You have always wanted to know more about the real estate investing market but didn’t have anyone to ask? Keep reading because this CrowdStreet review will answer all of your questions.
CrowdStreet Review: Crowdfunded Real Estate Investing
Since the Internet is full of different CrowdStreet reviews, we’re bringing you the ultimate one. This CrowdStreet review contains all the essential information in one place and provides answers to various questions.
It will bring you closer to the real estate market and explain previously unknown concepts. With real estate crowdfunding, there is a lot of noise and plenty of options. Not all are perfect for your investment goals.
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Unlike other CrowdStreet reviews, this one brings you all the pros and cons, as well as an explanation of different investment ways, noting to whom each one is intended.
Table of Contents
What is CrowdStreet?
CrowdStreet is a well-known name that brought an immense revolution in the real estate investing market. This real estate technology and service company has to offer one of the largest and most diverse investment opportunities.
At their disposal are single property investments, multi-property funds, and different equity and debt deals.
As they strongly believe that the market is better when efficient, transparent, and accessible, the CrowdStreet team’s work confirms their beliefs. They founded a company to give investors the ability to diversify their investment portfolios.
All the hard work paid off because today, CrowdStreet is the premium provider of online real estate investment offerings.
Since launching in 2014, CrowdStreet has published more than 361 commercial real estate investment offerings. To date, 17 of those offerings have been fully realized.
The best confirmation of their quality?
Marketplace performances on the Crowdstreet platform grow more and more every day. Check out the chart below to gain more insight into current performance numbers.
(total average annual returns across all fully-realized deals)
(total funds invested through the CrowdStreet Marketplace)
(total funds returned to investors to date)
The company is also fully committed to bringing in the latest market trends, investing news, and insights.
For all those who want to know more, feel free to visit their official news center.
How does CrowdStreet work
The market is full of different real estate investment sites. Although their work is similar in many performances, they also differ in many ways. This CrowdStreet review brings you a complete description of the company’s work and features.
CrowdStreet has a great innovative tool called CrowdStreet platform, which gives more than 112,000 investors a direct access model.
In other words, investors are able to easily access a wide range of institutional quality assets and diversify their own portfolios. They can also invest directly with sponsors instead of using third party communication channels.
Respectively, CrowdStreet does not originate its own deals but finds source deals from third party sponsors and make them available on their webpage.
This type of working model results in a lower overall risk to investors and reduces the platform risk of marketplace insolvency.
On the other hand, CrowdStreet technology is a great solution for large commercial real estate developers and operators. More than 260 of them use CrowdStreet technology to raise capital online and manage their investors and investments. This way, they reduce the cost of capital and improve efficiency.
Furthermore, before appearing on CrowdStreet’s marketplace, each investment opportunity is pre-scanned in detail. Only 2% of applicants successfully complete a strict verification process. On the basis of this, the company provides reliable and quality service to both parties.
Like any other crowdfunding company, CrowdStreet also provides deal transparency. They give you comprehensive documents and information before each project and during the whole process.
The minimum investment is $10,000 and there are no account fees.
See Related: Important Pros and Cons of Real Estate Investing
How does the CrowdStreet process of verification work?
CrowdStreet’s process of verification of each investment opportunity is very detailed and strict. It includes vetting the sponsor, the sponsor’s offer, and the specific real estate property.
The company first evaluates sponsor’s background and track records while assigning them a corresponding designation:
- The emerging designation goes to sponsors who have 2-5 years of experience with portfolio activity up to $100M.
- The seasoned designation goes to sponsors with more than 5 years of experience with portfolio activity of up to $100M and with an existing network of established bank relationships.
- The tenured designation goes to all those who have more than 10 years of experience with portfolio activity up to $500M, with principles who have invested in multiple real estate cycles.
After the sponsor has its own designation, the company screens all the funding necessary. This includes the business plan, due diligence documents, pro-forms, operating statements, market data, various appraisals, etc.
Finally, the company evaluates the terms of sponsor’s specific offer in a classification of common equity, preferred equity or mezzanine/2nd position.
This demanding process manages to pass only 2% of the applicants.
Three Ways to Invest with CrowdStreet
As you will see in this CrowdStreet review, there are three available ways to invest. Whether you are a real estate expert or completely new to the investment market, choosing the right approach can be hard.
There is no one-size-fits-all way of investing in the commercial real estate market.
To meet the needs of its users, CrowdStreet returns with a suggestion of three ways to invest. Let’s start with explanations of each.
1. Funds and Vehicles
If you are looking for a fast and simple way to diversify your investment portfolio, this is the right investment. With a single investment, you will get a stake in multiple property types and different sizes, geographies, and sponsors. CrowdStreet’s in-house experts manage all funds and vehicles. Moreover, they include deals that are selected from their marketplace by a proprietary algorithm.
You will also get regular updates, streamlined reports, tax information, and key documentation. This way, it will be easy to track your performances.
Each real estate investment fund and the vehicle have different features, minimum investment required, type of property, etc. Here you can learn more about every offer that is currently available.
2. Individual deals
Individual deals are excellent if you want to be in control and not a fund that picks the assets for you. Explore available deals at CrowdStreet’s marketplace and choose the right one for you. You can design your own commercial real estate portfolio by evaluating and picking projects you like.
Another great thing about being a passive investor is the chance to make good use of the power of online syndication. You can join hundreds of other individual investors and make your contribution to the equity stack in a real estate deal.
CrowdStreet is never an intermediary for any investment deal, so your capital will go directly to the sponsor behind the project. Visit the CrowdStreet Connect website and find more information about the benefits of online syndication.
If you go for this option, the company will provide you with sponsor history, detailed deal documents and investor support.
3. Advisory services
The third option is ideal for all those who require an investment strategy tailored to their individual financial objectives.
CrowdStreet Private Managed Account service will provide you with a custom-built portfolio based on your needs. This is an individual and personalized service, which fits with your other investments.
It is based on your long-term financial goals and you will have the support of the Advisory Service Team the whole time.
Their ongoing investment management offers an individualized Investment Policy Statement (IPS) that will guide all investment decisions.
If this sounds good to you, schedule a call and get expert advice.
How Can You Start Investing with CrowdStreet
As we already said in this CrowdStreet review, the company is mainly oriented to accredited investors. To be one of the accredited investors, you need to meet one of the following criteria:
- You need to have a trust with assets over $5 million
- You have a net worth exceeding $1 million (this is excluding the value of your personal residence)
- Your incomes are over $200,000 for the last two years
If you are a non-accredited investor, CrowdStreet offers you two real estate investment trusts called REITs.
Learn more real estate investing terms to expand your knowledge.
Furthermore, the minimum investment in most individual projects is $25,000. However, in some cases, that amount is as high as $50,000. On the other hand, the minimum investment in REITs is at least $10,000. They even have initial offerings where you can invest a minimum of $1,000.
Therefore, if you are interested in investing in CrowdStreet, first you have to create an account on their site’s home page. As mentioned above, there is a minimum investment of at least $10,000 for the smallest deals. The other thing is that you have to be an accredited investor.
After registration and accepting their terms of service, you will need to qualify as an accredited investor. That’s why you will be asked to fill out a certification and provide necessary documents as proof of your income and net worth.
After that, you will be able to see the dashboard and the investment performance of your holdings. All project updates, investment performance, and project documents will also be at your disposal. Browse the platform and search for various investment projects available at the moment. You can also determine how much money has been raised for each investment deal, as well as the number of investors participating in funding.
The platform also has a part where you can take a look into the marketplace performance of completed deals. This way, you can see the results of investment from start to finish.
Once you decide on a deal you want to invest in, choose a dollar amount and submit your investment offer. As CrowdStreet is a direct-to-investor marketplace, you will be investing directly with the project sponsor.
Start making the most of the investing market!
Pros & Cons of CrowdStreet
A premium provider of real estate investments has some interesting differences from other crowdfunding sites. This CrowdStreet review took into account all the features and compiled a list of the advantages and disadvantages of the company.
What is great about CrowdStreet?
Here are some of the advantages of using CrowdStreet over the alternatives.
- CrowdStreet has no investor fees and you don’t have to pre-fund anything.
- The minimum investment is $10,000 that you can split into 10 different deals that vary by investment structure, geographic region, sponsor, holding period, and risk profile.
- The company is 100% focused on the commercial real estate market, which is shown in the quality of investment offerings available on their webpage.
- CrowdStreet offers three ways to invest. You can easily compare them on their website as they put each offer information and document in the same format.
- They have an excellent online dashboard tool and 176-page e-book, which they regularly update. It offers lots of useful and helpful information.
- CrowdStreet offers you a chance to invest directly in commercial real estate instead of using an intermediary company.
- CrowdStreet platform allows you to have national access to deal investors and not only to local deals. It also shows commercial real estate offerings in real-time.
- All investments are thoroughly pre-scanned and their length is between 36 and 360 months.
- The company has investment management software, which is a great tool for those sponsors who want to offer real estate fundraising. It is also a great way to provide investment management capabilities directly on their website to be seen by their existing and future investors.
- CrowdStreet always provides transparent deals with extensive information and no hidden agenda.
What is not so great about CrowdStreet?
- The minimum investment of $10,000 is slightly higher compared to other real estate crowdfunding companies. Some of them offer a minimum investment per deal $5,000 or even $1,000!
- There is no liquidity. Like many other real estate investment sites and platforms, CrowdStreet commits you to the investment on their terms. Currently, there is no secondary market where you can sell your investments to others.
- CrowdStreet does not pre-fund its deals.
Just like any other huge company, CrowdStreet also has its own competitors. Each of them tries to get a higher ranking based on their benefits and disadvantages. The commercial real estate investing market is a competitive market. Some of the CrowdStreet competitors are Real Crowd, ArborCrowd, Roofstock, 1031 Crowdfunding, etc.
However, due to its numerous advantages, CrowdStreet is still one of the premium real estate technology and service companies.
CrowdStreet Overview: Is CrowdStreet legit or a scam?
The real estate investing market is full of different crowdfunding sites and companies. Lots of them have good benefits and operate legally.
However, there are also cheaters whose sole purpose is to trick you and get as much money as possible. That’s why it is normal if you are concerned about whether is CrowdStreet legit or a scam.
Due to its transparent work, quality platform and user support, CrowdStreet is a legit business. Precisely because they are dedicated to their business, investors, and customers, they have gained user confidence in the commercial real estate market.
The company tries to accentuate the pros and work to improve deficiencies. The statistics mentioned above reflect their success.
Furthermore, it should be remembered that this company is not for everyone. Based on this CrowdStreet review as well as the company’s business, a CrowdStreet market is a crowdfunding place for certain investors.
As they market themselves to investors under 506C*, CrowdStreet is best for accredited investors with lots of capital at their disposal. It is also a great match for all real estate investors looking for new opportunities or investors looking for diversification away from stocks.
*506C – accredited investor site with no 30 days waiting period. The law requires these sites to verify that investors are accredited.
Have you used the CrowdStreet service before? What are your experiences? Let us know in the comments below. We would love to hear from you.
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