Real estate investing is a very attractive asset class: everyone needs a place to live, it usually throws off consistent cash flow, appreciates over time, and there are real tax benefits to owning it. We invested through CrowdStreet, one of the largest platforms for real estate syndication deals, and 6 years in, we have enough real numbers to share an honest answer on whether it was worth it.
What Is Real Estate Syndication Investing?
For those unaware, there are two ways to invest in real estate. You can find a property yourself, buy it, and manage it. Or you can go through a real estate syndication, where an experienced team finds the deal, buys it, and manages it, and you just own a small slice of it without the hassle of being a landlord. We went the syndication route, using a platform called CrowdStreet to source deals.
Our 11 Real Estate Syndication Deals
Between 2020 and 2021 we put money into 11 different real estate syndication deals: vetted sponsors, decent track records, all over the map both property-wise (apartments, storage, industrial, senior housing, medical office, ground-up construction) and geographically (Texas, Montana, Maryland, Indiana, Illinois, South Carolina, New Jersey, Nevada).
Sponsors in their pitches to us said we'd be receiving cash flow of about 9% a year. So if we invested $100,000 into a deal, we'd be receiving about $9,000/year directly deposited into our bank account. They also said that after about 4 years of letting the properties appreciate, they'd sell them, and we'd walk away with an average IRR of 17%.
What Is IRR in Real Estate?
For those new to investing, IRR (internal rate of return) is a single percentage that summarizes how good an investment was, accounting for both how much money you made and how long it took to make it.
Think of it like this: putting $100,000 into a real estate syndication and getting $200,000 back (from either cash flow and/or appreciation in the property) is a "2x return." But that 2x return doesn't tell you how long it took. There's a big difference between getting a 2x return in a year vs. waiting 10 years, and IRR builds that time factor into the equation. It's commonly used in real estate deals because the cash doesn't move in one lump sum. You invest some money up front, get smaller distributions along the way (hopefully), then maybe a bigger chunk back when the property appreciates and sells (again... hopefully). In the 2x example above, if an investor got that return after 1 year, the IRR would be 100%. If it took 10 years to get the same return, the IRR would only be 7.2%.
One thing we've learned investing in real estate: whatever a syndication pitches you assumes everything goes exactly to plan. And when does that ever happen? We've since written a piece on why we rarely invest in alternative investments anymore, because we don't have the knowledge or experience to actually determine how close to reality a plan really is.
Our Real Estate Syndication Returns After 6 Years
Okay, now to the numbers so far. After 6 years, two of the properties have actually sold, with IRRs of 67.7% and 90.9%. Those are the wins so far in our real estate investing journey.
The other 9 investments are still going. 6 of them pay us something regularly: about 4% a year on our money. This is significantly less than we were pitched when we invested, as we were told we'd get 9%.
Unfortunately, 3 haven't paid us anything in the last 6 years. If you include those 3 investments in the calculation, we're getting closer to 2.5% a year on our money, again a far cry from the 9% we were pitched.
All in, over these 6 years we've gotten back about 42% of what we put into our real estate investments through the sale of properties and distributions, and we're getting about 2.5% a year in distributions on the money we still have invested.
Is CrowdStreet the Problem?
But Derek, isn't the real issue CrowdStreet? If a sponsor could raise money from their own network, their bank, or repeat institutional investors, why would they need a platform full of strangers? Doesn't that mean the deals that end up on a marketplace are the ones nobody else wanted?
It's a fair question, and I've heard some version of it more than once. Real estate syndication platforms like CrowdStreet, Fundrise, RealtyMogul, EquityMultiple, Yieldstreet, DiversyFund, and Arrived all exist because sponsors need capital. There's a real argument that if a deal or a sponsor's track record was strong enough, they'd raise it quietly from repeat investors instead of marketing it to accredited investors on the internet.
CrowdStreet has also had its own very public scandal to point to. In 2023, $63 million that investors sent through the platform for two deals with a sponsor called Nightingale Properties never made it to the properties. Nightingale's CEO, Elie Schwartz, was sentenced in 2025 to 87 months in prison for diverting roughly $53 million of it into a Miami condo, art, and watches. That's not a bad deal gone wrong. That's fraud, and it happened to investors who found the deal through a platform.
So is our data actually representative of real estate syndication investing, or is it just measuring the deals nobody else wanted?
Here's what I can offer: we didn't only invest through CrowdStreet. Over roughly the same window, we also put money into about a dozen other real estate syndication deals directly with sponsors, through introductions from other real estate investors and friends. No platform, no marketplace, just relationships and reputation. The results were basically on par with what we got through CrowdStreet. Similar cash flow shortfalls. Similar capital calls. Similar hold periods that ran long.
That tells me the numbers above are a fair representation of real estate syndication investing broadly, not just a CrowdStreet problem. Adverse selection may be real at the margins. It wasn't the thing that separated our winners from our losers.
Real Estate Syndication vs. the Stock Market
For context on returns, if we'd just put that same money into a plain index fund (VTI, tracking the total U.S. stock market) at the same times instead, we'd have almost doubled our money by now. Almost 2x in the market, against 42% back and 2.5% a year in the syndications.
Did We Just Have Bad Timing?
There's a factor the numbers above don't separate out: timing.
We put money into all 11 of these deals in 2020 and 2021, when the Fed had rates at essentially zero, 0% to 0.25%. Debt was cheap, cap rates were compressed, and sponsors underwrote their projections assuming that would keep going. Then, starting in March 2022, the Fed raised rates by more than 5 percentage points in about 16 months, up to 5.25% to 5.5% by July 2023.
That's the environment nearly every one of our properties has had to refinance, sell, or operate in for the last 4 years. Higher rates mean higher cap rates, which mean lower property values, which mean sponsors either sell at a loss, hold and hope, or come back to investors with a capital call to survive. We've now seen all three play out across our 11 deals.
I know plenty of people who got into real estate syndications back in the 2010s, when rates sat near zero for years after the 2008 crash and appreciation did a lot of the heavy lifting. Their returns look a lot better than ours. I don't think that means they were better investors. I think it means they were investing at a different point in the rate cycle.
The problem is neither of us has the experience or knowledge to actually time something like this. We didn't know rates were about to spike when we wrote these checks in 2020 and 2021, and I wouldn't trust myself to call the next cycle either. It's one more reason why we rarely invest in alternative investments outside our own expertise. Even with a good sponsor and a good deal, you're still exposed to a macro environment nobody, including us, saw coming.
The Risks of Real Estate Syndication We Didn't See Coming
Below are some of the real estate syndication risks and lessons we've learned along the way:
We didn't, and still don't, have the knowledge or experience to tell the difference between a good and bad real estate investment. So while we pretended to pore over the deals and hum and haw about the projections, we really were just picking real estate deals randomly.
When evaluating real estate syndications, remember that what they're pitching you is the best case scenario. We naively assumed that what they were pitching was certain to be reality. As you can tell above, it is not.
Investing in real estate syndications locks up your money, sometimes way past the time that was originally pitched to us. There's no real way to pull your money out until the property sells, and that's not something we control.
When we invested, we thought that was it. But we didn't understand that sometimes an investment may need more money from investors, and the real estate syndication will do a "capital call," requesting existing investors to re-invest or risk getting diluted or pushed further down the waterfall. 3 of these deals have come back and asked us for more money on top of what we already put in.
Passive Income?
"Passive income" might be the hottest term in personal finance right now. Everyone wants it. Not enough people ask what "passive" actually means before they buy in.
Real estate investing spans a wide range of how passive it actually is. You can:
Buy and manage the property yourself. This is the least passive option. You're the landlord.
Go through a real estate syndication. I'd call this medium passive, and here's why it's not fully passive.
Buy a REIT. Based on our experience, this is the most passive way to invest in real estate.
Real estate syndications get sold to you as the passive option. Someone else finds the deal, buys the property, and manages it. You just collect a check. That's the pitch.
Here's why I don't think it's actually passive:
You have to research the investment and the sponsor before you write the check, and that should take real work. Skipping this step is how you end up in a bad deal, not how you end up passive.
You'll get updates every month or quarter on the investment. You can't just delete these. You have to actually read them to know if there's a capital call coming, an interest rate change, or anything else that affects your money.
You have to manage distributions and capital calls as they happen, plus the accounting to track it all across 11 different deals.
K-1s. Every syndication generates its own K-1, for every fund, every year, and ours span eight different states, each with its own filing requirements. You have to collect them, review them, and hand them to your tax accountant. Because real estate K-1s almost always show up after the federal filing deadline, you end up filing an extension every single year.
For all these reasons, I wouldn't call real estate syndications truly passive. That was actually one of the reasons we got into them in the first place. We thought this would be the passive one.
Is Real Estate Syndication Worth It?
So, is real estate syndication investing, CrowdStreet or otherwise, worth it? After 6 years, it's fair to take a first look at the numbers. But we won't really know the full results of our real estate syndication investing until every single one of these properties has actually sold. We're already about two years past the roughly 4 year hold period we were originally pitched, so take everything above with a grain of salt. It's a progress report, not a final scorecard.
I'll try to update this post once all 11 deals have sold. I'm not holding my breath for that happening in the next couple of years. But who knows.
I'm not saying don't invest in real estate syndications. Just go into them eyes wide open.