Commercial real estate investments can look very different on the surface, but most deals follow recognizable patterns. Those patterns are defined by two factors: how returns are potentially generated and how sponsors plan to execute on the underlying asset(s).
Some investments target income from stabilized properties or contractual debt payments. Others seek asset appreciation through renovation, redevelopment, or ground-up development. These differences are commonly referred to as the investment objective. Execution risk tends to rise as business plans grow more complex — and more dependent on multiple factors and future outcomes aligning. Operating a cash-flowing apartment building looks very different from restoring a distressed property or developing one from the ground up. These differences are commonly referred to as the investment strategy.
Understanding these patterns can help investors assess what needs to go right, what could go wrong, and how much additional risk a given CRE offering may carry.*
This article breaks down each investment objective and strategy, offers concrete examples, and explains how key characteristics are typically understood across the spectrum.
Note: Designations “strategy” and “objective” are defined independently by Crowd Street. These designations may differ from the offering documents or common industry designations. For more details regarding the specific strategy and objective for a particular deal, reference offering documents.
Investment Objectives
Investment objectives are ordered by ascending potential risk, from those generally considered least risky to those considered most risky. However, it's important to note that all investment opportunities available through Crowd Street are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital.
Income
Seeking consistent cash flow from a strong, in-place tenant base or interest rate on contractual debt for the potential to generate returns, which typically have little to no dependence on asset appreciation.
Examples:
A fully leased industrial or multifamily property with stable tenants.
A senior loan secured by an operating property.
Key Characteristics:
Considered lowest risk relative to other objectives, since returns are driven by income already in place rather than changes the sponsor needs to execute.
The unique risks tend to be tenant credit, lease rollover, or borrower performance.
Growth and Income
Seeking moderate price appreciation while striving to generate cash flow in pursuit of a balanced return derived from both current income and asset appreciation.
Examples:
A stabilized apartment community with room for modest rent increases.
An office or retail asset with strong occupancy but under-market rents.
Light operational improvements that have the potential to improve margins or leasing efficiency.
Key Characteristics:
Considered moderate risk relative to other objectives, as the asset produces income from day one.
The unique risk is that part of the return depends on the sponsor executing improvements or benefiting from market tailwinds.
Growth
Seeking price appreciation due to physical and operational property improvements and favorable market conditions, with the majority of the return being dependent on the asset price at the time of future sale.
Examples:
A multifamily renovation where units must re-lease at higher rents.
A property with meaningful vacancy that requires lease-up.
Operational turnarounds that materially change the income profile.
Key Characteristics:
Considered higher risk relative to other objectives, as returns depend on assumptions around renovation costs, tenant demand, and exit pricing.
If improvements don’t translate into higher rents or occupancy, outcomes may fall short.
High Growth
Seeking high price appreciation through extensive improvement or development and favorable market conditions, with potentially the entire return dependent on the asset price at the time of future sale.
Examples:
Ground-up development projects.
Major redevelopments involving extensive construction.
Assets with limited or no current income.
Key Characteristics:
Considered highest risk relative to other objectives. Deals face layered risks: construction, entitlement, leasing, capital markets, and timing.
Delays, cost overruns, or weaker-than-expected demand can materially impact outcomes.
Investment Strategies
Investment strategies are ordered by ascending potential risk, from those generally considered least risky to those considered most risky. Debt and equity investment strategies cannot be straightforwardly compared. However, as noted above, all investment opportunities available through Crowd Street are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital.
Debt
Seeking consistent, contractual cash flow distributions from secured or unsecured loan(s) to potentially generate returns, which, typically, has little dependence on fluctuation in value of the underlying asset.
Examples:
A mezzanine or senior loan on a stabilized property.
Key Characteristics:
Considered lower volatility, but debt strategies can’t be straightforwardly compared to equity strategies (see examples below).
Downside protection depends on collateral value, loan-to-value ratios, and the sponsor’s ability to service the debt.
Core
Existing assets generally with little need for capital improvements, typically in major metros, with high occupancy, longer weighted average lease term (WALT), creditworthy tenants, and rents near or above market rate.
Examples:
An office or multifamily building in a major metro with long-term, credit tenants.
Key Characteristics:
Considered lowest risk among equity strategies within commercial real estate.
Core Plus
Existing assets with typically attractive occupancy rates, but with the potential to increase cash flow or property value through light improvements, operational efficiencies, and slight increases to the amount or quality of tenants, or rental rates.
Examples:
A well-leased apartment building requiring cosmetic upgrades.
Lobby renovations, paint, amenity refreshes, or modest rent optimization.
Key Characteristics:
Considered lower risk relative to other strategies, with some reliance on execution.
These assets are typically cash-flowing** throughout the hold period.
Value-Add
Projects requiring significant investment, improvement, and oversight to achieve goals, likely including interior and exterior renovations, operational efficiencies, leasing risk, increasing undervalued rents, and the likelihood of higher leverage.
Examples:
Older apartment communities undergoing unit renovations.
Properties with below-market rents that must re-lease at higher prices.
Assets with deferred maintenance or inefficient operations.
Key Characteristics:
Considered moderate to higher risk relative to other strategies, as success depends on multiple factors.
Cost control, tenant demand, and the ability to achieve projected rent increases after renovation are key considerations.
Opportunistic
Project could require heavy redevelopment, full development, or repositioning to reach its highest potential value. Other situations include distress, major tenancy issues, or other risks requiring drastic intervention from a new sponsor.
Examples:
Ground-up developments.
Office-to-residential conversions.
Distressed assets with major vacancy.
Retail or industrial properties being repositioned into entirely new uses.
Key Characteristics:
Considered the highest risk category relative to other strategies, as many things must go right for the business plan to succeed.
These deals often involve construction, zoning, leasing, and capital-markets risk simultaneously.
Multiple
An investment vehicle that employs two or more strategies, including Core, Core Plus, Value-Add, or Opportunistic. This approach typically seeks to capitalize on a range of market opportunities by enabling diversification across different investment strategies and risk profiles. Please see the offering’s ‘Strategy’ in the ‘Business Plan’ section of the detail page and the offering’s Private Placement Memorandum for more information.
Key Characteristics: Considerations vary based on allocation mix.
Putting It All Together
On Crowd Street’s platform, each offering is labeled by both an investment objective and investment strategy. Reviewing these together helps investors understand not just where potential returns may come from, but how much additional execution risk is embedded in the business plan.
Lower-risk strategies tend to rely on assets working largely as they already do. Higher-risk strategies generally depend on change — construction, leasing, operational improvement, or market shifts — and introduce more variables that can affect outcomes.
These categories are a starting point, not a substitute for deal-by-deal analysis. Investors should always review the specifics of each opportunity, including assumptions, timelines, capital structure, and risk factors, before making an investment decision.
{{ *Investment opportunities available through Crowd Street are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. }}
{{ ** ’Cash-flow’ or ‘Cash-flowing’ when used by Crowd Street in this context refers to investments in which current revenues cover all expenses and typically provide leftover money at the end of the month. This does not mean, however, that this will provide a distribution directly to investors or that the investment will continue to perform in this manner. Distributions are never guaranteed and investing in commercial real estate entails substantive risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. }}
