CrowdStreet Review 2022: Is it Legit? And What’s the Catch?

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CrowdStreet is one of the biggest names in the online real estate investment space.

With CrowdStreet, you’ll have the option to:

  • Earn passive income
  • Diversify your portfolio
  • Protect yourself against inflation
  • Earn annual profits from 7.5% to 19.7%+
  • Protect yourself against stock market volatility

But is it safe and legit?

Let’s take a deep dive into this CrowdStreet review and find out if it’s the best investment platform for you.

Bonus: Check out my interview with the CrowdStreet CIO here.

Overall Rating:
4.8/5
Investment options
Fees
Projected profits
Pros Cons

No fees

Earn passive income

High projected profits

Very illiquid

Accredited investors only

High minimum investments

What is CrowdStreet?


CrowdStreet is an online real estate crowdfunding platform for accredited investors. You can generate passive income while diversifying your portfolio in commercial real estate projects across the United States.

How Does CrowdStreet Work?


CrowdStreet uses CRE crowdfunding to help accredited investors diversify their portfolios and hedge against inflation.

Instead of hiring a high-priced hedge fund manager, you can join CrowdStreet, and invest in commercial real estate at a relatively low cost – all online.

CrowdStreet REIT Investment

If you invest in CrowdStreet, then you could invest in the following types of investments:

  • Debt – You’re financing a loan and hope to be repaid with your principal (initial investment) plus interest
  • Equity – You’re actually buying shares of a real estate project and hope to be repaid with your principal (initial investment) plus any growth from the project
  • Preferred Equity – You’re investing in something that’s treated like both a debt and equity investment: You take more risk than debt investors but less risk than equity investors

Your CrowdStreet investment would be considered asset-backed.

So, if – in the worst-case scenario – your investment deal falls through, you can still recapture a small portion of your original investment because you invested in an asset-backed investment. 

If that were the case, then CrowdStreet would likely sell the collateral (like selling a house in foreclosure) to repay you as much as possible.

Here’s a quick checklist that covers some of the most common rules to see if you qualify as an accredited investor:

Requirements for Accredited Investors

Annual income if filing single

Over $200,000 in the past 2 years & you expect to earn the same this year; OR

Annual income if filing joint

Over $300,000 in the past 2 years & you expect to earn the same this year; OR

Net worth if filing single or joint

$1 million (excluding your primary home); OR

Financial Professional Licenses

Series 7 or Series 65 or Series 82

CrowdStreet certainly simplifies alternative investing by bringing diverse options directly to you, online.

CrowdStreet Pros and Cons


Let’s take a big-picture look at the CrowdStreet pros and cons:

Pros Cons

Access a wide range of commercial real estate deals across the USA

Very illiquid (your money is typically locked up for 3 to 10 years)

Investors earn passive income over the lifetime of the investment

High minimum investments (typically $25,000)

You could earn a potential annual return between 7.5% to 19.7%+

Available only on desktop (no mobile app)

You can invest using a self-directed IRA

Only accredited investors can invest using CrowdStreet

CrowdStreet vets each deal and about 5% are accepted

Typically best for those with a lot of spare cash to invest

Investors are not directly charged a fee by CrowdStreet

Currently no secondary market (as of mid-2022)

Overall Rating


Before reading further, check out my ratings in this CrowdStreet review for each of the following 6 categories:

Overall Rating

Usability

⭐️⭐️⭐️⭐️⭐️

Projected Profits

⭐️⭐️⭐️⭐️⭐️

Fees

⭐️⭐️⭐️⭐️⭐️

Investment Options

⭐️⭐️⭐️⭐️⭐️

Customer Service

⭐️⭐⭐️⭐️⭐️

Liquidity

⭐️⭐️

To give a little more detail on the reason for my ratings, take a look at my breakdown below:

  • Usability – CrowdStreet’s online platform (desktop version only, no phone app) is extremely user-friendly
  • Projected Profits – In the last 50 years, the S&P 500 earned about 9.5% in returns. In comparison, CrowdStreet’s investments can earn up to 19.7%+
  • Fees – CrowdStreet does not directly charge investors fees! And most alternative investing platforms charge north of 2% in fees. However, keep a close eye on the fees that Sponsors charge you
  • Investment Options – CrowdStreet offers several different investment options – but they typically either sell out fast or only a few are offered at the same time
  • Customer Service – My CrowdStreet customer service rep was responsive, well-informed, and did not push me to do anything. In fact, he suggested researching the entire platform before investing in anything – and that’s the same advice I would have given to anyone else
  • Liquidity – Personally speaking, I’d prefer to have a more liquid option where I could convert my investments to cash within days instead of 5+ years, as with CrowdStreet

CrowdStreet Features


Let’s take a big picture look at CrowdStreet and their main features:

CrowdStreet Features

Year Founded

2013

Headquarters

Austin, Texas

Total Assets Under Management

$3.16 billion

Total Number of Users

80,000+

Availability

Desktop only

Minimum Needed to Open Account

$0

FDIC Protection

No

Secondary Market?

No (as of mid-2022)

Internal Rate of Return

17.7%

International Investors

No (must be US citizen or resident alien)

CrowdStreet Fees & Investments


Let’s take a big picture look at CrowdStreet’s fees and investment options:

Fees & Investments

Fees

None!

Investment Options

- REITs

- Hotels

- Industrial Parks

- Office Buildings

- Student Housing

- Multi-Family Units

Type of Investing

Typically fractional shares

Minimum Investment

$25,000

Typical Holding Period

3 to 5+ years

Self Directed IRA [SDIRA] Notes

Some investment opportunities may not accept SDIRA funds

How You are Paid Back

- Rental (or other passive) income

- Capital appreciation

- Repayment on loans

- Interest payments

Investment Account Types

- LLCs

- Trusts

- Self-Directed IRA

Since you (the investor) are not paying fees, you might be wondering how does CrowdStreet make money?

Here’s how:

  • Charging sponsor fees to use its platform 
  • Selling software subscriptions to its sponsors 

CrowdStreet does warn, however, that some fees may already be built into the investment deal.

So before you invest, always do your research.

CrowdStreet Returns


CrowdStreet is not only appealing because you’re charged $0 in fees, but they also offer high returns.

On average, CrowdStreet’s annualized internal rate of return (aka IRR) is 17.7%.

The image below gives you an idea of CrowdStreet’s financial picture:

CrowdStreet Financial Picture

Now keep in mind that your return potential increases with the risk that you take. 

CrowdStreet offers 4 main investment deals for you (which I’ll discuss more below):

  • Core
  • Core Plus
  • Value-Add
  • Opportunistic

Depending on the investment deal that you choose, you may have a higher return (since you may be taking more risk). 

Here’s a better image to describe the difference:

CrowdStreet Potential Returns vs Risk

As the screenshot above shows, the more risk you take, the more possible gains (or losses) you could have.

Another factor that can determine how high your returns can be is the length of time for which you hold your investments.

Below is a good illustration of the hold period relative to the returns (IRR) of the investments:

CrowdStreet IRR Hold Period

So far, out of 96 realized deals, only 11 yielded negative returns (about 13%). 

Now, there have been some total losses, meaning the IRR was -100% on deals including:

  • Hayes Court
  • Red Lion Hotel in Houston
  • Britannia Business Center I
  • IntelliStay Courtyard in Tulsa
  • Extended Stay Hotel in Baton Rouge
  • Extended Stay Hotel in Overland Park

One of the deals that fell through, the Houston Red Lion Hotel, ended in Bankruptcy.

CrowdStreet Lion Hotel Bankruptcy

Some reasons why the Red Lion Hotel ended in Chapter 11, include:

  • COVID 19
  • Severe staffing shortages 
  • Severe mismanagement of the property
  • The passing away of the previous general manager
  • Steep decline in oil and gas markets, causing a lower demand for travelers in the area
CrowdStreet Houston Red Lion Hotel

While not all deals end in Bankruptcy and a -100% IRR, this example illustrates that CrowdStreet certainly does not come without its risks.  

Since each investment comes with its own risk, it’s critical that you understand your risk tolerance – and do your thorough research.

CrowdStreet Deals


CrowdStreet sets itself apart from the competition by offering a large variety and high-quality deals.

In fact, CrowdStreet has raised over $3.25 billion across 647 deals – and counting.

These deals are categorized into 4 investment profiles:

  1. Core
  2. Core-Plus
  3. Value-Add
  4. Opportunistic

Let’s take a closer look at some of the CrowdStreet deals.

1. Core


The Core Deals are the least risky real estate deals offered on the CrowdStreet platform.

They provide predictable income streams – but less chance of appreciation in the future.

Below are some additional facts and features you may want to know about Core Deals:

Core

Number of deals offered

11

Number of deals realized

0

Lowest IRR

N/A (deals have not yet been realized)

Highest IRR

N/A (deals have not yet been realized)

Core Deal Characteristics

- Stable cash flow

- Located in major markets

- Fully occupied properties

- Real estate does not need major improvements

Risk Level

Least risky

2. Core-Plus


Core-Plus Deals are a little riskier (and thus, potentially more lucrative) than Core Deals.

As of mid-2022, 11 Core-Plus deals are fully realized.

Check out some of the deals below:

CrowdStreet Core-Plus Deals

The great news is that as of mid-2022, not 1 of the Core-Plus deals have lost money.

Below are some additional facts and features you may want to know about Core-Plus Deals:

Core-Plus

Number of deals offered

102

Number of deals realized

11

Lowest IRR

7.5%

Highest IRR

26.4%

Deals performing better than target IRR

54%

Deals performing less than target IRR

45%

Percent of deals at a total loss

0%

Core Deal Characteristics

- High-quality properties

- Less cash flow for investors

- Properties are not fully occupied

- May need maintenance/improvements

Risk Level

Low risk

3. Value-Add


Value-Add deals are high-risk and high-return profile deals.

These properties typically require maintenance and improvements with the expectation that future cash flow will increase significantly.

It should be noted that unlike Core-Plus Deals, which so far had 100% positive returns, the Value-Add Deals are unpredictable and have had several negative returns.

Check out some of the realized Value-Add deals:

CrowdStreet Value-Add Deals

Below are some additional facts and features you may want to know about Value-Add deals:

Value-Add Deals

Number of deals offered

283

Number of deals realized

66

Lowest IRR

-100%

Highest IRR

50.7%

Deals performing better than target IRR

45%

Deals performing worse than target IRR

53% (includes total losses)

Percent of deals at a total loss (-100%)

9%

Core Deal Characteristics

- Unpredictable cash flow

- Properties require a lot of maintenance

- Expected major property improvements

- Substantial future cash flow & return expectations

Risk Level

High risk

4. Opportunistic


Opportunistic Deals target the highest returns and have the highest risk. 

As of mid-2022, about 14% of deals have been realized, so there really isn’t a solid track record.

Check out some of the Opportunistic Deals below:

CrowdStreet Opportunistic Deals

As of mid-2022, only 3 of the 28 realized deals (or 10.7%) resulted in negative returns. 

Below are some additional facts and features you may want to know about Value-Add Deals:

Opportunistic

Number of deals offered

200

Number of deals realized

28

Lowest IRR

-100%

Highest IRR

116.7%

Deals performing better than target IRR

54%

Deals performing worse than target IRR

46%

Percent of deals at a total loss (-100%)

3.5%

Core Deal Characteristics

- Unpredictable cash flow

- Properties require a lot of maintenance

- Expected major property improvements

- Substantial future cash flow & return expectations

Risk Level

Highest risk

The CrowdStreet Vetting Process


You might be wondering how CrowdStreet finds its commercial real estate deals and whether they are actually any good.

The good news is that CrowdStreet really does stay true to one of it’s mission statements:

Uncompromising commitment to quality.

- CrowdStreet Mission Statement

And it’s true, about only 5% of deals make it through to CrowdStreet’s marketplace.

There are 4 steps that take place to list a real estate deal on the CrowdStreet platform:

  • Sponsor Approval – Background checks, track record review, and sponsor designation
  • Deal Approval – Sponsor Q/A, offering memo, investment committee, and review
  • Quality Control – Market data verification, 3rd party report, and verify assumptions 
  • Document Review – Operating agreement, subscription agreement, and private placement memorandum

CrowdStreet actually further condensed these 4 steps into 3 actionable categories: 

  1. Evaluating the firm
  2. Evaluating the asset
  3. Evaluating the deal materials

Continue reading to find out more about CrowdStreet’s vetting process.

Step #1: Evaluating the Firm


The very first step focuses on the sponsor.

CrowdStreet has reviewed hundreds of sponsors, such as the ones listed below:

CrowdStreet Approved Sponsors

CrowdStreet’s goal is to ensure that the sponsor has a good track record and a positive history of successfully executing deals similar to the one they are bringing to the marketplace. 

Some steps include:

  • Background checks
  • Track record review
  • Sponsor designation

The next step is concerned with evaluating the deal and the asset.

Step #2: Evaluating the Asset


Next, CrowdStreet performs its due diligence, which essentially takes a closer look at the actual deals that are being offered.

In plain English: CrowdStreet makes sure the offering is not fraudulent. 

Of the many factors, CrowdStreet reviews a company’s:

  • Market
  • Experience
  • Track record
  • Business plan
  • Overall strategy
  • Management team
  • Alignment of interest

Here, CrowdStreet’s goal is to gather as much information as possible for investors if the deal is offered on the CrowdStreet platform.

Step #3: Evaluating the Deal Materials


In this last step of the process, CrowdStreet verifies the sponsor’s assumptions, verifies the market data, and offers an operating agreement to the sponsor. 

Some of the items that are reviewed include:

  • Zoning report
  • Loan documents
  • Property condition report
  • Property management agreement

This final step scrutinizes the technicalities and the legalese before approving or dismissing an offering.

Where CrowdStreet Invests


As of mid-2022, more than 647 deals have been funded.

These deals are located across 250+ cities in the United States.

CrowdStreet Deals USA

As you can see, a majority of the top investment opportunities are located in income tax-free states such as:

  • Texas
  • Florida 
  • Nevada
  • Wyoming
  • Tennessee

A majority of the deals are located in Texas, which CrowdStreet believes is the No. 1 real estate market.

CrowdStreet Texas Austin Market

It is CrowdStreet’s belief that Austin, aka “Silicon Hills,” is the up-and-coming market in Texas.

Of the various real estate deal offerings, CrowdStreet mainly invests in:

  • Senior housing 
  • Student housing
  • Office properties
  • Industrial properties
  • Hospitality buildings
  • Multi-family housing

As always, make sure you do your thorough research before investing your money.

CrowdStreet Liquidity


Liquidity is a big issue when it comes to alternative investments.

While the average lock-up period for CrowdStreet deals typically hovers around 3 to 5 years, there are deals that can take longer. 

For example, some CrowdStreet deals (pictured below) could take up to 10 years to liquidate!

CrowdStreet Union Station Investment Period

Since CrowdStreet does not [yet] have a secondary market (where you could sell your share of the investment for a discount), you’ll have to wait until the end of the hold period. 

CrowdStreet investments are not like investing in the stock market, where you can sell your stocks and have your cash within a few days.

CrowdStreet Risk Tolerance Questionnaire


One of the most important documents when investing is the Risk Tolerance Questionnaire.

Some examples of such investment preferences include:

  • Portfolio size
  • Investment time horizon
  • Comfort level with taking risk
  • Willingness to sustain market volatility

When you first sign-up and create your investment account, you’ll be asked a few questions so that CrowdStreet can help tailor your investment options to your answers.

CrowdStreet RTQ 1

Here’s a snapshot of the second question, where you’ll be asked about how much help you’d like from the CrowdStreet platform in choosing your investments.

CrowdStreet RTQ 2

And finally, the third question, asks about how much you are willing to invest.

CrowdStreet RTQ 3

Finally, you’ll be asked to share where you first heard about CrowdStreet (and don’t be shy to share that it was The Millennial Money Woman who introduced you!).

CrowdStreet RTQ 4

CrowdStreet also offers another [very abbreviated] version of an RTQ for investors like you.

CrowdStreet Investment Objectives

This RTQ is found when you click on: 

  • My Account
  • Investing Preferences

From there, if you scroll to the bottom of the page, you’ll see the “Investment Objectives” section.

The 3 main questions you’ll have to answer include: 

  • Your total investment contributions per deal
  • How much risk you can take in your portfolio
  • Your total investment contributions in the next 12 months

It’s not required for you to complete these questions, but I think they’re a good way for CrowdStreet to help filter out the best possible deals for you.

CrowdStreet Customer Service Review


If you’re looking to invest in new deals, you’ll typically see a pop-up box, so you can schedule a one-on-one call with a CrowdStreet rep to learn more about that investment.

CrowdStreet REIT Call

Personally speaking, I thought that was a pretty cool customer service experience.

Why?

Because I, as the potential customer, won’t have to go searching through information about that particular investment.

Instead, I’ll have a CrowdStreet rep talk to me and help explain some of the important details about that investment.

CrowdStreet Schedule Call

You can schedule a call with your CrowdStreet rep virtually at any time – even on the same day if you wanted.

I am a pretty big fan of that.

CrowdStreet Meeting

Within moments of scheduling my call with Tom, I received a confirmation email.

Here’s my evaluation of CrowdStreet’s customer service:

Category Rating (0 - 5)

Knowledge

⭐️⭐️⭐️⭐️⭐️

Friendliness

⭐️⭐️⭐️⭐⭐

Response Time

⭐️⭐️⭐⭐⭐

Customer Experience

⭐️⭐️⭐️⭐️⭐

Check out CrowdStreet’s customer contact information, below:

CrowdStreet Contact Information

Email

ir@CrowdStreet.com

info@CrowdStreet.com

Phone

888-432-7693

Social Media

Twitter, Facebook, LinkedIn, Instagram, YouTube

Just keep in mind that CrowdStreet is located in the CST time zone (with headquarters in Austin, TX), so depending on where you live, don’t expect an immediate response due to the time difference.

CrowdStreet Usability & Interface


To be very honest with you, I think CrowdStreet did a good job in designing the user interface. 

It’s user-friendly and it does a good job of displaying the most important information in an organized fashion.

CrowdStreet Interface

One thing I would mention is that the user interface may be a little busy for first time-users – there’s a lot of stuff going on. 

The most important tabs are:

  • My Account
  • Marketplace

The standard or “home” view is the “Marketplace” tab (which you can see in the screenshot above). 

You can access “My Account” when you hover over your name, on the top right of the screen:

CrowdStreet My Account

Here’s what I really like about the CrowdStreet interface:

  • It’s easy to invest
  • Easy to link your bank account
  • You can easily schedule a call with an associate

Always make sure to invest only as much as you are willing to lose.

CrowdStreet Safety Features


Safety is a big concern for CrowdStreet, which takes many measures to protect its clients’ personal information.

I’ve listed 2 steps CrowdStreet takes to secure your data:

  1. Two-factor authentication
  2. Encrypted personal information

Check it out:

1. Two Factor Authentication


With CrowdStreet, you can establish 2FA (Two Factor Authentication).

You can do so simply by clicking on “My Account” and then “Security.”

CrowdStreet 2FA

If you choose to enable the 2FA, you’ll have to input your phone number.

CrowdStreet will send you a verification code every time that you log in.

2. Encrypted Personal Information


Your personal information is encrypted to industry standards.

Also, not every CrowdStreet employee will have access to your information – only a limited number of personnel will have clearance to view your data.

CrowdStreet Educational Resources


Do you want to start diversifying your portfolio, but want to learn more about alternative investments first?

CrowdStreet understands that every investor is different – that’s why the platform has created a list of educational resources for curious minds.

Resource Description

For Investors” Tab

Whether you’re a beginner or an advanced investor, this tab offers sub-tabs that can explain anything from why you should invest in real estate to CrowdStreet’s investment thesis

Resources” Tab

Learn everything you need to know about real estate investing

Offers sub-tabs, such as the investor quick start guide and the Help Center

Found under the “Resources” tab, this is a place for expert real estate investors to share their insights via ZOOM. All video conferences are recorded

The CRE Education center is a blog that details the simplest to the most complex matters found in real estate investing

Is CrowdStreet Right for You?


CrowdStreet might be a good option for you if:

  • You’re accredited
  • You don’t need liquidity
  • You’re looking for diversification
  • You want to earn passive income
  • You’re comfortable taking some risk 
  • You’re already contributing to retirement accounts

Alternative investment platforms like CrowdStreet are typically designed for intermediate to advanced investors.

So, if you’re just starting out with investing (like paying off credit card debt, not yet maxing out your 401(k), etc.), CrowdStreet probably would not be a good fit. 

If you’re a new investor, consider investing in index funds or at least first build a solid financial foundation.

How to Open an Account with CrowdStreet


First, head to the CrowdStreet website, and click “Create An Account,” in the top, right-hand corner.

The first step to the account opening process is just creating your account username and password.

CrowdStreet Create Account

Also notice that right away, you’ll have to declare whether you’re an accredited investor or not.

However, you will have to verify your accredited status in 1 of 2 ways: 

  1. Using the website VerifyInvestor.com through your CrowdStreet Portal
  2. Uploading a letter written by a third party (your CPA, attorney, wealth advisor, etc.) to your CrowdStreet account 

CrowdStreet even provides you with a letter template in both PDF and Word formats, which look something like this:

CrowdStreet Letter Template

After you create your password and submit the information, you’ll be taken to your account Dashboard Straight away!

It literally takes 5 seconds to open your user dashboard. 

Let’s check out your user dashboard.

CrowdStreet Dashboard

When you first log in to your dashboard, you’ll be asked a series of questions that are like your Risk Tolerance Questionnaire (check out the RTQ section of this post to learn more). 

Once you finish answering these 4 questions, you can then select whether you want an automated tour of the CrowdStreet platform.

CrowdStreet Tour

Once you’ve had some time to adapt to the CrowdStreet platform, it’s time to complete some additional steps before investing. 

You’ll want to click on “My Account” under the section that says “Hi [Your Name].”

CrowdStreet Account

After clicking on “My Account,” you’ll be prompted to complete any outstanding information before you can actually start investing.

CrowdStreet Set Up Profile

Once you click on “Get Started,” you’ll be given a list of outstanding items that must be completed first.

CrowdStreet Outstanding Items

In my case, you’ll see that I still need to verify my:

  • Address
  • Date of birth
  • Social Security Number

Once you’ve verified your information, the next step that you’ll want to complete is likely setting up your investment accounts.

CrowdStreet Set Up Accounts

You can set up your investment account by clicking on the “Investment Accounts” tab.

CrowdStreet Investment Accounts

Here, you have many options to choose from, such as:

  • IRA
  • Trust
  • Partnership
  • Corporation
  • Joint account
  • Sole Proprietor
  • Individual account
  • Multi-Member LLC
  • Single-Member LLC
  • Retirement 401k Plan

And as with any account application, you’ll have to complete more information to set up the investment account.

CrowdStreet Create Investment Account

Now, assuming you’ve set up your accounts, you can start browsing the many deal offerings.

Take a look at the many available filter options:

CrowdStreet Preferences

If you’re a very savvy investor and want to be kept up-to-date on all the latest deal offerings, then you should navigate to the “Email Preferences” tab.

CrowdStreet Email Preferences

Here you can opt-in to receive new offering announcements via email.

The CrowdStreet Marketplace


Assuming that you’re all set up, it’s time to check out the deals.

CrowdStreet Marketplace

You can do so by clicking on the “Marketplace” tab at the top of your dashboard and scrolling through the deal offerings. 

On the Marketplace tab, you can sort your search by many factors, such as:

  • Closing Soon
  • Recently Posted
  • Recently Updated
  • Minimum Investment (Low to High)

The minimum investments are $25,000 and can range up to $250,000 (check it out below):

CrowdStreet Minimums

The Private Managed Accounts (or PMA) are basically a VIP-level service of portfolio customization.

Deal Offering Walkthrough


If you’re more of a “typical” accredited investor and want to check out the $25,000 minimums for now, then check out my walkthrough of a deal offering:

CrowdStreet Art88 Miami

Since Miami is practically in my backyard, I figured I would show you a walkthrough of the Art88 Miami Apartment deal offering. 

If you want to learn a little more about the potential investment opportunity, you can check out a recorded webinar, which is posted at the top of the deal page:

CrowdStreet Deal Page

The webinars typically run for 50 to 60 minutes and address high level questions about the investment properties. 

Next, you’ll want to take a look at some of the basic data that’s listed to the right of the screen:

CrowdStreet Investor Data

In this data table, you’ll want to make sure to review several key pieces of information including: 

  • SD-IRA Investments – Can your investments be held in a tax-deferred vehicle (like a self-directed IRA)?
  • Targeted Equity Multiple – How much in cash distributions should you expect to make?
  • Targeted Investment Period – For how long should you expect to keep your money locked up?

These are all serious questions you need to start asking yourself if you’re planning to invest with CrowdStreet. 

If you keep scrolling through, you’ll see the table contents. 

I’d probably take a closer look at both the Investment section and the Business Plan details.

CrowdStreet Business Plan Details

Additionally, you may want to take a closer look at the Offering Summary page, where you can dig into some of the details of the investment offering.

CrowdStreet Offering Summary

If you’re looking for just a simple (and easy-to-read) overview from the CrowdStreet analysts themselves, then you may just want to click on the “CS Snapshot Review” section. 

Below is a screenshot of how this section could look:

CrowdStreet Snapshot Review

Another neat thing about the Offering Summary section is the Hypothetical $100k investment section. 

CrowdStreet helps model out your projected cash flow and targeted returns over the years of the investment deal.

CrowdStreet Hypothetical 100k

In other words, the goal for this particular investment property would be to help investors earn a 17% (or more) IRR. 

Of course, one of the most important sections is also the “Fee” tab.

CrowdStreet Fees

This is the section that details the financial data – and my first stop is always the fees tab, because I want to know how much I’m paying the sponsor. 

So while CrowdStreet does not directly charge you any fees for using the platform, you’ll likely pay fees to the Sponsor with whom you’re investing.

Speaking of the Sponsor,  let’s take a closer look at the Sponsor for this particular Miami investment property:

CrowdStreet Sponsor

While it’s important to understand the financial aspect of each investment property, it’s also critical to understand the broader aspects such as:

  • Leadership structure
  • Historical track record
  • How the Sponsor is viewed in the media

As an investor, it would be good to understand the type of property that you’re investing in.

For example, you may want to know the details of the floor plans.

CrowdStreet Floor Plans

Of course, it would also help to understand the comparables to similar properties in the area. 

For this Miami investment property, you can view how rent compares – and the potential opportunity to increase rents in the future (which would mean more cash flow for investors like you).

CrowdStreet Rent Comparables

If you’re interested in investing in a property, just make sure that you do so before the closing date. 

Once a property has closed its doors to investor funding, you will not be able to access the investment details:

CrowdStreet Art88 Miami Apartments

As you can see in this image, the Miami investment property closed its doors to the public. 

Always make sure to do your research first before investing.

How to Fund Your Investment


This is where CrowdStreet differs from other platforms: 

CrowdStreet cannot actually take funds from your accounts and send them to your investment Sponsor.

Instead, you will have to work with your bank directly to move funds from your account and invest with your Sponsor.

Typically, you’ll have to follow a 4-Step process to fund your investment:

  1. Make an offer
  2. Link your investment account to your offer
  3. Submit any necessary documentation
  4. Select a funding method to start investing

This process can be better described by the image below:

CrowdStreet Tutorial Offering

Typically, you would send an ACH payment to your sponsor, which typically takes 7 to 10 business days.

CrowdStreet Tutorial Offering 2

Make sure to click the “Confirm Funds Sent” button, which is at the bottom, right of the screen. 

This will notify your Sponsor to expect your funding.

Benefits of Real Estate Crowdfunding


Thanks to modern technology, real estate crowdfunding platforms like CrowdStreet can connect Sponsors with a much wider range of people. 

Here are some real estate crowdfunding benefits: 

  • Convenience – Invest online, in real-time, right from the comfort of your home 
  • Geographic Diversification – Access real estate deals across the country and tailor your search based on your preferences 
  • Direct Investment Opportunities – By investing, you can now directly buy into the action of the real estate project (versus indirectly investing through REITs, ETFs, or mutual funds)
  • Transparency – All the information about a property is directly at your fingertips. You can compare and contrast each project’s fees, projected cash flow, etc. to best determine which investment opportunity suits you
  • Lower Minimum Investment Thresholds – Thanks to real estate crowdfunding, minimum investment requirements have come down from several $100,000 or even several $1 million 
  • Portfolio Diversification – Thanks to the reduced minimum investment requirements, a $100,000 (for example) investment can now be used across 4 properties ($25,000 each), while before crowdfunding, $100,000 may not even have been enough to invest in 1 property
  • Passive Income Generation – investing in real estate can also help you generate income (through rents) and you can also earn a potential profit through capital appreciation (selling the property for a profit)

As you can see, there are many benefits to investing in real estate crowdfunding – but there are also many cons – like lack of liquidity (check out the pros and cons section for more info). 

I can never stress enough that you need to do your research before investing.

Taxes & CrowdStreet


A majority of the CrowdStreet deals are found in states with no income taxes, such as:

  • Texas
  • Florida
  • Nevada
  • Tennessee 

Unless you hold your investments in a tax-deferred account (like an IRA), then taxes may become a real issue for you.

For example, you’ll have to pay taxes on:

  • Passive income
  • Profits from the sale of properties

Keep in mind that CrowdStreet will send you your tax documents, and you have the choice to either receive them via email or via mail.

CrowdStreet Electronic Consent Tab

You can select which option you prefer by clicking on the “Electronic Consent” tab, which can be found under the “My Account” section of your CrowdStreet portal.

That way, you can avoid any potential state tax issues.

Of course, always make sure to loop your CPA into the picture as well.

Exclusive Interview with the CrowdStreet CIO


I have something that no other CrowdStreet review has done before: An exclusive interview with CrowdStreet’s Chief Investment Officer Ian Formigle

Check out our conversation below:

Q: What is Your CrowdStreet Story?


A:
It all started back in 2011 when co-founder Darren Powderly first had the idea of CrowdStreet on the heels of the GFC (Global Financial Crisis of 2008). 

Darren was looking for a way to infuse capital into the real estate world. 

In other words, how can real estate be more broadly held? 

Then, with the JOBS Act and Title II going live in the Fall of 2013, crowdfunding for real estate became a possibility.

This is where the private real estate “country club” investment model is disseminated to the public.

So, CrowdStreet incorporated and set out to build a platform for the public since you can do large commercial real estate transactions on platforms like CrowdStreet.

In April 2014, CrowdStreet’s marketplace was launched.

And that’s when I got to know Darren in 2014. It made abundant sense to join CrowdStreet.

Since then, we have done over 650 deals and I serve as the key decision-maker on those deals.

At the end of May 2022, we hold just under $3.3 Billion of invested equity, 649 deals have closed, and we have worked with 305 different companies.

The total value of all real estate deals is worth about $25 Billion.

Our aim is to continue to bring private real estate to individuals.

Q: Who is Your Typical CrowdStreet Investor?


A:
The average investor on the CrowdStreet platform has invested about $50,000.

And, at the end of May 2022, about 68% of investors have invested in more than 1 real estate deal.

We see that the average repeat investor has about 6.7 investments on our platform, and the average portfolio is about $350,000.

Since April of 2014, we have worked to provide exclusive access to real estate deals to individual investors across the country.

With our transparency and the fact that the information is all online, investors can make an informed decision and invest in hours.

The fact that we provide easy access to formerly exclusive real estate deals has resonated well with investors.

Investors also appreciate the communication, reporting, tax documents, and updates from the real estate sponsor.

Q: What does the future of CrowdStreet look like?


A:
We are continuing our efforts to invest in growing the platform.

We had a major expansion in 2018 with the RIA (Registered Investment Advisor) platform, also known as CrowdStreet Advisor.

CrowdStreet Advisor privately manages accounts for individuals who want to invest on the marketplace.

So, investors are assigned an advisor to help them build their portfolio and receive continued recommendations and advice from that advisor.

We’ve also recently introduced funds on the CrowdStreet platform.

Funds may be a better fit for clients who do not want to take the investment decision into their own hands and rather have a committee select which investments are to be held in each fund.

These funds gravitate around multi-family, and industrial development deals.

We generally hold between 6 to 10 assets that fit the fund investment mandate to diversify the fund itself.

So, as of now, we have 3 ways to invest with CrowdStreet:

  1. You invest in hands-off funds
  2. You pick and choose the individual funds you want to hold in your portfolio
  3. You join the CrowdStreet Advisor side and become a private client

Overall, we started where we could, we learned and grew, and the ultimate goal is to continue to broaden access (to real estate deals) over time.

Q: What is your advice to new CrowdStreet investors?


A: After opening an account, begin educating yourself.

There are 2 primary ways to do so:

First, sign up for webinars and attend deal webinars and just listen to the sponsors.

You will start educating yourself quickly on what these projects or groups look like and what they are trying to achieve.

After listening to these webinars, you’ll start hearing patterns.

Second, CrowdStreet has tons of content on the website. So, start reading the content and click on things that are interesting.

Plus, our investor relations team is happy to have conversations with you.

Deals are launching every week and the first thing that investors fall pretty to is the shiny and attractive deals. Just make sure you take your time to understand whether it’s the right deal.

Learn, show up, take time to educate yourself, get oriented, understand what resonates with you (for example, an individual deal versus a fund), and be patient.

Then, you can make a decision so you are ready for success.

Is CrowdStreet Worth It?


Not many people can say they invest in exclusive commercial real estate deals.

CrowdStreet is a game-changer.

Now, accredited investors can invest directly in real estate properties without going through an expensive hedge fund or property managers.

Here’s how you can get started:

  1. Sign-up to CrowdStreet
  2. Verify you are an accredited investor 
  3. Select your real estate deals and start investing

If you decide to invest with CrowdStreet, then it’s important that you only invest as much as you are comfortable losing.

fiona smith the millennial money woman

The Bottom Line:

Your investments are never guaranteed. Especially when it comes to real estate investing, remember that this can be speculative, risky, and illiquid. However, the more risk you take, the more potential return you could earn.

CrowdStreet Alternatives


If you don’t qualify as an accredited investor, or if CrowdStreet isn’t the right real estate platform for you, then check out Fundrise 👇

Worried that investing in commercial real estate is not the right next step for you? 

Here are other, more specialized and potentially lucrative alternative investments:

Just remember to always do your research – no matter the investment type – before you commit financially.

FAQs

CrowdStreet is an online crowdfunding platform that specializes in commercial real estate deals for accredited investors only. Deals undergo a rigorous vetting process and require a minimum investment of $25,000.

Yes, CrowdStreet is a legit alternative investment platform specializing in real estate deals for accredited investors only. The average returns hover around 18% IRR, and investors are not directly charged fees.

To open an account with CrowdStreet, you must be an accredited investor. The CrowdStreet minimum investment amounts start at $25,000.

Yes, you can actually make money if you invest on CrowdStreet. With over 647 deals launched, CrowdStreet has paid investors more than $632 million and counting. CrowdStreet estimates investors can earn up to 19% IRR on investments – which is considerably more than average stock market returns.

Yes, if you want to invest with CrowdStreet, then you must be classified as an accredited investor.

CrowdStreet was founded in 2012 by Darren Powderly. With over 2 decades of experience in transacting multi-billion dollar real estate deals, Darren’s goal was to improve access to commercial real estate deals. Since CrowdStreet’s inception, over 629 offerings have closed.

Yes, it’s always possible to lose money with any investment. So far, CrowdStreet’s expected rate of return for deals ranges between 7% to 19%, and only 6 out of 647+ deals have resulted in total losses (9.2%). Always do your research first.

No, CrowdStreet is not FDIC insured, so when you invest in commercial real estate, you are doing so at your own risk. That’s why it’s important to do your research first.

CrowdStreet Review: The Bottom Line


If you:

  • Want to diversify your portfolio
  • Don’t mind locking up your money
  • Don’t mind taking a little more risk
  • Have extra cash sitting on the sidelines

…Then check out CrowdStreet.

As long as you’re an accredited investor, you can expect minimum investments to start at $25,000.

Just remember that many non-traditional investments come with unique risks not normally known to “just” S&P 500 investors (for example).

Some unique risks you may encounter include:

  • Illiquidity
  • Market risk
  • Default risk
  • Minimal to no regulation

With that said, CrowdStreet’s potential returns range up to 20% or more, with average returns at 18.3%.

Now I’d like to hear from you:

What are your thoughts on CrowdStreet?

Would you consider investing with this platform?

Let me know in the comments section below.

Fiona Smith
Fiona Smith
Fiona Smith is the founder of The Millennial Money Woman. She holds her Master of Science Degree in Personal Financial Planning, has advised decamillionaires for 6 years in the corporate wealth management sector and has co-founded a local non-profit community teaching financial literacy. She is the author of the personal finance book How to Get Rich from Nothing and her work is featured on Forbes and FinCon.

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