Investors often think about diversifying the portfolio with commercial real estate. The investment in commercial real estate is much more stable and can offer various options and higher upside than investment in residential properties. But investment in commercial real estate is tedious due to the variables like developer reputation, sector stagnation, cyclical markets, and finding the right opportunity can be time-consuming and stressful. If you want to make the process easier and convenient, you must use a platform that is solely devoted to CRE. This is where CrowdStreet comes into play.
CrowdStreet is a platform that connects accredited investors to the pre-screened commercial real estate properties. It is an intermediary that makes the process easier for investors. They will connect you with project sponsors and will take a small cut. You are free to manage your relationship with the project sponsor. The platform does not have any residential properties and the sponsor vetting process can be rigorous as it includes reference checks, background checks, and more.
How does it work?
You can start investing with CrowdStreet in a few simple steps. You need to create an account, complete the profile and check out the deals for investment. CrowdStreet will ask you if you are an accredited investor. An accredited investor can be a person, fund, or entity that meets the requirements of net worth and has better investment opportunities. Accreditation is created by the SEC to protect the interests of less wealthy and experienced investors from any high-risk opportunities.
In order to qualify as an accredited investor, you need to meet one of the below-mentioned criteria of personal wealth.
- An individual net worth or joint net worth with the partner exceeding $1 million. This does not include the value of the primary residence.
- An individual income exceeding $200,000 in each of the last two years and reaching the same this year.
- A joint income with the spouse of $300,000 in each of the last two years and reaching the same this year.
- You can invest on behalf of an investment company or a business with more than $5 million in assets or if all the equity owners are accredited.
Those who qualify as an accredited investors should verify the accreditation status to be eligible to invest in the commercial real estate on CrowdStreet.
Steps to verify the accreditation
If you are an accredited investor, you can use CrowdStreet for investment. You need to verify the accreditation by getting a letter signed by the CPA, wealth advisor, or an attorney. One may also get it verified by a qualified or independent third party to meet the regulatory requirements. You can then scan and upload the documents on the CrowdStreet portal.
You need to keep in mind that every accreditation verification letter will be valid only for 90 days. If you want to make multiple investments, renew the verification from time to time.
What is in store for non-accredited investors?
If you are not an accredited investor, you can have access to the deals but they will be Regulation A+ deals. You can still invest, but with fewer options. The minimum buy-in amount for the deal on the platform is $25,000.
If you want to invest in commercial real estate and are considering CrowdStreet, you will have to meet their criteria. It is only for high net worth individuals and if you want to continue making investments, remember to renew the verification regularly.