CrowdStreet Review: Commercial Real Estate Investing Platform

For decades, private commercial real estate investments were opportunities reserved for the ultra-rich. Today, online investing platforms, like CrowdStreet, have made it possible for smaller investors to get into the action.

I believe that most investors should have some exposure to real estate in their portfolio. But should you build that piece of your portfolio with CrowdStreet?

In this review, I’ll explain the ins and outs of CrowdStreet, and when investors should consider using the platform.

What Is CrowdStreet?

CrowdStreet is a mainly commercial online real estate investing platform. To date, they’ve launched more than 470 deals, including both individual assets and funds. Some of the world’s largest sponsors, including Greystar and Harbor Group International have used CrowdStreet to raise capital.

Since 2014, their investor community has committed more than $1.65 billion in investments and earned nearly $200 million in distributions. Investors can use their Marketplace to invest in an individual property or in a fund of multiple projects.

The recent performance of projects shows that most individual investments tend to outperform the blended portfolio options.

That said, individual projects are far riskier than the blended portfolio. An individual project could result in a total loss of investment capital. The blended portfolios are much less likely to lose a lot of value.

Who Can Invest on CrowdStreet?

CrowdStreet is limited to accredited investors. To be an accredited investor, you must meet one of the following criteria:

• You earned more than $200,000 in each of the last two years (or more than $300,000 together with your spouse or spousal equivalent in each of those years) and reasonably expect the same for this year;
• You have a net worth of over $1 million, either alone or together with your spouse or spousal equivalent, excluding the value of your primary residence; or
• You are a holder in good standing of the Series 7, Series 65, or Series 82 licenses
• You have a trust with assets over $5 million.

The sponsor sets the minimum investment amount for each deal and the minimum for most individual projects is at least $25,000. 

What Are The Fees?

CrowdStreet doesn’t charge any fees to investors participating in an individual deal. Instead, it charges sponsors technology and use fees.

However, the sponsors may choose to charge investors with management fees and effectively pass CrowdStreet fees on to investors (either directly or by reimbursement of expenses) which will be baked into the deal structure.

Every deal is different, and these fees are all made public for potential investors to review. CrowdStreet does not provide investment advice to investors, unless the investors are clients of CrowdStreet Advisors.

CrowdStreet Advisors, a subsidiary of CrowdStreet, does manage several funds and a tailored portfolio option that charges investors management fees.

You can read about CrowdStreet’s typical sponsor fees here. The fees align closely with the fees from the REIT.

How Does CrowdStreet Compare?

CrowdStreet is one of many real estate investing platforms that have emerged over the last few years. However, CrowdStreet focuses on commercial real estate and is only for accredited investors, which is a bit of a differentiator to other platforms.

Here's how CrowdStreet compares to some of the other more popular platforms:

How Can I Start Investing on CrowdStreet?

If you’re interested in investing using CrowdStreet, create an account from the site’s home page. This will give you full access to the Marketplace. There is a minimum investment of at least $25,000 for the smallest deals, and you must be an accredited investor. 

I strongly recommend making use of their resource center and attend a new investor orientation before you put a dollar (or $25,000) toward a CrowdStreet investment.

Final Take on Crowdstreet

As I mentioned in the introduction, I think that real estate is an important asset class for most investors. I’m also of the opinion that most publicly traded REITs rely a bit too heavily on self-storage spaces and other mediocre investments. However, publicly traded REITs tend to offer massive geographic exposure, which provides some insulation from regional downturns.

Investing in any crowdfunding real estate site has more risk than investing in a publicly traded REIT. The fact is, it’s nearly impossible to get your money out of CrowdStreet until the property full-realizes (aka sells).. Since it’s an illiquid investment, you can’t get out of your investment early.

However, for the right person, CrowdStreet could offer excellent investment opportunities. 

The site has great resources for learning about commercial real estate investments. It also clearly discloses risks, fees, and other pertinent information about individual deals. If you have $250,000 that you need to allocate toward real estate, you could fund 10 or more deals on CrowdStreet and gain a well-diversified portfolio of commercial real estate.