CrowdStreet Review 2021: How To Get Started in Commercial Real Estate
Breadth of Products
- For those who are qualified, sign-up is free.
- A variety of deals sourced for an online marketplace
- Maintains and offers access to a variety of commercial spaces including multifamily, self-storage and data centers
- Sponsors who bring commercial deals to CrowdStreet's marketplace are carefully vetted, so investors can have a high level of trust in the people they're doing business with.
- CrowdStreet only serves accredited investors, meaning that you have to have a certain amount of wealth already.
- Most projects in CrowdStreet's marketplace have a minimum entry point of $25,000.
- CrowdStreet limits itself to commercial real estate investments, which potentially means fewer projects than an investor would have access to with, say, a portfolio that combines residential and commercial real estate projects.
What Is CrowdStreet?
CrowdStreet is a way of investing in commercial real estate without going the conventional route of buying a building yourself. It’s capable of making an individual investor a co-landlord of sorts, providing access to a real estate market that few would typically have access to otherwise.
CrowdStreet’s founders developed the idea after the Great Recession demonstrated how many investment portfolios were vulnerable due to overdependence on stocks and other Wall Street investment vehicles. They decided that more people needed an accessible way to diversify their holdings via access to the real estate market, and they saw an opportunity to create that via crowdfunding.
Who Is It Best For?
If you’re an investor with a decent amount of wealth to bring to the table, CrowdStreet has an array of commercial real estate deals to offer you. You can sign up for free and start window shopping for all kinds of commercial spaces. If you find a project you like and agree with the terms of its sponsor, you can sign the papers and have a stake in a property.
CrowdStreet works best for more affluent investors who have an interest in commercial real estate. Investors need to have an investing entity, such as a limited liability company, or LLC, in order to engage with the service.
CrowdStreet sources commercial real estate projects and offers qualified investors the chance to buy into them.
Individual projects, or single-sponsor funds, come with a professional real estate manager. When an investor identifies a deal and a sponsor of interest, the legal documents can then be signed online. These projects can target a geographic location and/or an asset class, such as office or multifamily.
Good To Know
An investor can also opt for a diversified CrowedStreet fund, which casts a wide net over properties and sponsors, bringing investors the ability to access an array of deals.
CrowdStreet also offers a range of information about investing in the commercial real estate market, starting with videos about each potential project that’s up for grabs on the site’s marketplace. Beyond that, there’s plenty of general information about the latest happenings in the commercial real estate market and the details, from basic to advanced, of making commercial real estate decisions.
Is CrowdStreet Right for You?
If you have enough wealth to qualify as an accredited investor and enough cash on hand to meet the minimum investment for a deal on CrowdStreet, you may get value out of CrowdStreet’s proposition. CrowdStreet does the commercial real estate shopping for you, giving you an unprecedented opportunity to compare deal terms, assess new kinds of opportunities and add to your portfolio.
If you are a non-accredited investor, you still have options. You can choose to direct funds to a Real Estate Investment Trust for a much lower cost of entry than CrowdStreet calls for.
It’s hard to know how the commercial real estate market might change following the pandemic. It’s already clear that many companies are allowing more remote work, which could affect supply and demand and alter building prices.
An Open Door to Commercial Real Estate, for Some
The idea of bringing small to mid-sized commercial real estate deals to the doorsteps of investors who might not otherwise feel empowered to go looking for them seems like a concept with staying power.
CrowdStreet appears to be on the right track with its intention to expand its offerings to everyone, and we hope to see that happen sooner than later. Real estate investments can be used to guard against inflation and stock market turbulence, so diversifying one’s portfolio with real estate assets is generally good guidance.
Although no one knows what the commercial real estate market will look like following COVID-19, there will always be a need for commercial spaces — and thus, an ever-present investment opportunity.
CrowdStreet FAQHere are the answers to some of the most frequently asked questions about CrowdStreet.
- Does CrowdStreet have plans to serve non-accredited investors?
- Tentatively, yes. There are no such opportunities available at this time, but CrowdStreet hopes to roll its service out to non-accredited investors at some point.
- What is the minimum investment needed to access a project on CrowdStreet?
- Most projects have a minimum investment of $25,000, but the range of entry points can go all the way up to $100,000.
- How are the sponsors who bring deals to CrowdStreet vetted?
- There are 26 factors considered in the process CrowdStreet uses to evaluate potential projects before they become available on its online marketplace.
- What does it mean that I'll need an investing entity?
- An investing entity provides information about who an investor is: whether they are investing alone or with a spouse or business partner, or whether they're investing as part of a trust or self-directed individual retirement account.
- Is CrowdStreet a real estate investment trust?
- No. CrowdStreet offers individual investors and small to medium-sized companies direct access to commercial real estate projects.
- Does CrowdStreet charge fees?
- No. Qualified investors can join CrowdStreet and browse investment opportunities at no charge.
- Do sponsors on CrowdStreet charge fees?
- Yes, potentially. CrowdStreet requires sponsors to list all fees on a tab dedicated to the subject within the offer details, so investors know what to expect upfront.
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- International Business Times. 2021. "Why Real Estate Investing Should Be Your 2021 Resolution?"