CrowdStreet Review 2021 – Is It the Right Investment for You?
CrowdStreet is a popular commercial real estate investing platform for accredited investors who don’t want to manage properties themselves. With a minimum investment of $25,000, investors have five to ten projects to choose from at any given time on an easy-to-use platform.
At a Glance
What we like
- Easy platform to use
- Lots of information about each project
- Always 5-15 projects to choose from
- CrowdStreet vets project owners
- Potential for high returns
What Needs Work
- Difficult accreditation process
- The high initial investment
- It takes a long time to see a return on investment
- Those with high net worth and income
- Investors who can wait on a return of their money
- People who understand commercial real estate
Have you always wanted to build a warehouse?
How about owning part of a hotel?
If your commercial real estate dreams have been building since you were a kid, CrowdStreet could be the place for you.
Commercial real estate like apartment buildings, medical centers, and malls are substantial projects. My guess is starting something like this isn't an opportunity you have the time or funds for.
However, when an entire “crowd” of investors works together, anything is possible. That’s where CrowdStreet comes in. You will have access to commercial real estate projects located all over the country. Simply invest your funds and see where that takes you. Easy, right?
CrowdStreet is the hands-off approach to making (or losing) money in commercial real estate. If you think this could be something you're interested in, I’ve compiled a more in-depth look at all CrowdStreet has to answer.
What Is CrowdStreet?
CrowdStreet is a commercial real estate investment platform. You will find five to ten large commercial real estate projects need funding at any given time.
Investors can put in money and wait to see if the money grows as the project develops. There have been many successful CrowdStreet projects — and some were not so successful. CrowdStreet offers you all the information to review for yourself.
I’m finding the platform is easy to use and has been around since 2013; there is plenty of previous data for you to pour over while making your decision.
How Does CrowdStreet Work?
CrowdStreet is an online platform that lets people invest in large commercial real estate projects. There are about five to fifteen projects on the website you can invest in at any given time.
Commercial real estate can be anything from apartment development to a new shopping mall to an amusement park.
If you always dreamed of owning a tiny part of the mall, other than the shoe store you visited for your birthday, then this could be the way to do it!
At CrowdStreet, the research for the projects is completed for you, and you can simply log in and look at the projects that interest you. The project owners go through a vetting process to reassure investors their projects are legitimate and they succeded in the past.
Once you find the project you like, you invest as much money as you want. The minimum investment is $25,000, though.
After your money is in, it’s time for the waiting game.
Most people who invest in CrowdStreet will wait years until they see a return on their investment. Of course, some will never see a return at all and will potentially see a loss. That’s just the way it goes with investing in anything.
Please hear me when I say CrowdStreet isn't a guaranteed way to make money. It’s an investment, just like the stock market or cryptocurrency. That’s why I want you to consider all sides of this before jumping into the process.
What Is the Investment Style of CrowdStreet?
The investment style of CrowdStreet can be a bit conservative.
These are large projects, and getting in at the $25,000 mark may not be enough to see all that much of a return on investment. Those who have done well have invested hundreds of thousands into a given project.
In addition, CrowdStreet offers a good amount of information and resources about the projects they offer, but in the end, it comes down to your decision. You will have to choose which one makes the most sense for your portfolio and whether or not you're ready for all that comes along with it.
How Much Does CrowdStreet Cost
There are two things you must know about the costs for CrowdStreet. The first is the fees, and the second is the minimum.
When you talk about costs, you must consider the initial cost of investment. If you don’t have $25,000 to invest, CrowdStreet isn't for you. Although this may seem a bit steep, it’s simply their platform right now, and they won’t budge on the initial investment.
CrowdStreet says they may offer lower minimum investments in the future, but this is likely not something I would wait around for. There are plenty of other options out there to help you invest your money instead. Don’t let your investing money sit in a savings account!
Secondly, some fees are involved in the costs here. The fees will vary by project between 0.5 percent and 2.5 percent. Make sure you consider that your profit needs to cover the costs as well.
As I mentioned, this isn’t the cheapest or soundest real estate investment out there; then again, the chance for high returns does make it appealing.
CrowdStreet Pros & Cons
Maybe the idea of being a commercial real estate investor is getting you excited. Chances are you've never done anything like this before, but the idea sounds pretty great.
I recommend you remember the good and the bad in the world of investing, especially in commercial real estate. I broke down the pros and cons for you so you can be fully informed before you make that first investment.
- Access to commercial real estate deals
- Vetting of real estate investors to make sure projects are legit
- Chance to make a significant return on investments
- Relatively easy buy-in process for accredited investors
- Website is easy to use
- You won’t have access to the money once you invest it
- High minimum investment of $25,000
- Must first become an accredited investor
- Not all projects make money
- Some projects will simply return your initial investment
Who Should Use CrowdStreet
It can help to know who the primary investors are on a platform like this. Will you be investing with people who are just like you, wealthier than you or more of a risk-taker than you?
I did a bit of research and put together the types of investors using CrowdStreet. If you fall into one of these categories, it could be your big break in the commercial real estate industry.
To become an accredited investor with CrowdStreet, you need to have a bit of money in your portfolio. And by a bit, I mean a lot. They are looking for over one million in assets (excluding your home) and an income of about $300,000 per year in one of the last two years. If you're single, they will accept $200,000 per year.
In addition, you need to have the $25,000 available to jump right into the next CrowdStreet project.
For many people, this is going to be an elimination factor. Unfortunately, these accreditations are difficult to reach, and they may send you looking for another commercial real estate investment platform. (Hint, there are other options out there!)
Investors With Lots of Time
This shouldn’t be a surprise, but real estate isn’t always a quick turnaround on your money.
If you have ever invested in a residential real estate flip, you probably know it takes some time to get a home fixed up, cleaned up, sold, and closed. You could wait on your money for a year or two.
However, commercial real estate projects take a long time. Remember that restaurant they have been building around the corner from you for the last three years? Your money could be tied up in that.
If you don’t have a lot of time (several years) to wait for your return on investment, I recommend staying away from CrowdStreet.
If you love to research and learn, then CrowdStreet is the perfect idea to consider. There is lots of information about each project you can dive into and learn from.
It can be time-consuming, but it's a smart idea to research if you will be putting your money into the project. Remember — even though CrowdStreet does some legwork to ensure the project owners are legit, they won’t tell you whether or not it’s a good investment. That’s entirely up to you.
Investors Not Concerned With a Complete Loss
Many investors have the mindset related to how much money they can make. In other words, if you invest $25,000 in Crowdstreet could you turn it into $30,000, $40,000, or $50,000?
I’ll be honest with you. Those who have invested in commercial real estate in the past will tell you that you also must be prepared for the $25,000 to decrease to $5,000.
If you're an investor prepared to have a potential loss, you can continue looking into CrowdStreet. Those who don’t know what they would do if their $25,000 disappeared should choose another option!
Who Shouldn’t Use CrowdStreet
Although this may seem a bit harsh, I don’t think most people should be using CrowdStreet. Not only are the minimums and accreditations a bit difficult, but you could also be setting yourself up for a considerable risk if you don’t do the necessary research.
Remember — the owners of these projects looking funds are also trying to make money from the process. The way they describe the project, feature the project, and sometimes even the project results may be based on their own bias.
Think of it like when you opened your first lemonade stand as a kid. Did you ever think that on lemonade day, you and your brother would be stuck drinking three gallons of lemonade sitting under an umbrella? Probably not.
Commercial real estate investors understand there is potential for loss, but they focus more on gain. It’s so easy to get sucked into that. I only recommend CrowdStreet for those with lots of discretionary income who have a good understanding of the world of commercial real estate.
There are a few features of the CrowdStreet platform that make it stand out. There is no question the website and platform are high-end and easy to work with. Here are the features I’ve found that CrowdStreet offers to investors.
There is no shortage of information about each of the projects on the CrowdStreet platform. The company wants you to make an appropriate financial decision for yourself using the information provided on their platform. There are videos, papers, and webinars to get you excited about your next potential investment. In addition, you can submit questions and get real answers.
You always have the opportunity to invest in commercial real estate projects entirely on your own. Simply find a commercial real estate firm, let them know your interest, and see what the investment procedure is like.
The problem, of course, is to find high-quality deals.
Most project managers and owners will be willing to take your money but are these higher-quality deals with the potential for real success?
CrowdStreet works hard to make sure they are only putting smart and legitimate deals on their website. This, of course, does not guarantee a return on investment, but it certainly helps to make it more likely.
Overall Knowledge of Investing
If you spend enough time on the CrowdStreet platform, you will learn quite a bit about commercial real estate investing. In addition, there are videos and guides to help you understand almost anything you could want on the subject.
Complicated Real Estate Investments
I do not doubt each of the deals on CrowdStreet is complicated. However, the good thing about complex deals is that they can better return on investment if you’re lucky. The bad thing is, they are complex and riskier!
CrowdStreet does its best to provide information and resources to help you understand what you're investing in. However, you will have to put in the time to pull this all together for yourself and have a better overall understanding of all that is involved.
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Is CrowdStreet Safe and Legit?
CrowdStreet takes some serious steps to ensure that its website is safe. As far as being legit, the website and platform have been around since 2013, and they are the real deal.
Of course, when you talk about safety here, you must remember it's more about information and data than it's about investment safety. There are no commercial real estate investments that will be 100% safe. This is a risky business, and you must be prepared for that.
However, if you're worried that CrowdStreet is some sort of scam, I can assure you that it’s definitely legit.
If you don’t think CrowdStreet accreditation is in your future, or you simply don’t believe in a minimum investment of $25,000, there are other options out there for you.
The two competitors that I feel make the most sense to consider are Fundrise and Diversyfund. Each of these has an investment minimum of $500. This is much more attainable for people compared to $25,000.
Of course, with a smaller investment, you can expect smaller returns, but this is a great way to get yourself started in the commercial real estate industry and see if it pays off for you.
Another option to consider is making your own commercial or residential real estate investments. This will probably require a significant risk, but at times it can also provide you more control. When you're an investor in a project on CrowdStreet, you will have no say in what goes on with the project. This is frustrating if you're not able to help control the outcome. So if you want a more hands-on approach, you will have to find that elsewhere.
The Final Word: Is CrowdStreet Worth It?
By now, you should have a pretty good understanding of what CrowdStreet is and how to get involved. There are lots of good things about this platform and then some not-so-great things as well. But, overall, if you have a lot of extra money laying around and want to get involved in commercial real estate, CrowdStreet is a good choice.
If you have just reached the minimum and can barely get accredited, maybe look for a smaller way to get involved in commercial real estate. Remember — as great as these projects look, and as nice as some returns have been in the past, nothing is guaranteed with this type of investment.
Yes, unless you have over a million in your portfolio and high income (over $200,000 for single people) in the last two years. There are currently no exceptions to this rule, and if you don’t meet these standards, you can’t participate in CrowdStreet. Bummer.
There is a process on the website you can follow to submit your application to become an accredited investor with CrowdStreet. The process includes ensuring you have the funds available and analyzing your income from the last few years.
For those looking to fund their project using CrowdStreet, the funding can be complicated to get. You will have to go through the CrowdStreet requirements and paperwork, and the process is lengthy. As a result, many project owners will decide to go with another service or find their own investors to avoid this process.
CrowdStreet has a great app and platform, but it’s hard for me to say if it’s the best. With the high minimum investment and the complex accreditation issues, CrowdStreet isn’t the best option for most people.
The minimum investment for CrowdStreet is $25,000.
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About Millennial Money Man
Bobby Hoyt is a former band director who paid off $40,000 of student loan debt in 18 months on his teaching salary and then left his job to run Millennial Money Man full-time. He helps other Millennials earn more through side hustles, save more through budgeting tools and apps, and pay off debt. He is a personal finance expert who has been seen on Forbes, Reuters, MarketWatch, CNBC, International Business Times, Business Insider, US News, Yahoo Finance, and many other personal finance and entrepreneurship media outlets.