June 9, 2021

CrowdStreet Review

Read more about CrowdStreet
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Are you looking to add private real estate to your portfolio but still searching for the right platform? If so, CrowdStreet might be just what you need.

CrowdStreet
Real Estate Deals

Overall Score

3.5

Annual Fee

4.0

Minimum Deposit

2.5

Customer Service

3.0

Ease of Use

4.5
5-point scale (the higher, the better)

Pros and Cons

  • Above average returns
  • Low fees
  • Well-vetted properties
  • No option for early redemption
  • High investment minimums
  • Only for accredited investors

Bottom Line

Private real estate crowdfunding with good returns but high minimum investments

CrowdStreet is the largest and most diverse commercial real estate marketplace today.

Better yet, their average 5-year return is around 18%.

But is it worthwhile for accredited investors? And how does it stack up to Diversyfund or Fundrise? Find out in our review below.

What is CrowdStreet?

Launched in 2014 by Tore Steen and Darren Powderly, CrowdStreet is a commercial real estate investment platform.

CrowdStreet connects accredited investors with top-notch commercial properties and development projects. Since its launch, they've closed on almost 500 deals and raised almost $2 billion. Even more impressive is that they average an IRR (Internal Rate of Return) of 18%.

Investors can register for free on the platform and view their different investment offerings. You'll then pick individual deals to invest in or have the experts at CrowdStreet build a diversified portfolio of properties for you.

Is CrowdStreet legit?
CrowdStreet has completed a large number of successful deals that have earned them a strong reputation. Plus, their executive team has 120 years of cumulative experience in real estate, business, and investing.

How Does CrowdStreet Work?

Once you sign up for your free CrowdStreet account, you can immediately view all their current properties and their investment stats, like the expected IRR, cash yield, and holding period.

CrowdStreet offers two main paths to invest: Individual Properties and Funds & Vehicles.

  • Individual Properties is for investors who want to research and choose their own properties.

  • Funds & Vehicles is for investors who still want a diversified portfolio of properties but lack the time or expertise needed to research multiple properties.

Each investment is also categorized by "Investment Profile", which tells you the risk/returns projection, if any work is involved in improving the building (and how much), and how it generates income.

Below, learn how to make an offer on CrowdStreet and determine which investment path makes sense for you.

How to Invest on CrowdStreet

Investing in a CrowdStreet property or fund is easy, especially considering that their team vets each investment extensively before it shows up on their platform.

All you have to do is sign up, make an offer, and fund your investment. Here's how it works:

  1. Browse the available properties on CrowdStreet's website

  2. After you choose your investment property, you'll submit your offer.

  3. Once approved, you can fund your offer via wire, ACH or check.

  4. Then, you'll monitor your investments from your account on CrowdStreet's website.

    They provide performance tracking, updates, and various documents about the project.

The way you make money depends on whether you choose an equity, debt or hybrid investment. In most cases, you'll earn returns when the property is sold, as interest (for debt investors), or as a share of profits (for equity investors).

Who is CrowdStreet best for?
CrowdStreet is ideal for investors with larger amounts of capital at their disposal. This is because the minimums for most properties and sponsor funds start at $25,000. While this might turn many smaller investors away to the competition, the larger minimums allow CrowdStreet to offer outsized returns to those who can put up the extra cash.

What are CrowdStreet's Pros and Cons?

Ready to invest in CrowdStreet? Check out these pros and cons before signing up.

Pros

  • Above average returns
  • Institutional-quality properties
  • Fees are average to below average
  • Many seasoned sponsors list on the platform

Cons

  • No liquidity/option for early redemption
  • High investment minimums
  • No mobile app
  • Only for accredited investors

Individual Properties

As you browse the listed properties, you can easily see the relevant stats for each one and what the value proposition is.

Property types include:

  • Commercial
  • Office
  • Residential
  • Industrial
  • Retail
  • New developments

The investment strategy for each property ranges from high risk/high return new construction developments to lower risk/lower return properties with long-established tenants and a steady stream of rental income.

The minimum investment for CrowdStreet deals is on the higher side, generally starting at $25,000.

Individual Property Example
One recent property on CrowdStreet is Pinnacle Corporate Park in Ft. Lauderdale. The info that CrowdStreet provides is thorough.

It's an existing office building with an ~83% occupancy rate and an impressive 100% of rents having been collected in the past year.

The sponsor, Feldman Equities, is the largest private owner of office buildings in the Tampa Bay area. They plan on making specific enhancements to the property (such as adding a fitness center) to attract new tenants and bring the occupancy rate up to 95%.

If successful, they expect to generate an IRR of 15.7% for investors over a 5-year period.

The amount of info CrowdStreet provides on each investment property is extensive. Each deal includes an archive of legal documents, the sponsor's offering memorandum and business plan, a video of the elevator pitch for their project, and the sponsor's contact info.

Funds and Vehicles

CrowdStreet's Funds & Vehicles allow you to invest in a variety of different properties through either a sponsor's fund or a CrowdStreet privately managed portfolio.

Funds are offered through experienced sponsors that deploy investors' capital across a handful of different properties with similar characteristics.

Minimums for CrowdStreet funds also start at $25,000.

Funds & Vehicles Example
One example of CrowdStreet's funds offerings is the New Era Medical Investment Fund.

The strategy for this investment is to acquire and redevelop medical office buildings, post-acute care hospitals, and specialty medical facilities in the U.S.

The targeted term length for this fund is 5 years, with an optional 2-year extension. Their projected IRR for the investor is 18% - 20%.

If you like the diversification offered by a sponsored fund but want your capital spread across a more diverse group of properties, you should consider CrowdStreet's Blended Portfolio (CSBP) below.

CrowdStreet Blended Portfolio (CSBP)

Another way to invest with CrowdStreet is with their all-in-one Blended Portfolio. The CSBP is a mix of many different property offerings on CrowdStreet's platform (from 30-50 deals).

It's goal is to maximize diversification while still targeting an attractive IRR of 16% - 18% and a cash yield between 4% - 6%.

This allows investors to gain sufficient diversification across private real estate sectors, sponsors, geographies, and risk levels.

Another benefit of the CSBP is that CrowdStreet only charges a 1% management fee to invest in the portfolio. This is lower than most other private real estate investments.

The targeted holding period for the portfolio is between 5 and 10 years, and the minimum investment requirement is $25,000.

What are CrowdStreet's historical returns?
CrowdStreet boasts some of the highest historical returns that we've seen in private real estate. The average IRR on the deals they've realized so far is 18%.

What are CrowdStreet's Fees?

CrowdStreet itself does not charge investors any fees for using or viewing listings on their platform.

However, each sponsor will charge you a fee for investing in their property or fund because they need to get paid for doing all the research and developing and managing the properties.

These fees vary by project, but generally consist of a one-time acquisition fee and then an annual management fee (both generally between 1% and 2%).

As with any investment, investors should read the fees section of the offering documents carefully before submitting their offer.

If you open a privately managed account with CrowdStreet ($250K minimum), you'll pay between 2% and 2.5% in the first year (depending on the size of your account), but only ~0.25% in subsequent years.

Is CrowdStreet for Accredited Investors Only?

While CrowdStreet has expressed their intent to make at least some of their investments accessible to non-accredited investors in the future, their platform is currently only for accredited investors.

This means you must have an annual income of at least $200,000 ($300,000 if filing taxes jointly) or a net worth of at least $1 million, excluding the value of your primary home, in order to invest through CrowdStreet.

CrowdStreet Common Complaints

One of the biggest criticisms of CrowdStreet is the short window of time you have to invest in a deal once it goes live on the platform.

Making a real estate investment requires a lot of time and research to go through the extensive offering documents and make sure the terms are to your liking and that there are no red flags.

This is a process that could take weeks, so understandably investors are discouraged when they see some popular offerings getting fully funded sometimes in just a few days.

Other users have noted that the customer service response time is subpar, sometimes taking several days. Other than these two items, we aren't seeing many complaints and have found that most investors are pleased with the returns they've seen.

CrowdStreet lawsuit: The law firm "Peiffer Wolf" has brought a lawsuit against CrowdStreet on behalf of investors who have lost money on certain deals offered on the platform. It notes that one such deal, Cloverleaf Suites - Lincoln, saw its investors lose 74%. Whether or not it has merit, this lawsuit reminds us that the high returns in real estate also come with significant risk.

CrowdStreet Competitors

There are several other platforms that specialize in real estate crowdfunding. While most of these offer much lower investment minimums and better liquidity, their historical returns have generally not been as high as CrowdStreet's.

We'll offer a brief comparison to their larger competitors below.

CrowdStreet vs. DiversyFund
DiversyFund is a non-traded public REIT that invests in urban and suburban multi-family residential properties in California and Texas.

They create value for investors by upgrading and enhancing their portfolio properties to improve their rentability. Then, they sell the properties after 5 years, targeting an IRR between 10% and 20% for their investors.

One notable difference between CrowdStreet and DiversyFund is that the Diversyfund doesn't pay out any dividends during the life of the project, but instead pays out all returns once the properties are sold.

Their payout structure is also unique in that they guarantee investors a 7% annual return before the manager starts sharing in any of the profits.

Two advantages we saw with DiversyFund are its low minimums (starting at $500) and its accessibility to all investors - accredited or not.

Read more: Diversyfund Review

Is DiversyFund a good investment?
DiversyFund is a good investment for anyone who isn't reliant on regular dividends and is okay with their investment being locked up for five years. It's also a good way to get exposure to the residential real estate market with a manager that's 100% focused in this market.

CrowdStreet vs. Fundrise
Fundrise is another popular private real estate investing platform that launched the eREIT, which is like an ETF that holds a diversified mix of properties from different real estate sectors.

They offer a few different eREITS that target different investors - some focusing on dividends and others more focused on growth - with fees comparable to those of CrowdStreet.

What we like about Fundrise is that their investment minimum is much lower (just $10). Plus, their eREITS offer quarterly dividend payments, which compare favorably to the more lump-sum cash flows of the CrowdStreet offerings.

And because the Fundrise products are closer in nature to an ETF, they are able to offer quarterly liquidity in case you need to withdraw your capital early (although there is a modest redemption fee for this convenience).

Read more: Fundrise Review

CrowdStreet vs. YieldStreet
YieldStreet also offers private real estate deals on their platform, but they tend to offer debt instead of equity, which comes with a lower risk/return profile.

YieldStreet also offers a large variety of alternative investments, including art, supply chain financing, and litigation finance. This is a big plus as these alternative investments that typically out of reach to most individual investors.

Individual deals at YieldStreet have minimums starting at $5,000, but their diversified fund offering (YieldStreet Prism Fund) only requires a $1,000 investment. This is a big advantage over the high minimums of CrowdStreet.

Similar to CrowdStreet, YieldStreet also requires you to be an accredited investor to invest in their individual offerings, although the Prism Fund is open to anyone.

If you want to invest in the equity portion of private real estate deals and can pony up the high minimums, CrowdStreet probably offers you the most expertise in this area and some of the most attractive deals.

YieldStreet is an attractive opportunity for those looking to get exposure to unique alternative asset types that are generally not available to smaller investors.

Bottom Line: Is CrowdStreet Worth It?

Our assessment is yes, CrowdStreet is definitely worth it.

They have some of the best offerings in the private real estate crowdfunding space that boast high-quality properties, above average returns, and are backed by experienced sponsors.

They also include a ton of detailed information and research on each deal that they post to their platform, which adds to our confidence in their ability to scout out good deals.

CrowdStreet caters to investors wanting to hand-pick each property in their portfolio and those who want to buy into a diversified portfolio without having to do extensive research.

The biggest drawback to investing with CrowdStreet is their high minimums (which are the highest we've seen), but if you are able to put up the extra cash, the outsized historical returns that we've seen on their prior deals are worth it.

CrowdStreet

Real Estate Deals

$25,000 Minimum Investment

Fundrise

Invest in Real Estate with $10+

Become real estate investor with as little as $10

DiversyFund

Earn Passive Income with Real Estate

  • Only $500 to start investing in real estate
  • No platform fees
  • No income requirements
Ally Invest Coupon Codes

Get Up to $3,000

Expires Tomorrow

The minimum qualifying deposit to receive a cash bonus is $10,000. Accounts will be reviewed 60 days after account opening to determine the total qualifying deposit. Corresponding cash bonus will be credited to the account within 10 business days. Once the bonus is credited to the account, the bonus and qualifying deposit (minus any trading losses) is not available for withdrawal for 300 days. If the qualifying deposit is withdrawn, the bonus may be revoked.

Deposit or TransferCash Bonus
$10,000 - $24,999$100
$25,000 - $99,999$250
$100,000 - $249,999$300
$250,000 - $499,999$600
$500,000 - $999,999$1,200
$1,000,000 - $1,999,999$2,000
$2,000,000+$3,000

TD Ameritrade

Commission-Free Trading - Online Stock, ETF and Option Trades

Applies to U.S. exchange-listed stocks, ETFs, and options. A $0.65 per contract fee applies for options trades, with no exercise or assignment fees.

Write to Andrew Fitzgerald at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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