portfolio of single-family rentals instead of purchasing a single property.
Here are several questions you may have about how CrowdStreet works.
Most CrowdStreet offerings are profitable, but some sell for a loss. The average internal rate of return is 17.10% (as of July 21, 2021) for closed projects.
Certain projects have more inherent risk than others but also have more profit potential if the offering is a success.
The platform researches sponsors and their proposals to verify the offering isn’t a scam. It also tries to ensure proposals don’t have a high probability of being unprofitable.
Remember that diversifying your investments helps manage risk.
You can send an email to CrowdStreet for platform questions. In addition, Tailored Portfolios members can call their dedicated advisor.
It’s even possible to interact with deal sponsors during the live webinars or by email.
CrowdStreet can be a good option for accredited investors who are comfortable with an investment commitment that ranges from three to seven years and requires a $25,000+ initial investment.
The platforms can offer more commercial and multifamily offerings than other competing services.
Unfortunately, you will need to use other platforms if you want lower investment minimums, shorter holding periods, are a non-accredited investor or want to invest in other real estate sectors.
There are several advantages that CrowdStreet has over its competitors.
First, the site has a rigorous review process, including background checks and performance history reviews.
Second, CrowdStreet offers an expert investment team through their managed funds.
Third, investors with a $250,000 balance can receive a dedicated advisor and a custom investment portfolio.
There’s also investor support where investors can ask questions about potential and existing investments.
CrowdStreet offers more investment options than most crowdfunding platforms. It can satisfy hands-on investors and those who prefer the simplicity of managed funds.
If you are an accredited investor who wants to dabble in commercial real estate or multifamily units, the investment minimums and fees are competitive.
Crowdfunded real estate could be the next income-producing asset you invest in if you can meet the $25,000 minimum investment with CrowdStreet.