CrowdStreet was founded in 2013 in Portland, Oregon. It still maintains a strong presence in its Portland office but has now moved headquarters to Austin, Texas. CrowdStreet is a crowdfunding real estate investment model that gives accredited investors access to individual commercial real estate investment opportunities. Its marketplace was created to give individual investors better access to private equity opportunities in commercial real estate, the third-largest asset class in the United States.
Thousands of investors have invested over $1.69 billion in more than 488 projects, receiving over $197 million in distributions with CrowdStreet. To date, 51 of the offerings have been fully realized. Its offerings include funds and vehicles, individual deals, and tailored portfolios.
CrowdStreet has experienced rapid growth. Commercial real estate took a financial hit during the COVID-19 pandemic and individual investors turned to online investing in response. The end of 2020 proved to be CrowdStreet’s most lucrative year with more than $640 million invested. The company also launched several managed funds.
Forbes has recognized CrowdStreet as one of America’s Best Startup Employers for 2021.
CrowdStreet has a great website that makes it easy for investors to view projects and products that are available for investment. Each individual investment offering on its website includes a detailed video webinar about the project. This is critical considering the amount of money being invested. Interested investors can listen to webinars live and submit questions to the project sponsor, or they can watch the recorded video later.
It also offers additional page features that make it easy for investors to glean the information they need to confidently invest. Its pages offer a resources section, with instructional videos and articles about general investing topics, such as “How to review an investment offering” and “Understanding internal rate of return,” as well as a link to CrowdStreet’s “Quick Start Guide,” for help getting started.
CrowdStreet states that it is committed to bringing high quality deals to its investors. It evaluates deals closely before accepting them onto its marketplace. Developers are given background and reference checks. It does this to help narrow the field of commercial real estate opportunities for investors who don’t have the time or ability to do vetting on their own. It says that out of every 100 deals, approximately five make it to the Marketplace for investors to compare and review.
In spite of this vetting, CrowdStreet does encourage investors to do their own due diligence on developers and projects to ensure they understand the potential risks.
CrowdStreet knows how important it is to bring high quality deals to investors and emphasizes investor education as well. It recently launched a new video series called “StreetBeats.”
The series provides insider perspectives from investors, sponsors, and industry leaders on the commercial real estate market. It helps investors understand what's happening and changing from week to week. For example, the series has videos discussing the market volatility and how it can impact the commercial real estate market.
CrowdStreet is a convenient platform to give accredited investors the ability to add commercial real estate projects to their investment portfolios. It is one of the largest online commercial real estate marketplaces.
It also offers investors a variety of commercial real estate investment opportunities, including both single-asset projects and funds. This means that investors can choose to invest in individual commercial real estate properties and interact directly with the project sponsor, or buy into one of its funds which are similar to a mutual fund.
CrowdStreet is for investors that are established and have deeper pockets. It has high investment minimums and fees as well. Each investment offering on its marketplace has a different investment minimum. Most of the funds and individual projects have an investment minimum of $25,000.
It charges fees as well which is standard; however, it's fees can be higher than its competitors. Each individual project has a different fee structure, so interested investors need to view each project page. The CrowdStreet funds have a fee of between 0.5 percent to 2.5 percent of invested capital on an annual basis.
Again, charging fees is standard in this industry and 0.5 percent is on the low end. But, 2.5 percent is higher than most competitors.
CrowdStreet’s investment offerings are complicated commercial real estate deals. Each project is different. Some may start paying a return immediately, while others may take years. Some projects may fail to fund. These projects are illiquid so investors need to review each project carefully for details on its target investment period.
While CrowdStreet vets the projects on its marketplace, it still encourages investors to do their own due diligence to make sure the project fits their portfolio. These complex real estate deals mean that investors should be prepared to do their research and choose carefully.
All of CrowdStreet’s investments are currently available only to accredited investors. This means investors that have a high net worth, excluding their primary residence, of at least $1 million. Or they may have an annual income in each of the past two years of at least $200,000 if single or $300,000 if married.
This limits who will be eligible to invest with CrowdStreet. Interestingly, CrowdStreet directs interested investors who are not accredited to two alternative websites.
CrowdStreet has a well-designed marketplace of commercial real estate project offerings for accredited investors. If you’re looking to diversify your investment portfolio and add commercial real estate projects to the mix it could be a great way to do this. CrowdStreet makes this process easier by doing the first layer of vetting for each project on its marketplace.
Investors should be prepared to do their own due diligence on each project and be aware that these are illiquid investments.
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