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Among the earliest real estate crowdfunding platforms, CrowdStreet has built a strong name in the industry.
But how does the reality of investing with CrowdStreet stand up to its reputation?
Overall, Crowdstreet boasts plenty of pros. But its high minimum investment and availability only for accredited investors leave it out of reach for most investors.
CrowdStreet features a transparent history of high returns with plenty of investing options. But the minimum investment isn't trivial at $25,000, and only accredited investors can participate.
- High Historical Returns
- Established Platform
- Volume & Diversity of Options
- Custom Managed Accounts
- Accredited Investors Only
- High Minimum Investment
- Poor Liquidity
- Significant Risk
What Is CrowdStreet?
Crowdstreet bills itself as “the nation's largest online private equity real estate investing platform.”
Through its marketplace, you can invest in individual properties, funds, or REITs. Alternatively, you can pay an advisory fee for a privately managed account, where CrowdStreet picks and chooses investments for you.
The marketplace offers an impressive range of property options. Over its history, CrowdStreet has funded over 700 deals and counting. Those include every conceivable type of real property, from commercial to industrial to agricultural and beyond.
At any given moment, however, you might see five to ten property deals and a few funds available.
How CrowdStreet Works
You choose any properties or funds you like and invest a minimum of $25,000 in each. Expect to park your money for a minimum of three years, as most projects take at least that long to complete and sell.
Sponsors bring deals to CrowdStreet for broad exposure to help them raise money for large deals. CrowdStreet charges these sponsors for access to its platform, although it doesn’t typically charge investors.
But that doesn’t mean sponsors don’t charge their fees to passive investors.
CrowdStreet claims it rejects 95% of the deals that sponsors bring. That aggressive underwriting helps weed out all but the most promising deals.
Which doesn’t mean deals on the CrowdStreet platform have never lost money. Some have, including a handful of projects with 100% losses.
Still, CrowdStreet brags that the average internal rate of return (IRR) on completed deals is an impressive 18.8%. That’s nothing to sneeze at, nearly double the historical average stock market return of around 10%.
While it’s hard to say whether CrowdStreet is truly “the largest online private equity real estate investing platform,” it can honestly make plenty of other claims.
Here are a few reasons to invest in CrowdStreet.
High Historical Returns
As of late 2022, CrowdStreet has returned nearly 19% on average to passive investors. That includes an average equity multiple of 1.55x over an average investment hold period of 3.0 years.
Those returns don’t just reflect a handful of deals, either. CrowdStreet has overseen 153 deals going through the full cycle of the 709 deals completed on its platform.
For more details about their past deals’ results, check out CrowdStreets' Marketplace Performance page.
How do we know all that?
Because CrowdStreet publishes it on its website and not hidden behind a login gateway, anyone can view it publicly on the web.
Sure, the averages are impressive, so there’s a reason not to publish them. But the website also features an interactive dot plot showing the returns and hold period of every single deal that’s gone full cycle on its platform. Those include deals that have lost money (in some cases, 100% of investors’ funds).
If only every real estate crowdfunding platform was so transparent.
CrowdStreet is one of the oldest real estate crowdfunding platforms available, dating back to 2013.
That puts it in the same ballpark as Fundrise (2010), RealtyMogul (2013), Groundfloor (2013), and Yieldstreet.
Volume and Diversity of Options
With $4 billion raised for 709 deals at the time of this writing, CrowdStreet has a fair claim to being the largest private equity real estate platform.
CrowdStreet has done deals in over 250 cities to begin with. Even more impressively, its past deals include multifamily, single-family, office buildings, coworking spaces, industrial, hospitality, student housing, senior housing, retail, mixed-use, self-storage facilities, cannabis, charter schools, bank notes, medical space, veterinary, manufactured housing, build-to-rent, parking, and raw land.
You can pick and choose any deals of funds you want to invest in on CrowdStreet.
And you do so with detailed financial information on each deal, sponsor, business plan, and real estate market. CrowdStreet makes sure you don’t lack details on any prospective investment.
Custom Managed Accounts
If you have at least $250,000 to invest, you can pay CrowdStreet an advisory fee to develop a bespoke investment plan for you and your financial needs.
You get a dedicated investment advisor and a custom real estate investment portfolio. But it costs you an advisory fee between 2% to 2.5% in the first year and 0.25% annually after that.
Like most real estate crowdfunding platforms, CrowdStreet offers a wealth of educational content for free. It makes for good content marketing and SEO, after all!
For all those upsides, CrowdStreet comes with its fair share of limitations. Watch out for the following as you consider investing.
Accredited Investors Only
Only about 10% of U.S. adults qualify as accredited investors. That leaves the other 90% of Americans unable to invest in CrowdStreet.
None of the other pros or cons matter if you aren't an accredited investor. You can’t pass Go and invest $200 (or rather $25,000) in CrowdStreet.
High Minimum Investment
You may not want to park $25,000 apiece in individual real estate investments even if you are an accredited investor.
It makes it hard to diversify your investment portfolio when each asset requires 25 grand. You also don’t have the chance to grow comfortable with the platform by starting with a smaller investment.
That said, you can invest in their funds for broader diversification, albeit with less control over your investments.
Once invested, you’re committed. You can’t sell or redeem your investments early.
These investments typically last for three to five years, sometimes longer. They don’t offer any liquidity whatsoever. Don’t invest any money you might need in the foreseeable future.
Consider these commercial real estate investments moderate to high risk, depending on the investment.
Of the 153 deals that have gone full cycle, 11 have lost money. Of those, six lost 100% of investors’ capital, not just a few percent.
Some projects come with higher risks than others. Make sure you understand how to vet commercial real estate deals before you invest tens of thousands of dollars in them.
How CrowdStreet Compares
At the risk of stating the obvious, CrowdStreet targets a wealthier clientele than most crowdfunding platforms. While other platforms such as Fundrise, Groundfloor, and Concreit let you start investing with as little as $10, you can’t walk through the proverbial door with less than $25,000 on CrowdStreet.
That can make diversification a challenge, although their funds help you skirt that problem. If you opt for that route, you sacrifice control over your investments, however.
Speaking of which, CrowdStreet offers more options than most real estate crowdfunding platforms. Sure, you can only expect a few property deals available at any given moment. But come back next week, and it'll likely have new deals available for you.
And wow, has it offered many different types of deals over the years. From student to senior housing, storage to mobile homes, land to manufactured homes, and of course, the traditional multifamily and office buildings, you can find every type of real estate investment under the sun on CrowdStreet.
Most competitors do offer some kind of early redemption option, however. Granted, many charge hefty fees for the privilege of selling early, but at least the option is on the table.
For other crowdfunding platforms specializing in commercial real estate for accredited investors, check out our review of Fundrise and their higher-end offerings or EquityMultiple’s investing options. The latter lets you invest in commercial properties with as little as $5,000—still no trivial sum, but a fraction of CrowdStreet’s minimum.
Wealthy investors looking to access real estate syndications through a reputable, transparent platform will find a warm reception at CrowdStreet.
You can expect high potential returns at moderate risk, a tradeoff worth making for many investors. And the better you understand how to underwrite commercial real estate deals, the more you can mitigate those risks.
Most of the deals that lost 100% of investors’ returns were high-risk hotel deals that collapsed during the COVID-19 pandemic. Fortunately, the average real estate deal doesn’t come with that risk.
Still, when you’re investing five digits, it helps to have some expertise in real estate. Novices should proceed with caution, no matter how high your net worth.