When it comes to investing in alternative assets, two platforms that investors often consider are Yieldstreet and CrowdStreet. Both platforms offer opportunities for investors to diversify their portfolios beyond traditional stocks and bonds, but there are some key differences between the two.
Yieldstreet is a platform that focuses on alternative investments such as real estate, art, and lending. The platform offers a range of investment options with relatively low minimum investments, making it accessible to a wide range of investors. CrowdStreet, on the other hand, is primarily focused on commercial real estate investments. The platform offers opportunities to invest in a variety of different property types, from office buildings to multifamily housing developments.
Now let's find out what should you choose between Yieldstreet vs. CrowdStreet.
What is Yieldstreet?
Yieldstreet is an alternative investment platform that gives investors various investment opportunities to diversify their portfolios. In Yieldstreet, you can choose from assets like real estate, commercial finance, consumer finance, litigation finance, art, marine finance and commercial loans. It aims to allow individuals to diversify their portfolios for the potential of higher returns. Yieldstreet allows investors to participate in crowdfunding, but most offerings are only available to accredited investors.
Yieldstreet conducts a risk assessment and due diligence on each investment opportunity before offering it to investors. With an account minimum of $10,000 and management fees of 0% to 2.5%, Yieldstreet offers solid investment options for accredited and nonaccredited investors. However, it's worth double-checking fees as a 0% fee is excellent, while 2.5% is high.
What is CrowdStreet?
CrowdStreet is an online crowdfunding platform only available to accredited investors. With CrowdStreet, individual investors are connected with real estate developers who raise capital for their projects while offering investors the opportunity for potentially high returns.
CrowdStreet is structured like a marketplace where investors can browse and invest in a variety of commercial real estate projects, including office buildings, retail centers, multifamily properties, other commercial and industrial real estate, and land.
CrowdStreet has higher minimums than Yieldstreet. Accredited investors must invest a minimum of $25,000. The investment period is usually three to 10 years. CrowdStreed has no options for early withdrawal, potentially leading to medium-term liquidity of investments.
CrowdStreet offers individual investors access to institutional-quality commercial real estate opportunities. Investors can access CrowdStreet's tools and resources to make better-informed investment decisions about due diligence, materials, financial projections, and investor relations.
Comparing Yieldstreet and CrowdStreet for Real Estate Investing
Should you invest in Yieldstreet or CrowdStreet for real estate investing? That depends on various factors, including your available funds and status as an accredited investor.
User Interface and Platform Design
If you're debating between Yieldstreet and CrowdStreet, ease of use and intuitive navigation shouldn't be a consideration. Both offer simple navigation, intuitive interface and insights into investment opportunities, including relative risks.
However, while Yieldstreet has a mobile app available on Android and iPhone, CrowdStreet doesn't appear to have an app available to investors. While it's consistently rated as one of the best real estate investing apps, the actual app doesn't appear to be available for mobile devices. Instead, you access the website and sign up or log in.
Both Yieldstreet and CrowdStreet are easy to get started with. Benzinga opened an account in about 5 minutes on both platforms. Answer a few questions about your income and status as an accredited investor, enter a little personal contact information and start browsing investment opportunities.
Types of Investments Available
While Yieldstreet offers a variety of asset classes such as real estate, art or other assets, CrowdStreet offers only real estate. Both websites provide information on investment due diligence. Both Yieldstreet and CrowdStreet have benefits when it comes to analyzing investments and accessing information. CrowdStreet offers a bit more information on each investment opportunity, but investors also appreciate Yieldstreet’s easy-to-navigate platform and highlights section.
Any investment has inherent risk, so the risk levels of each investment platform are comparable, assuming you diversify your total investment portfolio across asset classes and investments.
Minimum Investment Requirements
When it comes to investing with varying budgets, there is a clear winner. If you have a smaller investment budget for real estate or other alternative asset classes, Yieldstreet requires a small minimum investment — $10,000 compared to CrowdStreet's $25,000 minimum investment. Yieldstreet also has options open to nonaccredited investors, offering accessibility to a wider range of investors.
Returns and Performance
Historical performance of investments on each platform varies by investment type. CrowdStreet is known for its commercial real estate investments with good historical returns, but that can vary by individual investors' portfolios. Projected returns on Yieldstreet are 8%-20% annually.
According to CrowdStreet data, its average annualized internal rate of return (IRR) is 15% and the average holding period is just 3.3 years. In addition, Also, it doesn't charge fees to investors, preserving your capital and returns. Meanwhile, Yieldstreet's IRR is 9.6%.
Transparency and Due Diligence
Both CrowdStreet and Yieldstreet offer transparency in their screening and vetting processes. For Yieldstreet, all investment opportunities undergo a stringent four-step vetting process to review an investment opportunity through various risk lenses comprehensively. Less than 5% of all investment opportunities evaluated by Yieldstreet made it to investors in 2023. The vetting process includes origination, screening, diligence, assessment and a committee review.
CrowdStreet's due diligence involves not only the investment opportunity but thorough due diligence on the company offering the investment. This includes a background check, sample reporting review, financial vetting and track record review of any company. If the company passes due diligence, properties are evaluated with key materials, including financial models, market, rent and sales comps, legal and loan documents and financial statements.
While both platforms perform due diligence, CrowdStreet's due diligence of companies appears more thorough, and the reports available to investors are more comprehensive.
Platform Security and Regulation
In the day of cybersecurity threats, an investment platform must employ robust security. Yieldstreet’s security includes:
- All data in transit is encrypted end to end with a minimum of 128-bit encryption.
- All data at rest is encrypted via FIPS-140-2-compliant encryption technology.
- Account passwords are cryptographically one-way hashed with a multi-iteration 16-byte random salt.
While CrowdStreet has strong privacy policies and it can be assumed it uses excellent encryption, that's not stated on the website.
In September 2023, Yieldstreet was charged by the U.S. Securities and Commission (SEC) for misleading investors. Yieldstreet is open to nonaccredited investors and must comply with SEC guidelines.
CrowdStreet Capital also complies with SEC regulations that require customers to have access to an easy-to-read disclosure form regarding the nature of their relationship with the firm (in this case, CrowdStreet), called the Customer Relationship Summary, or Form CRS. You can find CrowdStreet's regulatory disclosures here.
Pricing
The fee structures for Yieldstreet and CrowdStreet vary by investment but can be comparable. Investors should check the fees of individual investments as fees vary widely. Both funds disclose fees for investment type.
CrowdStreet typically charges 0.50% to 2.5% in fees, with 0.25% to 2.5% tailored portfolios.
Yieldstreet fees range from 0%-2.5% annually. One investment option, the Yieldstreet Prism Fund, has a total annual fee of 1.5% and charges no load or redemption fees.
Should You Invest in Yieldstreet vs. CrowdStreet?
Whether you choose Yieldstreet vs. CrowdStreet depends on your investment goals, available funds and whether you're an accredited investor. It also depends on how much you want to invest in high-risk, high-reward real estate investments. Yieldstreet offers more diverse investment options and asset classes and is open to nonaccredited investors, while CrowdStreet offers higher potential returns through real estate only. Learn more about other real estate investment apps or the best alternative investment platforms here.
Frequently Asked Questions
How risky is CrowdStreet?
When considering the risk associated with investing in CrowdStreet, it’s important to understand that commercial real estate investments can be inherently risky. Unlike traditional stocks and bonds, real estate investments are subject to market fluctuations, changes in property value, and other factors that may impact returns.
Who competes with Yieldstreet?
Yieldstreet faces competition from Fundrise in the alternative investments space. Fundrise is a platform that also focuses on real estate investments. Another competitor to Yieldstreet is PeerStreet, which specializes in real estate debt investments.
Can anyone invest in CrowdStreet?
No, CrowdStreet isn’t open to everyone. To invest in CrowdStreet, you must be an accredited investor and plan to invest a minimum of $25,000 in the platform.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.
