CrowdStreet Review 2023

CrowdStreet Overview

Real estate is where a lot of big money is, but one drawback is CrowdStreet only opens the doors to private equity real estate investing for accredited investors. The platform is a marketplace for big-time investors with deeper pockets or public entities to make institutional-level investments.

What is an accredited investor and how do you become one? An accredited investor is one who has a minimum net worth of $1 million (not including primary residence), individuals who have a $200,000 annual salary, or couples with a combined $300,000 annual income.

CrowdStreet does a lot of the legwork for you and vets all of the developers extensively, doing background checks and reference checks so you don’t have to. This move is a major win for the platform because it saves investors a ton of time. But even so, we still recommend doing some digging of your own.

What Does CrowdStreet Offer?

CrowdStreet is an innovative real estate investment platform that offers a wide range of investment offerings to cater to different investor preferences and objectives. By providing diversified funds, individual deals, and tailored portfolios, CrowdStreet ensures that investors can find the right fit for their investment needs while benefiting from the platform’s extensive real estate expertise and resources.

• Diversified Funds: Quick and Easy Diversification – For those seeking a simple way to diversify their investments into commercial real estate, CrowdStreet offers diversified funds. These professionally managed funds allow investors to access a portfolio of multiple private real estate deals with just one investment.

CrowdStreet features both in-house managed funds and single-sponsor funds, ensuring investors have access to a variety of real estate opportunities. With similar minimum investment requirements as individual deals, diversified funds provide a convenient and cost-effective way to build a diversified real estate portfolio.

• Individual Deals: Direct Investment Opportunities – CrowdStreet’s Marketplace allows investors to take control of their real estate investments by providing direct access to individual real estate deals. Investors can browse and select from a diverse collection of investment opportunities based on property type, investment profile, and other factors.

By investing directly into the equity of the chosen project, investors can design and build their own commercial real estate portfolios while benefiting from CrowdStreet’s rigorous quality control process and support from the Investor Relations team.

• Tailored Portfolio: Professionally Managed Real Estate Investment – For those who prefer a more personalized approach, CrowdStreet offers Private Managed Accounts through its subsidiary, CrowdStreet Advisors.

This service provides a custom-built, diversified real estate investment portfolio tailored to the investor’s financial goals and objectives. With a minimum starting account balance of $250,000, investors receive a dedicated representative, a custom investment strategy, and robust online tracking through CrowdStreet’s Portfolio Center.

CrowdStreet Features

While there are no fees involved to sign up to the platform, CrowdStreet does command a pretty hefty minimum sum of around $25,000 (depending on the project), so it makes sense that you want to know what you can get out of the platform.

Educational Resources

Aside from having a help guide to get you started, CrowdStreet also offers an abundance of educational resources. Get expert insights with helpful articles and instructional videos that answer questions about reviewing projects and understanding returns. The knowledge you can get from the resources can also be applied to other forms of investments.

Thorough Vetting Process

CrowdStreet takes the hassle out of real estate investing by performing an extensive vetting process for every project and developer. This comprehensive process ensures that investors have access to all the relevant information at their fingertips.

The vetting process consists of three main steps:

• Sponsor Review: Evaluating the Firm – CrowdStreet works with reputable, high-quality partners and conducts an objective review process for each new sponsor. This includes an in-depth background check on the firm and its principals, a track record review to confirm the sponsor’s experience, and a sponsor designation based on their background and expertise.
• Deal Review: Evaluating the Asset – The CrowdStreet team assesses potential deals by asking four key questions that focus on the sponsor’s core competencies, professionalism, deal assumptions, and alignment with investor preferences.
• Document Review: Evaluating Deal Materials – CrowdStreet’s goal in reviewing legal documents is to ensure there are no issues or discrepancies between the documents and the information provided by the sponsor. Any concerns are addressed with the sponsor prior to launching the project on the platform.

To gain further insights into a specific project, investors can access videos and webinars that provide detailed information, helping them determine if the project is a good fit. CrowdStreet encourages active participation and transparency, allowing investors to ask questions to the project sponsor during live webinars or view recorded sessions at their convenience.

Access to Complex and Diverse Real Estate Investments

Yes, there is a threshold you must meet in order to enjoy the perks of the platform (being an accredited investor), but if and when you do, the opportunities in real estate can be very lucrative.

The platform provides access to different property types and asset classes, including commercial, residential, and mixed-use properties. This allows investors to tailor their investment strategy according to their risk tolerances and preferences.

Investing in a variety of real estate deals and projects helps to reduce the overall risk in your investment portfolio, as it reduces the impact of a potential deal going south. Additionally, you can benefit from the various types of investments available on the platform, such as equity, debt, and preferred equity investments, offering you different levels of risk and potential returns.

User-Friendly Real Estate Investment Experience

One of the main factors that make CrowdStreet stand out among real estate investment platforms is its ease of use. The platform is designed to provide a seamless, user-friendly experience for both novice and experienced investors, making it simple to navigate and participate in various real estate investment opportunities.

• User Interface: CrowdStreet’s website is clean and easy to navigate, with a clear structure that allows investors to find information quickly. The platform features a detailed search function, allowing investors to filter projects based on property type, investment profile, location, and other parameters. This streamlined approach enables investors to find suitable investment opportunities efficiently.
• Getting Started: Signing up for CrowdStreet is a straightforward process. The platform requires basic personal information, and once the account is set up, investors can access the Marketplace to browse available investment opportunities. The platform provides clear instructions and guidance, making it simple for investors to get started with their real estate investing journey.
• Investment Process: When it comes to investing in a project on CrowdStreet, the platform has made the process as intuitive as possible. Investors can review comprehensive details about each project, including the sponsor’s track record, project financials, and the expected rate of return. Once an investor decides to invest, they can follow a step-by-step process to complete the investment, guided by clear instructions and explanations.
• Investor Dashboard: CrowdStreet’s Investor Dashboard is designed to make portfolio management and performance tracking a breeze. The dashboard provides an overview of the investor’s investments, including the invested amount, projected returns, and investment status. Investors can also access detailed information on each investment, receive updates on project progress, and access tax documents and other essential files.
• Customer Support: CrowdStreet offers responsive customer support to assist investors with any questions or concerns they may have. Investors can access a comprehensive help center with a wealth of articles and videos on various topics. Additionally, the platform provides a dedicated Investor Relations team to address any questions or issues that may arise during the investment process.

Performance and Returns

In recent years, CrowdStreet has emerged as a dominant player in the real estate crowdfunding market. With an impressive track record of funding over 732 deals, the platform has attracted $3.9 billion in investments. Investopedia has recognized CrowdStreet’s outstanding performance, naming it the Best Overall Real Estate Crowdfunding Site for three consecutive years.

CrowdStreet Marketplace Realized Track Record

As of January 27, 2023, CrowdStreet investors have successfully funded 732 deals, with 151 of these deals having reached their realization (sold). The platform’s realized track record boasts an impressive Internal Rate of Return (IRR) of 19.7%.

The IRR calculation takes into account aggregate investor cash flows and utilizes the XIRR function in Microsoft Excel, referencing effective capital contribution dates and distribution dates by the Sponsor (Issuer). This high IRR demonstrates the potential for significant returns for investors who choose to participate in CrowdStreet deals.

Average Hold Period

The average hold period for deals on CrowdStreet is 3.0 years. The hold period represents the time between the acquisition of the underlying property and its sale, followed by the distribution of proceeds to investors. While sponsors typically target hold periods ranging from 3 to 5 years, some deals may extend up to 10 years. It’s crucial to keep in mind that many of the deals listed on the CrowdStreet Marketplace are still in their holding periods, meaning their final returns have yet to be realized.

Is CrowdStreet Right for You?

Investing in real estate and diversifying your profile in a major way sounds amazing, but is CrowdStreet the right one for you?

There are some things to be aware of before making your decision:

• Real estate investments offered on CrowdStreet are locked in for years
• You must still conduct due diligence despite CrowdStreet’s vetting process
• Each project is different with varying periods and returns
• Some projects may fail
• You may take losses, as you would with any type of investment
• Almost all opportunities require accredited investor status

The criteria above can be tough to meet, especially the last one of being an accredited investor, but that doesn’t mean real estate investing is out of reach for you. You have the option of investing in REITs, or real estate investment trusts, which are available to all and have lower thresholds.

REITs are also liquid, unlike CrowdStreet projects which are not. However, the rise and fall of REITs tend to follow the overall market, while CrowdStreet options can sometimes act as a hedge against that and diversify your holdings. Learn more about what CrowdStreet can do for you.