[{"@context":"https:\/\/schema.org\/","@type":"Article","@id":"https:\/\/moneydoneright.com\/passive-income\/real-estate-investing\/crowdstreet-review\/#Article","mainEntityOfPage":"https:\/\/moneydoneright.com\/passive-income\/real-estate-investing\/crowdstreet-review\/","headline":"CrowdStreet Review","name":"CrowdStreet Review","description":"CrowdStreet Basics: CrowdStreet is a marketplace that connects accredited investors to various real estate...","datePublished":"2022-06-29","dateModified":"2024-12-26","author":{"@type":"Person","@id":"https:\/\/moneydoneright.com\/author\/logan-allec\/#Person","name":"Logan Allec, CPA","url":"https:\/\/moneydoneright.com\/author\/logan-allec\/","identifier":4,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Money Done Right","logo":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","width":488,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/crowdstreet-review.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/crowdstreet-review.png","height":460,"width":1900},"url":"https:\/\/moneydoneright.com\/passive-income\/real-estate-investing\/crowdstreet-review\/","about":["Real Estate"],"wordCount":3161,"keywords":["schema"],"articleBody":"\t    \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tCrowdStreet\t\t\t\tBasics: CrowdStreet is a marketplace that connects accredited investors to various real estate projects. Investors may receive regular cash flow on top of any returns from appreciation at the end of the investment.Pros: Unlike some other real estate platforms, CrowdStreet allows members to pick the opportunities they\u2019re interested in. Offerings are vetted by CrowdStreet before being posted, and each listing comes with detailed information about the investment.Cons: CrowdStreet is only open to accredited investors, which makes it less approachable than some other competitors. Sponsors can charge fees and take a substantial cut of investors\u2019 returns, which may limit upside.\t\t\t\t        We may receive a commission if you sign up or purchase through links on this page.  Here's more information.    Table of ContentsToggleWhat Is CrowdStreet?CrowdStreet at a GlanceHow Does CrowdStreet Work?CrowdStreet FeesExample CrowdStreet InvestmentIs CrowdStreet Legit?CrowdStreet Pros and ConsAlternatives to CrowdStreetIs CrowdStreet Worth It?How to Use CrowdStreet (Step-by-Step)Final ThoughtsFrequently Asked QuestionsWhat Is CrowdStreet?CrowdStreet is a real estate marketplace that allows users to participate in crowdfunded real estate investments.Rather than investing in a single shared fund, members can pick their own individual investments from the CrowdStreet marketplace.However, CrowdStreet also offers portfolios and funds that include multiple assets.CrowdStreet at a Glance.simple_table-50041 table tr th{\ttext-align: center;\t\t}.simple_table-50041 table tr td{\ttext-align: center;\t\t}Minimum InvestmentVaries, usually at least $25,000Annual FeesNone, fees charged by sponsors for particular investmentsTarget ReturnsVariesAccreditation RequiredYesLock-Up PeriodVariesProperty TypesBroad selectionProject TypesDevelopment, renovations, and property managementRegions Invested InThroughout USTax StructureLLCTax Document ProvidedSchedule K-1Dividend ReinvestmentNo1031 Exchange-EligibleGenerally notMobile AppNoHow Does CrowdStreet Work?After signing up for CrowdStreet, you\u2019ll be able to view past, present, and upcoming offerings in the Marketplace.CrowdStreet offers a variety of details including information about the property, sponsor, and projected timeline and returns.After buying into a particular project, investors may receive a regular dividend reflecting rent received from the property\u2019s tenants.However, some of CrowdStreet\u2019s listings have no cash flow at the time of the initial investment.Near the end of the targeted hold period, the sponsor will look to liquidate the investment and realize gains from appreciation as well as any renovations or development.Finally, investors will be compensated for their share in the investment.Property Types and LocationsCrowdStreet offers a variety of properties located throughout the United States.If you\u2019re looking at the CrowdStreet marketplace, you can search for specific property types by clicking the \u201cofferings\u201d filter. You can also search for investments located in different areas of the country.Here\u2019s the full list of investment types I saw on CrowdStreet: Built-to-RentCo-LivingData CenterFlex\/OfficeFlex R&D (research and development)HospitalityIndustrial LandManufactured HousingMedical OfficeMixed UseMulti-AssetMultifamilyOffice Parking GarageResidentialRetailSenior HousingSpecialtyStorageStudent Housing Project TypesCrowdStreet provides a range of options with different risk profiles, from \u201copportunistic investments\u201d that require ground-up development to \u201ccore investments\u201d that already have reliable cash flow and aren\u2019t expected to need any major renovations.Based on past projects, CrowdStreet appears to be focused on projects that involve significant renovation or development.Out of a total of 580 funded deals, 422 have been listed as either opportunistic or value-add, which refer to projects whose business plan includes \u201cdramatic improvements to the property.\u201dTarget ReturnsTarget returns vary from one project to another, with riskier projects generally offering a great potential reward.If you visit the CrowdStreet website, you\u2019ll notice a prominently advertised \u201caverage\u201d IRR (internal rate of return) of 19.0%. However, it\u2019s important to note that this only includes returns from projects that have been finalized.The 85 deals included in that calculation make up less than 15% of the 580 deals that have been initiated through CrowdStreet. With that in mind, the 19.0% figure comes from a relatively small dataset.Furthermore, successful deals may be more likely to finish on a shorter timeline, so the 85 that have been finalized may not be representative of typical results for CrowdStreet investors. While a return of 19% is certainly possible for any given opportunity, I recommend taking that figure with a grain of saltMinimum InvestmentEach opportunity on the CrowdStreet marketplace comes with its own terms, so the minimum investment will be based on the projects you\u2019re interested in.Based on current and recent listings, most CrowdStreet offerings appear to come with minimums of roughly $25,000 to $50,000.With that being said, some multi-asset funds and other opportunities have minimums of over $100,000.Investment Duration and Lock-Up PeriodSimilarly, you will have to hold your investment for a different period of time depending on the specific opportunity.Most opportunities are open for a period of about three to ten years, with more on the shorter end of that spectrum. Keep in mind that the target timeline may change depending on market conditions and other factors.Vetting and Review ProcessCrowdStreet evaluates potential listings based on the sponsor\u2019s history and reputation, the terms of the offering, and the underlying asset or assets.Sponsors are listed as emerging, seasoned, tenured, or enterprise depending on their track record.Enterprise sponsors, for example, have to be ranked in the top 250 for estimated value of total holdings according to Real Capital Analytics. They also need to be 15 or more years old, with 30 or more years of combined experience between the principals.You can use the \u201cSponsors\u201d search filters when viewing listings to find offerings with reliable sponsors.CrowdStreet provides a filter for the sponsor\u2019s experience as well as the extent of their investment in the offering. You can also search for offerings from repeat sponsors or those that are provided by CrowdStreet itself.Tax ImplicationsWhen you invest in a typical CrowdStreet offering, you\u2019re becoming a member in an LLC. That makes CrowdStreet different from many other platforms that work as REITs.Instead of a 1099 form, you\u2019ll receive a Schedule K-1 from the sponsor of your CrowdStreet investments. Schedule K-1 reflects income from partnerships.LLC income typically passes through the LLC itself and is instead taxed at the individual level.On the other hand, CrowdStreet has also listed a handful of REITs, which come with their own tax considerations.Generally speaking, dividends from REITs are taxed as regular income, while returns from liquidating shares are considered capital gains.You should contact the support team or reach out to a tax professional if you have any questions about your tax obligations.Accreditation RequiredUnlike some other public real estate investing platforms, CrowdStreet is only open to accredited investors. Investors must meet at least one of these three conditions in order to be eligible for accreditation:Earn at least $200,000 ($300,000 for couples) in income in each of the last two years, and expected to reach that in the current year.Have a total net worth over $1 million excluding the primary residence.Hold a Series 7, 65, or 82 license.However, other conditions may apply if you are planning to invest through a trust or another entity.If you\u2019re not an accredited investor, you may be interested in entering the real estate market with another popular platform such as HappyNest or DiversyFund.Customer SupportWhile CrowdStreet offers a basic support chatbot, they only appear to provide one-on-one customer service via support requests filed through the website.There are no listed turnaround times, so it\u2019s hard to predict how long CrowdStreet will take to get back to you. Business hours run on weekdays from 8 AM until 6 PM PST.The support form asks whether your inquiry is of low, medium, high, or critical urgency, so the response time could depend on the answer you give to that question. I sent a \u201clow urgency\u201d message at the end of the workday on a Wednesday and\u2026The offerings listed on CrowdStreet are managed by third-party sponsors, so CrowdStreet will not be able to give you any information about current, past, or prospective investments beyond what\u2019s posted by the sponsor.With that in mind, the sponsor\u2019s communication will be more important than CrowdStreet\u2019s once you get involved with a specific offering.When you\u2019re looking at a CrowdStreet offering, you can pull up details about the sponsor such as their leadership team, track record, and case studies of successful projects.I also recommend doing some extra research to find impressions of potential sponsors from investors who have been involved with them in the past.CrowdStreet FeesCrowdStreet doesn\u2019t charge any fees to use the platform, but fees may be involved with specific investments.Additionally, the sponsors of each investment may get a cut of the returns depending on the terms of the offering.In this offering, for example, investors will receive 100% of the profits up to an IRR of 20%.That distribution rate drops down to 60% for all additional returns, which means that the sponsor will receive 40% of gains beyond a 20% IRR.If the final IRR worked out to 35%, for example, investors would keep all of the first 20% plus 60% of the final 15% for a total IRR of 29%. The sponsor would get just 40% of the final 15%, or just 6%.Keep in mind that this is just one of many offerings available on the CrowdStreet marketplace. Other opportunities may come with very different fees and\/or distribution structures.Example CrowdStreet InvestmentIs CrowdStreet Legit?CrowdStreet is a legit platform that connects accredited investors to private real estate offerings.CrowdStreet offerings are made under Rule 506 of Regulation D, which provides an exemption from SEC registration under certain conditions.The first requirement is that Rule 506 offerings must be available only to accredited investors if they are generally advertised to the public.While this restriction limits CrowdStreet\u2019s potential audience, it\u2019s intended to make sure that investors fully understand the risks and can make an investment without jeopardizing their financial security.Additionally, even though CrowdStreet is exempt from SEC registration, it is still subject to basic antifraud regulations.That means the company could be held responsible for any false or misleading statements. Similarly, antifraud provisions also apply to omissions that give a false or misleading impression.Finally, CrowdStreet is required to be available to answer questions from potential investors.On the other hand, that doesn\u2019t mean you can take every piece of information they offer at face value.While CrowdStreet reviews each potential investment, neither CrowdStreet nor the SEC endorses any particular offering.Remember that a projected timeline or return is still just a projection.Any CrowdStreet offering could go beyond the expected timeline, and you could end up losing some or all of your investment. It is your responsibility to do your own due diligence on top of CrowdStreet\u2019s own review process..simple_table-50042 table tr th{\ttext-align: center;\t\t}.simple_table-50042 table tr td{\ttext-align: center;\t\t}Reviewer\/Username (Name of Message Board)ExperienceMy Takeiginoaco (Reddit)iginoaco is a Reddit user who claims to have four years of experience with CrowdStreet across a total of nine completed investments with 18 more active at the time of their comment. Their average return was 11.8%, with a peak of 18.2% and a maximum loss of 1.6%. iginoaco\u2019s complained that CrowdStreet gives investors the last priority when it comes to failed investments, which may lead to a total loss in cases of foreclosure or bankruptcy. They also noted that investors have no way to leave feedback for sponsors, making it more difficult for new members to make informed decisions on CrowdStreet listings.iginoaco offers a surprisingly balanced take on CrowdStreet, providing insight into the platform\u2019s strengths and weaknesses. While some of their investments have gone well, this is a good reminder that CrowdStreet is essentially a marketplace for investors and sponsors to connect and ultimately is not responsible for the success or failure of any particular opportunity. If you decide to move forward with CrowdStreet, make sure to do your own due diligence on each listing rather than assuming that CrowdStreet endorses any of the sponsor\u2019s claims.Longshortequities (Reddit)This user discouraged readers from investing with CrowdStreet due to the associated fees as well as the platform\u2019s distribution structures, which in some cases allocate a significant portion of returns to the investment\u2019s sponsor while leaving investors with much of the risk. They recommended a few alternative real estate investments that could give investors more upside with less risk.On one hand, this Reddit user is correct in that CrowdStreet sponsors may get a portion of some returns, plus investment fees, while still leaving individual investors with a significant risk. But this doesn\u2019t necessarily mean that you\u2019d be better off avoiding CrowdStreet altogether. Sponsors put significant resources toward acquisition, development, renovations, property management, and other costs, and they compensate for those expenses through fees and tiered distributions on returns. Ultimately, whether or not you believe in a CrowdStreet offering comes down to your evaluation of that specific investment plan along with the sponsor who\u2019s backing it.ifmwpi (Reddit)Conversely, ifmwpi highlighted a positive experience with CrowdStreet and a sponsor called Fountain Residential. This sponsor went above and beyond to keep investors informed. As an investor, ifmwpi was able to see a live construction camera, monthly progress and financial reports, overhead photos from drones, and more helpful information.This is a good counter to the more critical perspective of Longshortequities. The sponsor for this particular project made an effort to stay in touch with investors, which helped ifmwpi stay confident in their decision to back the project. Some other users in the same thread had more mixed experiences with their sponsors.CrowdStreet Pros and ConsProsPros Control: With CrowdStreet, you\u2019ll have the chance to select your own investments rather than being stuck with a single pre-set REIT.Flexibility: Instead of focusing on a certain location, property type, or project type, CrowdStreet offers a relatively broad selection of investment opportunities.Funds: In addition to individual projects, CrowdStreet also provides funds that give investors exposure to returns from multiple assets.ConsConsAccreditation: CrowdStreet is only open to accredited investors, so you\u2019ll need to look elsewhere if you don\u2019t need those requirements.Minimum investments: With most CrowdStreet projects requiring a minimum investment of tens of thousands of dollars, you could gain or lose thousands on any particular investment. Minimum investment requirements may also make it more difficult to diversify your portfolio.Fees and distributions: CrowdStreet doesn\u2019t charge any fees of its own. Instead, fees are determined for each project by the associated sponsor, and they can vary widely from one offering to another. Sponsors may also receive a portion of the profits at the end of the term, which could cut significantly into your returns.Alternatives to CrowdStreet.btn.btn-blue.dift:hover, .btn.btn-default.dift:hover {color: #4db848;border-color: #4db848;background: #fff !important;}\t\t\t CrowdStreetAcreTraderStreitwiseRealtyMogul \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tPros and Cons\t\t\t\t\t\t\t\t\t\tVisit\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tRead Review\t\t\t\t\t\t\t\t\t\tVisit\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tVisit\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tVisit\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tProperty Types\t\t\t\t\t\t\tBroad selection\t\t\t\t\t\t\t\t\t\t\t\t\tFarmland\t\t\t\t\t\t\t\t\t\t\t\t\tRetail and office\t\t\t\t\t\t\t\t\t\t\t\t\tBroad selection\t\t\t\t\t\tProperty Locations\t\t\t\t\t\t\tThroughout US\t\t\t\t\t\t\t\t\t\t\t\t\tMostly US\t\t\t\t\t\t\t\t\t\t\t\t\tUS, mostly central\t\t\t\t\t\t\t\t\t\t\t\t\tThroughout US\t\t\t\t\t\tTarget Returns\t\t\t\t\t\t\tVaries\t\t\t\t\t\t\t\t\t\t\t\t\t7%-9%\t\t\t\t\t\t\t\t\t\t\t\t\t9%-10%\t\t\t\t\t\t\t\t\t\t\t\t\t10%-25%\t\t\t\t\t\tMinimum Investment\t\t\t\t\t\t\tVaries, usually at least $25,000\t\t\t\t\t\t\t\t\t\t\t\t\tTypically $15,000 to $25,000\t\t\t\t\t\t\t\t\t\t\t\t\t500 shares (roughly $5,000)\t\t\t\t\t\t\t\t\t\t\t\t\t$5,000\t\t\t\t\t\tMinimum Duration\t\t\t\t\t\t\tVaries, usually at least three years\t\t\t\t\t\t\t\t\t\t\t\t\tTypically five to ten years\t\t\t\t\t\t\t\t\t\t\t\t\tOne year, five years to redeem for full value\t\t\t\t\t\t\t\t\t\t\t\t\tOne year (REITs)\t\t\t\t\t\tAccredited Investors Only?\t\t\t\t\t\t\tYes\t\t\t\t\t\t\t\t\t\t\t\t\tYes\t\t\t\t\t\t\t\t\t\t\t\t\tNo\t\t\t\t\t\t\t\t\t\t\t\t\tYes (except REITs)\t\t\t\t\t\t\t\t\t \t\tIs CrowdStreet Worth It?CrowdStreet may be worth it if you want to get started in the real estate market as an accredited investor.Who CrowdStreet Is Best ForCrowdStreet is best for accredited investors who aren\u2019t ready to buy a property of their own, but who are prepared to invest tens of thousands of dollars.One notable aspect of CrowdStreet is its focus on individual investment opportunities instead of a fund or collection of assets.If you want to get in at the ground floor of a project you really believe in, CrowdStreet will give you the chance to research prospective investments and gain a significant share of a particular property.With a wide selection of projects including everything from basic property management to full-scale development, CrowdStreet also caters to investors with different strategies and degrees of risk tolerance.Who CrowdStreet Is Not ForCrowdStreet is not for people who want to get into the real estate market with a small initial investment.Accreditation is a key barrier for CrowdStreet users, preventing most everyday investors from accessing the platform.On the other hand, investors who are accredited may prefer to buy real estate themselves instead of buying a share in someone else\u2019s project.CrowdStreet users are highly dependent on the sponsor of each opportunity, so this isn\u2019t a great option for those who want full control over their real estate investments.You will need to do your own research on the risks and opportunities associated with each project, so CrowdStreet isn\u2019t for people who just want a simple way to generate safe returns.How to Use CrowdStreet (Step-by-Step)Click the \u201cCreate an Account\u201d button in the upper-right corner. While accreditation is required for CrowdStreet investors, you don\u2019t need to be an accredited investor to create an account and check out the website.Enter the required information including your name, email address, password, and whether you are an accredited investor.Check out the marketplace to see more information about each CrowdStreet offering. I noticed that some sponsors also schedule webinars or Q&A sessions to engage with potential investors and answer common questions. You can scroll down to view details like square footage, market analysis, and the sponsor\u2019s experience.To make your first investment, find a live offering and click the \u201cInvest Now\u201d button. You\u2019ll have an opportunity to read the disclosure and disclaimers and enter the amount you wish to offer.Connect the account you\u2019re planning to invest with.Sign the closing documents and complete the offer.Final ThoughtsCrowdStreet is marketed as a way to make the real estate market more approachable, but the accreditation requirement and minimum investment ($25,000 or more for most offerings) will be prohibitive for many investors.If you are an accredited investor and ready to accept those risks, CrowdStreet will make it relatively easy for you to put a significant amount of money into a particular offering that aligns with your investing strategy.Since CrowdStreet lists a wide range of sponsors and project types, you should create an account and check out the marketplace if you think CrowdStreet could be a good fit.Frequently Asked Questions.accordion-list .accordion-title:hover{color: #4db848;}Do I have to be an accredited investor to invest in CrowdStreet?Yes, CrowdStreet is currently limited to accredited investors.How do I withdraw from CrowdStreet?The terms of each CrowdStreet offering are determined by the sponsor. Some projects come with steady cash flow, while others only pay out after the assets are liquidated.Unlike REITs and other real estate investments with more liquidity, CrowdStreet doesn\u2019t allow investors to cash out early. You will only be able to withdraw from the platform based on the terms laid out in the offering.Who owns CrowdStreet?CrowdStreet was founded by Tore Steen and Darren Powderly.Before creating CrowdStreet, Steen was involved with a user management platform called Janrain. Powderly was the president of Compass Commercial, a real estate services company."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Passive Income","item":"https:\/\/moneydoneright.com\/passive-income\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Real Estate Investing","item":"https:\/\/moneydoneright.com\/passive-income\/\/real-estate-investing\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"CrowdStreet Review","item":"https:\/\/moneydoneright.com\/passive-income\/real-estate-investing\/crowdstreet-review\/#breadcrumbitem"}]}]