Investing in commercial real estate entails substantive risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. All investors should consider their individual factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. An investment in a private placement is highly speculative and involves a high degree of risk, including the risk of loss of the entire investment. Private placements are illiquid investments and are intended for investors who do not need a liquid investment.
During times of uncertainty, I prefer owning real assets. Roughly 50% of my passive income comes from physical rental properties and investments in private commercial real estate.
Therefore, I thought it would be an opportune time to reach out to CrowdStreet for an update on how they closed out 2021 and their views on the commercial real estate market going forward. CrowdStreet is one of the leading real estate investing platforms today and a Financial Samurai sponsor.
CrowdStreet Year In Review 2021
CrowdStreet investors invested $1.2B* in 2021, making it a record-breaking year for the company. Not only did this set a record for this online real estate investing pioneer, it also surpassed their 2020 record of $600M.
Over the year, their Investments team reviewed 345 deals to determine if they met their criteria for being added to the Marketplace. Of these 345, only 114 launched on the Marketplace, which speaks to their diligent review process*.
*Based on internal CrowdStreet data as of January 24, 2022.
Popular Real Estate Asset Classes
If you’re like me, you’re probably wondering which asset classes had the biggest presence on the Marketplace last year. Here's the data.
Of the deals brought to the CrowdStreet Marketplace in 2021, the majority (55/114*) were for multifamily projects, an asset class where CrowdStreet actually sees strong opportunities for investing in 2022–but more on that later.
There was a tie for second, with 10 industrial and office projects on the Marketplace.
*Based on internal CrowdStreet data as of January 24, 2022.
Cities With The Highest Concentration Of Deals
Your next question is probably where did CrowdStreet see the highest concentration of deals on their Marketplace.
Deals were launched in 43 U.S. markets in 2021, with the highest concentration in Miami, Orlando, D.C. Metro, and Dallas-Fort Worth*.
Not surprisingly, all of these markets have a spot on their Top 20 Best Places to Invest Report for 2022, which we’ll talk about in this post, as well.
Something I admire about CrowdStreet is their transparency. Their Marketplace realized performance is updated on their website monthly. It gives existing and potential investors the chance to see not only how many deals have been realized (sold), but the average IRR, equity multiple, and hold period of all fully realized deals to date.
As of April 22, 2022, they’ve funded over 625* deals, with $3.16 billion invested.
CrowdStreet shared with me they doubled their team in 2021. Their goals for a larger headcount are to:
- Build better technology
- Drive more deal flow (i.e. bringing a greater number and variety of deals to the Marketplace)
- Build an Investment Wealth Solutions team to manage more funds
- Improve investor support for their growing network
*Based on internal CrowdStreet data as of April 22, 2022.
New CrowdStreet REIT1 Launch
In February 2022, they launched their flagship fund, the CrowdStreet REIT I (C-REIT), a first for them. The fund's minimum investment is $25,000, much less than the typical investment minimum of usually $250,000 for private equity funds and REITs.
The Fund intends to give investors exposure to approximately 20-25 private opportunistic and value-add commercial real estate projects. To guide the curation of these projects, CrowdStreet’s experienced team of investment analysts is looking at demographic and social changes that are transforming individual markets and asset classes, including:
- An aging U.S. population creating opportunities in life sciences and other healthcare properties
- Growing share of e-commerce over traditional retail sales driving a rapidly expanding need for ‘last-mile’ industrial space
- A U.S. housing shortage driving a need for build-to-rent and multifamily housing
- Ongoing migration to the Sunbelt driving an increase in population and job growth, creating opportunities across multiple sectors and regional markets
In addition to the launch of this flagship fund, CrowdStreet has continued to bring new thematic funds to the Marketplace, including their CrowdStreet Build-to-Rent and Multifamily Fund 1, LLC, Series III, CrowdStreet Sunbelt Growth Fund I, and an upcoming opportunistic fund.
New “Office of The CIO” Education Center
Investor education and thought leadership is important for any investment platform. This is why CrowdStreet created an “Office of the Chief Investment Officer (CIO)” that is focused on publishing valuable insights related to the CRE market.
Some of the content they’ve recently published includes:
If you follow CrowdStreet on LinkedIn or on social media, you can be notified when new content like this becomes available.
CrowdStreet's Latest Best Places To Invest
CrowdStreet’s Best Places to Invest Report uses market and investment insights gathered by their investment analysts to evaluate and identify where they see the most opportunity for CRE investors in the year ahead.
CrowdStreet not only identifies their top 20 markets nationwide, they also identify top markets by asset class, e.g. multifamily investments, life sciences investments, etc.
There were a few key differences between last year’s report and their 2022 report, but overall I still saw an emphasis on 18-hour cities, which I’ve mentioned before on this site.
Austin took the #1 spot this year, switching places with last year’s number one, Raleigh-Durham. With tourism creeping towards a post-pandemic comeback, Orlando had a dramatic jump to #4 overall from #18, while Seattle and Miami both ranked 9 spots higher than they did in 2021.
New to the Top 20 entirely were #11 San Diego, #13 Fort Lauderdale, #14 San Antonio, and #17 Charleston. The full report explains what is driving opportunity in these markets and, like I mentioned, also takes a look at where CrowdStreet sees the most opportunity by asset class.
CrowdStreet's 2022 Investment Thesis
In addition to their annual Best Places to Invest Report that focuses on where, take a look at their 2022 Investment Thesis. It looks at the future of office and hospitality in a post-pandemic environment, as well as the future of industrial and retail space as demand for and reliance on e-commerce continues to grow in America.
Life sciences–which refers to any commercial building that is part of the medical or biotech world– is a new asset class they added to their investment thesis this year, thanks to NOI growth* over the past decade that was well-above the average for all property sectors.
In looking at the year ahead, CrowdStreet believes the market to be more balanced than they saw it in 2021, putting it in a better position for broader, albeit moderated, growth across the board.
CrowdStreet believes hospitality is poised to enter its next cycle of recovery. Further, they believe multifamily could have yet another record year in terms of pricing in 2022.
*Green Street Advisors – Life Science Insights, 2021
CrowdStreet's 2022 Investor Benchmark Survey Results
Just as they did last year, CrowdStreet started 2022 by publishing insights from a survey sent to their investor base. 98% of respondents to CrowdStreet’s 2022 Investor Benchmark Survey plan to make at least one commercial real estate investment in 2022.
Of the over 1,000 investors that responded to their survey, the majority had over one year of investing experience while a quarter had five or more years, which makes for some unique insights.
The survey results show a clear appetite for investing in real estate this year, with 66% of investors indicating that they plan to allocate more of their personal portfolio to commercial real estate than they did in 2021–well above the interest shown for other investment types.
When it comes to how many CRE investments investors are looking to make, provided they find deals suitable for their strategy, the overwhelming majority indicated they would like to make 1-3. Over a quarter of respondents were interested in 4-6 and nearly 8% expressed interest in making 7 or more.
Where Investors Are Planning To Invest
CrowdStreet’s investor survey also takes a look at where investors are looking to invest in the year ahead. In recent years, as the millennial population has matured into home buying and starting families, and real estate prices continued to soar, Americans have shied away from higher cost locations.
Investor preference for investing in the Southeast and Southwest regions of the U.S. is in line with where CrowdStreet expects to see investment opportunities in 2022 and beyond.
If you’re looking to get started with investing in commercial real estate, take a look at CrowdStreet. It’s simple to create an account for free and start browsing available investment opportunities on their Marketplace today. CrowdStreet primarily focuses on 18-hour cities where real estate valuations are lower and cap rates tend to be higher.
Just make sure to thoroughly review the sponsors before investing in any deal. Understand the sponsor's track record and management experience. The fewer individual deals you invest in, the more concentration risk you have. Therefore, the more due diligence you have to conduct on each sponsor.
Financial Samurai is a third-party advertiser for CrowdStreet. This article was written by an employee of CrowdStreet and has been prepared solely for informational purposes. The views and statements expressed by Financial Samurai are made solely by the third-party and are based upon the opinions of Financial Samurai. All information is from sources believed to be reliable. Nothing herein should be construed as an offer, recommendation, or solicitation to buy or sell any security or investment product issued by CrowdStreet or otherwise. This article is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation, or needs of any investor. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance or success. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate.
Financial Samurai is a third-party advertiser for CrowdStreet and Financial Samurai is compensated, either directly or indirectly, by CrowdStreet. CrowdStreet uses third-party marketers to market the CrowdStreet Marketplace. Such marketers are generally compensated a fixed amount for each investor that registers on the marketplace as an accredited investor. CrowdStreet does not assume responsibility for the reliability or accuracy of any materials produced by third-party marketers, and any information contained therein should not be used as a basis for making an investment in the CrowdStreet Marketplace or any product or service offered by CrowdStreet or any of its affiliates. The information provided herein does not and is not intended to constitute investment advice. All information, content, and materials available are for general informational purposes only. This article may contain links to other third-party websites. Such links are only for the convenience of the reader and CrowdStreet nor its affiliates do not recommend or endorse the contents of the third-party sites. Third-party posts found in this article do not reflect the views of CrowdStreet or its affiliates and have not been reviewed by CrowdStreet as to accuracy or completeness.
CrowdStreet, Inc. (“CrowdStreet”) offers investment opportunities on its website (the “CrowdStreet Marketplace”). Broker dealer services in connection with an investment are offered through CrowdStreet Capital LLC (“CrowdStreet Capital”), a broker dealer registered with FINRA and a member of SIPC
1This communication is for informational purposes only and should not be regarded as a recommendation, an offer to sell securities, or a solicitation of an offer to buy any investment products, financial products, or services. Information in this communication, including information regarding targeted returns and investment performance, is subject to change. Forward-looking statements, hypothetical information or calculations, financial estimates, and targeted returns are inherently uncertain. Such information should not be used as a primary basis for an investor’s decision to invest.
All prospective investors must certify that they are accredited investors, and provide either supporting documents or third party verification, eligible for this type of illiquid investment, and must acknowledge that they have received and read all investment materials. Direct and indirect purchase of real property involves significant risks, including without limitation market risks, risk related to sale of land and risks specific to a given property. The securities offerings posted on the website are speculative. Investments posted on this website are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by CrowdStreet, (or any of its affiliates) and MAY lose value.
An investment in CrowdStreet REIT (the “Fund”) is speculative and involves substantial risk. You should not invest in the Fund unless you can sustain the risk of loss of capital, including the risk of total loss of capital. No guarantee or representation is made that the Fund will achieve its investment objectives or that investors will receive any return on their investment. Investors should consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity. All investors should review the Fund’s Prospectus and referenced documents carefully.
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As someone living near the Raleigh-Durham area, I can vouch for it being a huge real estate investing hub right now (well, as it has been for several years). It comes with good and bad, as I’ve ridden the wave to get a nice chunk of change out of real estate, but primary residences are expensive and you’re either left with a long commute or a huge jump in the price of housing.
I have a feeling it will continue to boom for a while, especially with all the new tech companies building campuses and expanding in the area. Exciting times!
Just realized my first deal on Crowdstreet. 90% gain on a 14 month hold. I couldn’t believe how good the result was. I just rolled the proceeds into another deal via 1031 exchange. Probably not going to hit a home run on the next deal but I’m playing with house money at this point. I have been very happy with Crowdstreet’s sponsor vetting. I feel they are worried more about quality than quantity which is a very good thing.
Also my question to Sam :-) What’s his opinion on the two investing platforms? Fundrise is the only one in Sam’s recommendations, and where he has over 800,000K invested. That’s pretty convincing for me. I’m invested in Fundrise, but I’m not sure Crowdstreet would have enough value-added over Fundrise to convince me to invest. The value I see is the diversity in having more than one REIT investing platform. In that way, if something goes south with one platform, you at least have a portion of your REIT investing funds in another investing Platform ( Company). Which does make sense. Risk diversification is keen for me.
Fascinating charts! Didn’t realize multi family property was almost half of their marketplace. Also really helpful chart on which property types are strongest and weakest with inflation. Interesting on self storage – I’ve never used any before but you’ll pretty much find self storage in every city!
Thanks for this, Sam!
How do you compare Fundrise (another platform you recommend) vs Crowdstreet?
Both seem to dominated by multi family investments in the Sunbelt. Is one better than the other on other dimensions (eg fees)?
My exact question, Sam! Would love to hear your thoughts.
Would also be very interested in your answer to this, Sam. Especially since you seem to prefer Fundrise.
The main differences are:
* Fundrise is vertically integrated where they are the investor who raises capital, chooses the deals, makes improvements, manages, holds or sells. Fundrise does all the work for you.
CrowdStreet screens the deals and the sponsors before showcasing them on the platform for investors to select. The investor then invests directly with the sponsors.
Overtime, CrowdStreet builds stronger relationships with sponsors based on their past performance, trust and due diligence. A sponsor might consistently allocate accept percentage of equity or debt to the CrowdStreet platform.
* With Fundrise, you invest in one of their funds based on your objectives.
With CrowdStreet, you mostly invest in individual deals and build your own fund. Where you invest depends on your level of interest, time, and diversification needs. Although, CrowdStreet occasional has speciality funds.
For example, if you specifically want to add to hospitality real estate in Austin, CrowdStreet may have an opportunity for you. In other words, you can be more surgical in your investing with CrowdStreet.
* For CrowdStreet, you also need to be accredited investor and be able to invest usually with at least $25,000 minimum per deal or fund.
I should write a post comparing the two specifically.
Thanks so much for responding to this question. Very well answered.
I second this idea to post a comparison article.
Yes, a post comparing the two specifically would be very helpful. My observation is that Fundrise is going in the direction of fewer funds with the major fund being the Flagship RE Fund (an interval fund). Crowdstreet does have funds (Build to Rent and Multifamily Fund 1, Crowdstreet REIT 1, and Pearlmark Mezzanine Fund V for example). The Pearlmark Fund requires a value of 5 million to invest — whew! Crowdstreet’s Funds are not interval funds which has an impact on risk, results, and liquidity. These are important differences between the two platforms. I’m sure there are more differences to mention in a future post. Thanks.
Agree with the above. Appreciate all your work!
Hi Sam –
Thanks for a great article. I also like your idea of penning and article comparing Crowdstreet to Fundrise.
After reading your real estate articles for the past couple of years, I finally pulled the trigger and open an account with Fundrise. I selected the Flagship Interval Fund which is mostly single family homes and multi family. There are a few retail and warehouses as well.
Fundrise makes it so easy to understand.
Looking forward to collecting our first or many dividends!
Tony