There are many ways to become involved in real estate. From a more traditional path of buying a property directly to crowdfunding, investors can participate in real estate with varying levels of capital and time required.
Crowdfunding has become highly popular in the last few years as more and more platforms have come into existence. Crowdfunding is a great way to invest in real estate as you can often participate in deals you could not otherwise invest in on your own.
In this article, we will be comparing and contrasting two platforms that focus on commercial real estate. While they have many similarities, they also have many differences. This is CrowdStreet vs Cadre.
CrowdStreet is a crowdfunded real estate investing platform that provides investment opportunities focused on commercial real estate. This platform has a minimum investment of $25,000 and is limited to accredited investors. CrowdStreet offers investors the ability to pick and choose individual deals or funds. These deals are highly vetted and represent the top 5% of deals CrowdStreet receives.
Cadre is another investing platform focused on commercial real estate limited to accredited investors. Like CrowdStreet, Cadre also offers investors access to both their fund and direct deals. The minimum investment with Cadre is $25,000. Cadre is unique in that it is actually not a crowdfunded platform, rather the company commits all funds to a deal and allows investors access to them.
CrowdStreet is a crowdfunded real estate investment platform. The company focuses on commercial real estate and has a highly rigorous vetting process to ensure investors have access to high-quality deals only.
The company is essentially a marketplace that connects developers, or sponsors, with investors. These sponsors bring deals to Crowdstreet, who then carefully reviews the offerings and determines whether or not the deal is a good fit for the platform. If a deal makes it to the site, then investors can begin funding a project.
Since its launch in 2014, CrowdStreet has listed over 524 commercial real estate investment offerings. Of those 524 offerings, 54 of those have been fully realized. Over $2.25 billion in capital has been raised and over $245 million has been distributed to investors.
Check out our full Crowdstreet review for more.
CrowdStreet allows investors to invest in one of three ways: Individual Deals, Diversified Funds & Vehicles, and Tailored Portfolios. Let’s dive in and discuss each of them.
Within the CrowdStreet marketplace, investors have the opportunity to browse individual projects. This is a great feature as many real estate investment platforms are limited to funds.
On the website, members can analyze a number of different options from apartment complexes in college towns to new developments in up-and-coming cities. As an investor, you can do all the research necessary to make you feel comfortable before diving in.
These individual deals are all unique, meaning the fees, targeted return, and holding period will be different. Regardless of the deal, there is a $25,000 minimum investment.
In addition to being able to select individual deals on your own, you can also choose to invest in a fund. With trained fund managers, you can access a quicker path to diversification, a tried and true strategy, and an average lower per deal upfront investment.
Within these funds, you can choose between single-sponsor funds or CrowdStreet funds. Single-sponsor means that one real estate firm is leading the charge and will usually focus on that firm’s specialty within a certain region or asset type.
On the other hand, CrowdStreet funds are managed and constructed by CrowdStreet employees and are set up with a variety of locations and property types.
These funds have a much higher minimum investment usually between $150,000 and $250,000.
If you are looking for a more personalized experience, then a custom-built portfolio might be best. These portfolios are designed by a CrowdStreet advisor specifically with your goals in mind.
These advisors will take your goals and bring them to life by investing in properties that line up with your objectives. This obviously comes with a fee, which varies depending on the size of the investment. It also comes with a hefty minimum balance of $250,000.
Since its inception, CrowdStreet has demonstrated a strong track record with an average return of 17.1% IRR and a 1.39 equity multiple. These are the results from 56 fully realized deals that had an average holding period of 2.3 years.
Each deal listed on the site features a different targeted IRR and equity multiple. It is important to note that a target is just that, a target. So a deal may have a targeted IRR of 20% but actually realize a return of 17% or 23%.
Crowdstreet fees really depend on the deals that you choose; however, they generally range from 0.50% to 2.5%. There is no fee to sign up, meaning investors can create an account and start browsing potential deals before ever committing funds.
When investing with CrowdStreet, investors should be prepared to leave their money with the company. The holding period varies by deal but typically ranges from 2-10 years.
Since the company does not offer any early redemption or early liquidation, you will have to leave your money in the investment until the maturity date.
Cadre is a real estate investment company that is focused on commercial real estate. The company puts an emphasis on high-quality deals over higher volume. They achieve this through their management team with years of experience and data science to ensure each deal matches certain criteria.
The company has skin-in-the-game with every deal as they commit funds for the life of the investment. After an asset is acquired, they then offer investors access to invest. This is unlike many crowdfunding platforms that either have low skin-in-the-game or none at all.
Since its launch in 2015, the company has amassed over $3 billion in assets. This number alone speaks to the quality of their investments.
Like CrowdStreet, Cadre offers investments in a fund or individual deals. Regardless of investment, the minimum is $25,000 and both options are reserved for accredited investors. Let's look at both options.
When Cadre acquires a property, they split up the equity with the majority going into their Direct Access Fund. A smaller portion will be designated for investors who want to select individual investments. Suppose they purchase an asset and have $30 million in equity to syndicate. First, $25 million would be allocated to their fund and the remaining $5 million would be available for direct investment.
Once $5 million is reached, that investment will be closed.
Deals range from multifamily residentials, industrial, office buildings, and hotels.
For many, the option of analyzing and choosing individual deals represents a large amount of time. With this in mind, Cadre offers investors their Direct Access Fund.
Cadre's fund seeks to have 50% of the assets be multifamily real estate and the other 50% be office buildings and hotels.
This fund offers investors a chance to leverage a team of experts. It can be difficult to build a portfolio on your own; Cadre works hard to create a well-diversified fund that has both strong cashflow and appreciation.
Since 2015, the company has had an impressive track record with a historical IRR of 18.2% and over $168 million in distributions.
Investors can expect to receive quarterly payout from property cashflow.
Investing with Cadre comes with 3 fee types:
There is also a transaction fee for investors that sell their asset in a secondary market. This is a 1.5% transaction fee that is paid to Cadre at the time of the sale.
Cadre targets holding an investment for 6-8 years. This time is essential in order for a property to appreciate. While many real estate investing platforms lock your money in for the duration of the investment, Cadre offers special access to their secondary market.
For each deal, Cadre allows investors to begin selling their shares after 6 months. After those 6 months, Cadre holds a specific 2 week window each quarter where investors can sell their investment.
When selling, an investor can sell their holdings at a specified discount to the market value. This value is assessed by Cadre quarterly.
This is an awesome feature as large commercial deals like this would typically require a lock-up period. An investment with Cadre is more liquid than other commercial real estate deals, and therefore provides you with discretion, flexibility, and choice not found on other platforms. There is a caveat however: if there are no buyers interested, then you will not be able to sell the asset. You will also pay a 1.5% transaction fee at the time of sale.
While both of these platforms offer access to both funds and individual deals, there are a few key differences to be aware of. In addition to some of the more obvious differences like fee structure, and properties, these two platforms also have a few important differences that may impact your investing strategy.
First, Cadre offers investors access to a secondary market, which means that early liquidation is possible. With CrowdStreet, investors should be prepared to hold their investment for the life of the loan.
Second, the deal flow varies greatly. CrowdStreet typically has a larger number of deals available at any given time. Conversely, Cadre typically has 1-2 deals available per month.
Third, Cadre fully commits to every deal listed on their site. This means that they have high skin-in-the-game with every deal. For some, this is highly important as it demonstrates the platform also believes in the investment.
Both platforms are reserved for accredited investors and come with a large minimum investment. Before deciding which platform to invest with, be sure to check out their websites and dive in deeper!
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