New to CRE crowdfunding? Don’t worry, we have you covered. First let’s understand CRE, direct CRE investing and how technology is bringing the two together with crowdfunding.
Now that you understand the benefits of CRE crowdfunding, let’s understand what a diversified CRE portfolio looks like.
The Definitive Guide to Commercial Real Estate Property Types
Making the Grade in Real Estate: Understanding Class A, B and C
The Four Phases of the Real Estate Cycle
How to Invest in Multifamily Real Estate
How to Invest in Office Real Estate
How to Invest in Hotel Real Estate
How to Invest in Industrial Real Estate
Ready to go? Visit the marketplace to start comparing offerings. Want to dive deeper? Explore these resources to round out your CRE investment education.
Real Estate Investment Strategy: Four Categories of Risk & Reward
Top 10 Sources of Risk in Real Estate Investment Deals
What are Real Estate Risk-Adjusted Returns?
Assessing Real Estate Investment Risk Using Debt Service Coverage Ratios
The Real Estate Development Process: Understanding the Risks and Milestones
Leverage: The Double-edged Sword of Real Estate Finance
Sources & Uses: Following the Real Estate Money Trail
Shining a Spotlight on Real Estate Sponsor Fees
Frequently Asked Questions
Got more questions? We’ve got answers.
CrowdStreet is a direct-to-investor marketplace, which means you are investing directly with the Sponsor. Read more.
Each sponsor with a live offering has its own “detail page” which contains all the pertinent information on the deal, for example, the PPM, offering documents, business plan and projected returns. Near the bottom of the page, we introduce key members of the Sponsor’s team as well as the company “Track Record.”
Yes! Provided there is sufficient time before the closing, almost all sponsors with projects on the CrowdStreet marketplace are equipped to accept investments from a self directed IRA account. The process, outlined below, is straightforward but may take up to 10 business days for the custodian to fully process and remit funds. For this reason, sponsors who have a expedited closing date may be unable to accept IRA investments. Therefore, it’s best to check with the CrowdStreet IR team in advance.
The normal steps for completing an investment through CrowdStreet with a self directed IRA are as follows:
- Submit an offer to invest by clicking the “Invest Now” button on the detail page
- On the Offer Submission Page:
(a) Indicate the $ amount you would like to invest
(b) Indicate that you are investing with a self-directed IRA
(c) “Create an investing entity” – input the full name of your investing entity
- Provide your custodian with the offering documents (e.g. the PPM, Operating Agreement and Subscription Agreement) to get approval
- E-sign docs via DocuSign in the CrowdStreet transaction center (the sponsor may need to counter sign these before returning to the custodian for final acknowledgement)
- Complete the accredited investor verification process in the CrowdStreet Transaction Center
- Receive approval from CrowdStreet and the sponsor that your docs & verification have been approved
- Custodian remits funds
At this time, only one project is available to non-accredited investors. Projects featured on the CrowdStreet marketplace are done so, in most cases, pursuant to SEC Reg. D 506(c), which allows for general solicitation but restricted to accredited investors. You can learn more about SEC Regulation D on the SEC’s website: https://www.sec.gov/answers/regd.htm.
Yes! Occasionally there are offerings on CrowdStreet that are already equipped to accept international investors. More often, however, you would need to create an investing entity that is suitable to invest in US real property. A few options for this strategy are outlined below. Note, the stated minimum investment may vary on a deal by deal basis.
The easiest and most straightforward solution for foreign investors to invest in any US enterprise (CRE included) is to form a Delaware entity and fund it through an international bank. Once the money is on shore you can freely invest inside the US. You will need good international tax counsel to guide you through coordinating US and International tax filings.
You can also pursue this strategy through a Caymans or BVI entity. There are plenty of law firms that specialize in setting up these types of entities.
Outside of these two strategies, while it is possible to fund money directly into a US real estate operator’s project, doing so requires them, as your fiduciary, to withhold taxes and complete annual filings with the IRS (to ensure they get their piece should you ever choose to move the money back off shore). These requirements translate into most US sponsors to elect not to accept international investors, or only accept them if they invest a substantial sum ($500K+). Creating your own US, BVI or Cayman entity moves the reporting requirements from the sponsor to you, which is why that format is far more feasible.
The capitalization, or “cap” rate is a term that is used frequently when discussing real estate asset sales and purchases. The cap rate is a ratio of two variables – net operating income and the current value or sale price of a property – which helps to determine the potential return on an investment. Put another way, the cap rate is the rate at which the net operating income recapitalizes the asset value on an annual basis. The cap rate is a useful tool that is often used to assess real estate investment opportunities and draw conclusions across asset classes. Read more.
A key term to a real estate private equity deal is the sponsor “promote”. This term is really just industry jargon for the sponsor’s disproportionate share of profits in a real estate deal above a predetermined return threshold. In this article, we will define the sponsor promote, explore how promotes work, explain how they are justified as well as how they benefit both sponsors and investors and, finally, what they mean to investors under a direct-to-investor model. Read more.
A common metric for measuring commercial real estate investment performance is the cash-on-cash return, which is sometimes also referred to as the cash yield. The cash-on-cash return rate can provide useful insight into the business plan for a property and the likelihood of receiving regular cash distributions over the course of an investment. Read more.