Investors looking to diversify their portfolios and grow their wealth often turn to real estate as an alternative investment idea. While there are many options for investing in real estate, Cadre offers a technology-driven way to invest in individual property or a select portfolio of commercial properties.
With an impressive track record and unique approach, Cadre offers an exciting option for investors seeking diversification. Read on to find out if Cadre could be the right choice for you.
Cadre provides accredited investors direct access to institutional quality assets, including Opportunity Zone investments. The company's minimum investment of $25,000 is among the highest on any real estate platform, but so is its historical return of 18.6% per year. Cadre is a good option for cash-rich high-net-worth investors looking to build a diversified portfolio.
- Powerful historical performance.
- A very selective research process.
- Possibility of liquidity through the secondary market of pictures
- Minimum investment: $25,000.
- For accredited investors only.
- Does not guarantee liquidity.
Cadre is a real estate platform for accredited investors that focuses on quality and quantity. Many industry competitors have more properties in their portfolios, but Cadre aims to generate better returns by taking a more selective approach and focusing on investing in the best properties in high growth markets.
The company was founded in 2014 and is focused on making commercial real estate a viable investment opportunity for those who might not otherwise be able to invest in these businesses.
Recruiters rely on technology, data and extensive manual due diligence to identify what they believe are the best opportunities. The company invests in apartment buildings, offices, hotels and manufacturing facilities.
While there are countless opportunities for those who choose to invest in real estate, Cadre stands out in a few key ways.
- They put their own money into the properties Rather than simply providing a platform for investment, Kader itself has a significant stake in the game. This helps provide confidence in the level of due diligence on specific transactions.
- They focus on opportunity zones Not all Cadre properties are part of opportunity zones, but many are, offering some potential tax benefits.
- They’ve produced solid historical returns The stock reports a historical rate of return of 18.6% per annum. Of course, this is no guarantee that future returns will be strong, but it does show that Kadr's approach has worked well so far.
An experienced team leads Cadre, which has attracted a wide range of institutional investors, including Andreesen-Horowitz, Khosla Ventures and Goldman Sachs.
Co-founder Ryan Williams serves as CEO. Investors include Mark Cuban and Joshua and Jared Kushner. Cadre has made headlines because of her ties to the Kushners and a potential conflict of interest related to Jared Kushner's former position in the Trump administration.
Cadre's holdings include an equity transaction value of more than $3 billion, and the company has distributed more than $168 million to investors.
Types Of Property Cadre Invests In
Cadre invests in institutional-quality commercial properties, including apartment buildings, office buildings, hotels and industrial buildings such as warehouses. If you invest in the Cadre Direct Access Fund (more details below), you will have a portion of the portfolio that can invest in all of these property types.
The due diligence and vetting process is part of how Cadre stands out from competitors and other real estate investment platforms.
Cadre relies heavily on proprietary technology to augment its investment and asset management teams to select, acquire and manage properties on its platform. Their data science team tracks 50 US metropolitan areas to determine the markets with the greatest growth potential, which they call the Cadre 15. In these markets, they conduct due diligence on the property, sponsors or deal processors, and the submarket in which the property is located; Their goal is to find properties that can achieve “excessive risk-adjusted returns” and they only invest in properties that meet very strict criteria.
Furthermore, Cadre co-invests in every closed deal on its platform. This is the case with many other competitors, especially crowdfunding platforms, which usually only serve as middlemen.
In June 2021, Cadre announced a strategic partnership with DisruptAD that will pave the way for Cadre to access more investors outside of the United States.
Investments In Opportunity Zones
Some of the properties in which Cadre invests are part of Opportunity Zones. The Tax Cuts and Jobs Act of 2017 encourages investment in census tracts designated for low-income individuals by providing significant tax incentives to investors. This is one approach that Cadre uses to maximize returns, although not all Cadre properties are in the opportunity zones. You can read more about staffing and opportunity zones here.
There is some controversy surrounding the opportunity zones. While the intent of the incentives is to help low-income neighborhoods, some question who actually benefits from these investments.
Investors in Opportunity Zones receive significant tax benefits, both short-term and long-term. One immediate benefit is the deferral of taxes on capital gains from other investments if those gains are invested in opportunity zones.
For long-term benefits, investors can eliminate 100% of the capital gains tax on the Opportunity Zone investment itself if the investment is held for at least 10 years.
For this reason, most Opportunity Zone projects have a longer goal retention period. Cadre provides more details on the benefits of Opportunity Zone investments on its website.
While it's clear investors are winning, critics question how much low-income residents are benefiting. The complaint is that wealthy investors receive benefits but are not required by law to provide affordable housing to those in need. For example, they may invest in higher-priced apartment complexes, making neighborhoods less affordable for people who have traditionally lived there. In other words, opportunity zones can promote gentrification.
Investors should consider their stance on Opportunity Zone investments as this is an important part of Kadri's business.
Cadre offers investors two different options to access their platform:
- Cadre Direct Access Fund. The Cadre Direct Access Fund allows you to invest in a diversified property portfolio rather than a single property. It's the easiest way to get started and takes no time to sift through features and choose the right option (Cadre does it all for you). The portfolio is approximately 50% multi-residential and 50% office, hotel and industrial.
- Deal-by-deal investing. For those who want more control over their own investment choices, deal-by-deal investing is available. You may have the opportunity to earn higher returns on your investments, but you won't get the loss protection of a more diversified portfolio.
The minimum investment is $25,000 regardless of which option you choose. All offers available through Cadre have gone through their vetting process.
By investing in the Cadre Direct Access Fund, you will be investing in the same properties available for investment under the agreement and vice versa. A certain percentage of each program is available for investments according to the arrangement, and the rest is allocated to the Fund.
Who Can Invest With Cadre
The shot is not necessarily suitable for everyone as it is only open to accredited investors. To qualify as an accredited investor, you must meet at least one of the following criteria:
- Have a net worth of at least $1 million (individually or jointly with your spouse), excluding your primary residence.
- Have an annual income of at least $200,000 (or $300,000 for joint filings) in the past two years, with the expectation of achieving the same level of income in the current year.
- You can learn more about these requirements in our list of accredited investor opportunities worth considering.
The platform is ideal for high net worth individuals looking for alternative investment ideas with the potential to generate superior returns that can outperform the stock market. It is also suitable for those who do not want to spend time researching specific investment properties.
Box investors also need to be comfortable with less liquidity, as it usually takes at least five years to recoup your investment. However, Cadre has created a secondary market that provides investors with liquidity every quarter.
Note: While many real estate platforms are only open to accredited investors, there are some notable exceptions. Fundrise, Groundfloor, and Realty Mogul are a few options for those who don't meet the requirements to be classified as accredited investors.
Investments made through Cadre, like other real estate platforms, are not considered liquid. As a rule, each deal is signed for a period of five to 10 years, but there is no specific limit on the length of your investment. Generally, you should invest only money in Cadre that you won't need for at least five years.
One of the ways Cadre differentiates itself from other similar platforms is by offering a secondary market for investors. Investors can sell Cadre in the secondary market during quarterly windows after waiting at least six months after the fundraising period.
While selling in the secondary market helps provide an option for investors who want or need to sell, Cadre does not guarantee liquidity during these windows and restrictions apply. As a result, investors should consider Cadre illiquid and should not rely on the ability to sell through the secondary market.
Equally important, your income may not match your target return if you sell on the secondary market, so this is not an ideal way to use the platform. People who buy in the secondary market will be looking for an investment at a discounted price.
In our research, we were unable to find publicly available data on investments sold in the secondary market and the results for those investors.
Potential Benefits And Risks
Let's summarize the key factors to consider if you're considering investing with Cadre.
Here are some possible benefits:
- Access to commercial real estate. Investing in large apartment buildings, offices, hotels and other commercial real estate is out of reach for most investors. The frame not only makes it possible, but also makes it easier. Cadre performs due diligence (although investors should always do their own due diligence) and allows people to invest hands-free.
- Intense vetting is carried out by Cadre. The company doesn't offer as many offers as other crowdfunding platforms because they are incredibly selective in the offers they do in their vetting process. This is especially valuable for those with no experience or knowledge of real estate investing.
- Potential for excellent returns. There's no denying that Cadre has an impressive track record with outstanding returns. Only four deals have been completed so far, but the historical yield of 18.6% will attract many investors.
But you should also be aware of some risks and disadvantages, including:
- Limited History. The staff has had outstanding results so far, but the company has only been in business for a few years. While Cadre has done very well so far, the experience is limited (same with many other real estate platforms and crowdfunding sites in general).
- Lack of liquidity.. Although Cadre offers the opportunity to sell your investment through their secondary market once a quarter, you should note that the investment is not liquid as they do not offer liquidity guarantees. You may not be able to sell your investment or you may get less than you think is fair.
- Limited options. HR focuses on quality rather than quantity. That's a big factor in its success so far, but it limits the number of deals available to investors.
Apart from the risks and disadvantages mentioned above, Cadre is an option for accredited investors only. Additionally, the current minimum investment of $25,000 is also a barrier for some.
To date, Kadr has invested in 40 properties. So far, only four have been fully implemented, while investments in other properties are still pending. The final results of those investments will not be determined until the property is sold.
However, all four completed deals exceeded their target performance. The company represents a total historical return of 18.6%, and the four completed deals range from 15% to 27.4%.
Here are the revenues reported by some other real estate platforms as of 2022 and for comparison purposes:
- Cadre: 18.6%
- CrowdStreet: 18.3% (see our CrowdStreet review)
- Multiple inheritance: 17.4%
- Strictly speaking: 8.4%
Cadre has so far delivered excellent results for investors through Cadre Direct Access Fund and deal-by-deal investments. Additionally, their vetting process has proven successful to date for anyone looking to invest in a real estate portfolio, meaning you don't need to be a real estate expert to generate solid returns.
Cadre Vs. Fundrise
Fundrise is one of the most popular real estate investment platforms, so it may be helpful to compare and contrast these two options.
Here are some ways they differ.
- Fundrise is open to all investors, while Cadre is only open to accredited investors.
- Fundrise offers a minimum investment of just $1,000 while Cadre's current minimum is $25,000.
- Fundrise’s fees are lower at just 1% per year compared to 1% upfront and 1.5% p.a. for HR.
- Fundrise offers different core plans (long-term growth, supplemental income, balanced investing), while Cadre's Shortcut Fund has one for everyone.
- Fundrise invests in a higher quantity of properties while Cadre is more selective.
- Cadre offers the potential for higher returns Fundrise has a historical return of around 10% and Cadre has over 18%.
Fundrise is a viable option for any investor and Cadre is out of reach for the average investor. However, those who qualify as accredited investors seeking to maximize returns may appreciate Cadre's strong performance to date.
See also: Arrived Homes is similar to Cadre and Fundrise with one big difference. it allows investments in single-family homes. Read our Arrived Homes review for details.
Costs And Fees
Knowing the costs and fees involved is an important step before making any investment.
Cadres charge investors different fees depending on the vehicle they invest in;
- 1%-3.5% upfront depending on the amount of investment in the HR Direct Entry Fund. If you invest $100,000, Cadre will take $3,000 as an upfront fee and the remaining $97,000 will be invested. This is a one-time fee that applies every time you make an investment.
- 1.75%-2% annual management and administration commission. Cadres charge up to 2.0% of net asset value each year, allowing them to manage their property portfolio.
These fees may seem high compared to traditional investments such as stocks, mutual funds, ETFs, or bonds. However, the costs are reasonable and in line with many other alternative investments. Remember, Cadre not only facilitates investment, but actually manages properties for several years before selling them.
It's also important to note that the historical earnings reported by Cadre are net of fees (ie, after deducting fees).
Cadre Review Summary
Real estate is an investment alternative that has been a cornerstone of the portfolios of many millionaires and billionaires. Commercial properties such as apartment buildings, office buildings and hotels offer great potential for investors but have traditionally been out of reach for most people.
Cadre is a platform that makes institutional quality investments available to individual investors. They have produced solid results so far, although their track record is limited due to the relatively small number of investments they have made to date.
There's a lot to like about Cadre's approach to using technology and data to make more selective investments, with the platform's biggest drawbacks being the requirement to qualify as an accredited investor and the high minimum investment of $25,000.
For those who qualify, Cadre represents an exciting investment opportunity due to its strong track record to date.
Of course, past performance does not indicate or guarantee future investment success, so be sure to do your own due diligence before investing.