CrowdStreet is one of the best platforms for accredited individual investors who want to find promising large-scale commercial projects that are ripe for investment. The minimum amount required to get started on CrowdStreet is about $25,000. For some projects, it could be as much as $250,000.
Compared to other real-estate crowdfunding sites, the minimum investment required at CrowdStreet is quite high. Is the high entry cost makes the platform worth it, or is it better to consider alternatives, like First National Realty Partners (FNRP)?
What Is the Average Return on CrowdStreet?
Perhaps, the best way to weigh the worthiness of CrowdStreet’s high entry cost is to evaluate the average return on investment for the deals closed on the platform. Some of the best deals closed to date are as follows:
- River’s Edge: A multi-family property in Haverhill, MA (30.8% IRR, 2.13 equity multiple)
- Sonoma Villas and Pines: A multi-family property in Phoenix, AZ (36% IRR, 1.56 equity multiple)
- Quadrant: An office building in Brooklyn Park, MN (30.1% IRR, 1.61 equity multiple)
- Oakland Airport Plaza: An office complex in Oakland, CA (41.9% IRR, 4.1 equity multiple)
- South Seattle Business Park: Mixed-use property in Seattle, WA (42.8% IRR, 2.28 equity multiple)
- Liberty Self Storage: A self-storage facility in Philadelphia, PA (76.5% IRR, 1.66 equity multiple)
Looking at this data, it is evident that property type and location significantly influence the returns on investment when it comes to real estate—and deals closed by CrowdStreet are no different. For this reason, it is important for any investor to stay on top of the best commercial real estate markets.
Based on how CrowdStreet’s portfolio has performed over the years, it is safe to say that you can expect an average of 1.49 times your investment. At times, this number has been as high as 4.1 times the invested amount. This means that if you’re investing $25,000, you’d be making a $102,500 return.
However, it has not always been smooth sailing at CrowdStreet. There were a few instances in 2016 when the equity multiple for investors has been close to zero, 0.16X, and 0.27X. In recent years, we haven’t seen a failed project on CrowdStreet. During this time, the average IRR is about 18.3%, which is by far one of the highest average returns in the real estate equities in the U.S.
As far as the holding period is concerned, the average holding period on CrowdStreet is approximately 2.7 years. Although this average is higher than most other real estate crowdfunding sites, the actual holding period for each project on CrowdStreet is much lower than the intended holding period, which indicates a higher win rate on the platform.
At the time of this writing, CrowdStreet has successfully closed 647 deals, and each one of these has generated high returns on investment. So, the high entry cost on CrowdStreet is indeed worth it. It’s the only real estate crowdfunding site that offers near-to-zero money-related risks.
How Do You Invest With CrowdStreet?
To get started on CrowdStreet, simply log on to crowdstreet.com and click “Create an Account.” You can create an account for free and browse the listed investment opportunities. However, you cannot begin investing unless you verify yourself as an accredited investor.
To qualify as an accredited investor, you must have one of the following:
- A net worth of $1 million (excluding your primary home)
- A minimum annual income of $200,000 (for an individual) or $300,000 (for couples) and a similar expected pay scale for the coming year
You also need to have the following financial licenses:
- Series 7
- Series 65
- Series 82
Once you qualify as an accredited investor, you can select the opportunity you’re interested in, submit an offer, and finalize the financial transactions. The entire process will be monitored and secured by the platform.
Despite the credibility of the platform, you may not be comfortable investing $25,000 on an online crowdfunding site. This is often the case with novice investors. We recommend that those in doubt try less expensive investment alternatives:
- Fundrise: Initial investment can be as low as $10
- RealtyMogul: Start with $5,000 or more
- EquityMultiple: Start with $5,000 or more
If you have more to invest, we highly recommend exploring FNRP. The minimum amount required at FNRP is about $50,000, but it’s an excellent platform to find high-value opportunities, particularly in the healthcare and senior living sectors. For beginners, the debt investment options may be more attractive because FNRP takes a more conservative approach.
If this turns out to be your forte, you may also want to think about starting a private equity real estate fund.