Most investors search for ways to add diversification to their portfolio beyond simply holding a variety of stocks. They often seek to invest across a number of various asset classes to achieve even greater diversification.
One of the most common asset classes investors use to achieve this level of diversification is real estate. This is commonly done through a crowdfunded real estate platform such as Crowdstreet. However, there are a vast number of other asset classes that investors can add to their portfolio, though there aren't many investment platforms that can achieve this. Yieldstreet is one of the few platforms that offer investors access to a variety of assets.
In this article, we are going to be highlighting some of the pros and cons of investing with Crowdstreet vs Yieldstreet.
Crowdstreet Review 2022: Best Commercial Real Estate Platform?
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CrowdStreet is a crowdfunded real estate investing platform that focuses on commercial real estate across the nation. The platform is reserved for accredited investors and requires a minimum investment of $25,000. The company has a rigorous vetting process to ensure each deal presented to investors is top quality. In fact, they tell investors that less than 5% of the deals they receive make it to the site for investors.
Yieldstreet is an alternative investment platform where investors have access to unique assets such as real estate, consumer finance, commercial finance, litigation finance, art, and more. The platform was created in an attempt to offer investors greater access to investments outside of more typical investments such as stocks and real estate. Yieldstreet requires accreditation for full access to their offerings, though they do have two offerings for those that are not accredited.
Since its founding in 2014, CrowdStreet has published 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.
These numbers really speak for themselves and have helped Crowdstreet position itself as a top option for crowdfunded real estate.
The company is really 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.
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, users can browse different projects currently in production, or soon to be. After doing research and their own due diligence, investors can choose to participate in various listings. The minimum investments vary but in general, it’s around $25,000.
On the website, users can sift through a myriad of 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.
Since this is obviously quite a lot of hands-on work, the team at CrowdStreet has made it easy with detailed deal documents, sponsor history, and progress tracking.
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.
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.
Yieldstreet is an alternative investment platform that gives an ordinary investor the opportunity to get in on deals that would otherwise be out of reach.
They offer access to investments in a number of different asset classes such as art, multi assets funds, real estate, and more.
The company was founded in 2014 by Millind Mehere. He reportedly created the organization because he had become frustrated with the lack of alternative investment opportunities available to investors who are not ultra-wealthy.
Since then, they have grown substantially with more than $1.5 billion in assets under management.
Like Crowdstreet, Yieldstreet provides investors with a variety of investment options such as funds, short term notes, and custom portfolios.
The Prism Fund is one of Yieldstreet's offerings and does not require accreditation. The minimum to invest in this fund is $500.
At the time of this writing, the Fund has currently raised over $82.9 million and has holdings in the following asset classes: Art, Commercial, Consumer, Legal, Real Estate, Corporates and more.
This investment option comes with an opportunity to make passive income in the form of quarterly distributions currently at a rate of 8%. The returns that investors can expect are net of fees, meaning the 1% management fee will be deducted first. There is also a 0.50% annual service fee bringing the total fees to 1.5% annually.
The Prism Fund does offer investors a quarterly opportunity to sell back shares; however, there is no guarantee of early liquidity.
For accredited investors, Yieldstreet has a more customized option. The minimum to invest with a custom portfolio is $10,000, though some of the investment options may be more.
With the custom portfolio, investors have the option to pick and choose various investments. At the time of this writing, investors could choose to add commercial real estate, legal, corporate, and residential asset classes to their portfolio. Each one of these investment options comes with its own minimum investment ranging from $10,000 to $30,000.
The fees vary among the different investment options but are generally between 1-2%. The distributions also vary by investments, so investors will need to review each offering and determine their own preferences. Accredited investors can also invest in the Prism Fund if they do not want to build their own portfolio.
Yieldstreet also offers investors access to short term notes, though these are also reserved for accredited investors. These notes range from 3-6 months and have a $1,000 minimum investment. The annualized return for these notes range between 3-4%.
One of the key benefits to investing with Yieldstreet's short term notes is that there are no fees for investors.
Both of these platforms offer investors an opportunity to add diversification to their portfolios. Yieldstreet may be the platform for you if you are hoping to add more than just commercial real estate. Investors can also add asset classes like art, legal, and corporate investments. Crowdstreet may be better suited for you if you are solely looking to add commercial real estate to your portfolio.
Both platforms require accreditation, though Yieldstreet does offer non-accredited investors access to their Prism Fund with a minimum investment of $500. For full access to the site, Yieldstreet's minimum investment is $10,000. Conversely, Crowdstreet comes with a much higher minimum investment of $25,000.
Crowdstreet typically has more offerings available at any given time compared to Yieldstreet. While both sites do allow investors to pick and choose investments, our team found that Yieldstreet was more limited in the options they offered.
Both of these platforms give investors the chance to browse deals listed on their sites before ever committing funds, which is a huge benefit and allows individuals to understand the platforms and types of deals they can invest in. Our recommendation would be to review both platforms and see which is most aligned with your goals!