CrowdStreet is a real estate crowdfunding platform that provides investors with investment opportunities that are managed by real estate professionals. The company was founded in 2013 and is one of the popular real estate investing platforms online.
The CrowdStreet platform offers opportunities to regular investors that were previously only available to private or institutional investors. Through CrowdStreet, small investors can invest in a wide range of projects and diversify their investments.
Real estate is a great way to build passive income. Many investors struggle to find good real estate investment deals to invest in. CrowdStreet curates good deals for you and allows you to find the deals that pique your interest.
Accredited investors only
Investment opportunities offered through CrowdStreet are only available to accredited investors. Accredited investors are:
- individuals with income exceeding $200,000 annually ($300,000 per couple) with the expectation of that continuing, OR
- a net worth of more than $1 million, excluding the value of the primary residence.
Type of projects
The platform offers the opportunity to invest in different types of projects such as apartments, data centers, self-storage, hotels, charter schools, etc.
Comprehensive vetting of deal sponsors
CrowdStreet rejects more than 90% of the projects it receives from sponsors. CrowdStreet evaluates sponsors based on their prior record and checks whether sponsors’ projections are realistic. The company also reviews project documents and works with sponsors to come up with deal terms that are attractive both to investors and the developers.
Ways to invest
CrowdStreet offers three ways for investors to invest their money
Individual deals – Investors can choose individual deals to invest whether that’s an apartment building or a hotel.
Diversified funds and vehicles – You can invest in funds that invest in multiple deals. This allows you to build a diversified portfolio that is professionally managed. Minimum investment for individual deals is $25,000.
Tailored portfolio – Build a custom portfolio based on your needs. Minimum investment for individual deals is $250,000. Fees vary between 0.25% to 2.50%.
Invest through Self-directed IRA
You can put your self-directed IRA money to work in real estate with CrowdStreet. You need to create a self-directed IRA with Equity Trust first before you can invest in investments offered by CrowdStreet.
How does CrowdStreet make money?
CrowdStreet makes money in two ways.
- CrowdStreet sells its software as a subscription to sponsors. This helps sponsors manage multiple deals and reduce their administrative burden.
- CrowdStreet charges a fee when sponsors raise money on the platform
Though there are no direct costs to the investors, these costs are built into any deal that investors invest in.
Pros and cons of investing with CrowdStreet
- CrowdStreet platform is easy to use for both investors and sponsors. Documents (eg. tax documents or deal-related documents) are shared online and can be signed electronically.
- Sponsors are vetted well. Investors can be assured that they are investing their money with qualified sponsors.
- Investors get access to a wide range of real estate opportunities. Investors also get to invest in single deals or invest in multiple deals through funds.
- You can invest your IRA funds with CrowdStreet through its partnership with Equity Trust
- CrowdStreet offers excellent educational content on its website for investors. If you are investing for the first time, read through their educational material.
- When you invest your money with CrowdStreet, they are typically locked for a long period of time (three to seven years)
- Project can have high minimum investments. Most projects have a $25,000 minimum but some deals require a minimum investment of $100,000 or more.
- You need to be an accredited investor to invest through CrowdStreet. That can be a high bar for small investors.
- CrowdStreet does not offer a mobile app. So you need to access the platform through its website.