Real estate crowdfunding may be the most important investment revolution you’ve never heard of. It’s the simple idea of allowing accredited and non-accredited investors to buy, hold and sell fractional ownership in real estate assets, like they trade stocks. It’s also an exceptionally profound idea, which allows investors to boost yield, receive steady income, and stabilize and diversify their portfolios.
To learn more about real estate crowdfunding, what it is and how it could improve your portfolio, refer to my comprehensive review of the real estate crowdfunding marketplace.
But, let’s assume you know what real estate crowdfunding is. Now, you’re looking for the best real estate crowdfunding sites to invest with.
In that analysis, there are three very important questions investors should ask when looking at any crowdfunding platform.
- Is the platform legit? Because this industry is relatively new — crowdfunding wasn’t legal until 2016 — there are still lots of low-quality, scam-like platforms out there which investors should avoid.
- Who is the platform for? Each platform positions itself differently in terms of what type of investor it caters to. Some are for accredited investors (wealth individuals with $200,000-plus in annual income, and/or a liquid net worth of over $1 million). Some are for retail investors (the rest of us). Knowing the difference is very important to optimizing your crowdfunding experience.
- What type of investments are on the platform? Each crowdfunding platform also offers different investment opportunities. These differences are with respect to the quality, liquidity, and geography of the investments, as well as many other qualities. Knowing the differences here is also very important to optimizing your crowdfunding experience.
With all that in mind, let’s review one of the more popular real estate crowdfunding platforms out there: Cadre.
Is Cadre Legit?
The answer here is unequivocally yes. Cadre is arguably the most legit real estate crowdfunding platform out there.
The team at Cadre is very experienced, comprised of a suite of former high-level Wall Street bankers and private equity experts. Together, that team has raised an enormous $133 million in venture funding. The most recent fundraising round at Cadre was led by Andreessen Horowitz, the famous venture capital firm which was an early stage investor in the likes of Facebook (NASDAQ:FB), Pinterest (NYSE:PINS), Okta (NASDAQ:OKTA), Slack (NASDAQ:WORK), Twilio (NASDAQ:TWLO), and many, many more.
The platform has also had many success stories with its investors, and there haven’t been any noteworthy complaints against the company in terms of fraudulent behavior or investment malpractice.
All in all, then, Cadre is legit. More than that, it’s one of the most legit real estate crowdfunding platforms in this space.
Who Is Cadre For?
Cadre is built for wealthy investors who are willing to commit sizable amounts of cash to relatively non-liquid assets. Indeed, the platform is less “crowdfunding”, and more “clubfunding”, wherein a relatively small and exclusive group of wealthy investors gain access to highly-curated real estate assets.
Here are the specifics. Cadre has an investment minimum of $50,000 (but, if you commit to building a portfolio of ten properties over the course of a year with a Managed Portfolio, you can invest in as little as $5,000 per property). The platform features investment opportunities which most normally require the funds to be locked up for at least a few years. The fees — which amount to about 1.5% of net asset value — are higher than the norm in this industry.
So, if you are a retail investor who isn’t willing to commit upwards of $50,000 to a real estate investment, Cadre isn’t for you.
But, if you are an accredited investor or an investment firm handling accredited investor money and are willing to put down $50,000-plus for a few years, then Cadre could be the perfect platform for you, mostly because in that space of big price tag, non-liquid real estate investments, Cadre offers the cream of the crop (see next section).
What Type of Investments Are on Cadre?
Cadre has developed a stellar reputation for offering only exceptionally high quality commercial real estate investment opportunities on its platform.
Unlike many other crowdfunding platforms, Cadre emphasizes quality over quantity. So, at any given time, there won’t be many real estate investment opportunities on the platform. But, those that are on there, are very high-quality opportunities.
The investment opportunities on Cadre are also relatively non-liquid. Most of the projects have a timeline of five-plus years. But, Cadre does offer some liquidity, by opening up a secondary market on the platform a few times a year. This injection of liquidity is an attractive differentiation for the platform.
Also of note, Cadre emphasizes flexibility with investment style. That is, investors can hand-pick their own investments on the platform. Or, they can enroll in Cadre’s “Managed Portfolio”. In that portfolio, Cadre simply divides your money equally into the next five projects on the platform. Most platforms don’t allow this capability of both auto-invest and pick-and-choose.
If you’re an accredited investor willing to put down $50,000-plus on a real estate project for a few years, then Cadre is the best real estate crowdfunding platform for you. You’ll get access to only high-quality investment opportunities. You’ll have the option to auto-invest, or pick-and-chose your investments. You will get the benefit of liquidity every few months. And, perhaps most importantly, you don’t have to worry about the platform going under — $133 million is a lot of money, and Andreessen Horowitz has much deeper pockets to keep the lights on.
But, if you’re just looking to dabble in real estate and aren’t ready to commit significant capital, Cadre isn’t for you. And that’s perfectly OK. There are a plethora of other crowdfunding platforms out there that are for you. See Fundrise, Small Change, or Groundfloor, for example.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, Luke Lango was long FB and PINS.