CRE property types have fundamentally different risk/return profiles. Multifamily behaves nothing like industrial. Office is not retail. Choosing the right asset class depends on your available capital, risk tolerance, and how much management you're willing to take on — or pay for.
This guide covers the five major property types Deal Scout supports, with a side-by-side comparison and a breakdown of what makes each one tick.
| Property Type | Typical Cap Rate | Risk Level | Mgmt Intensity | Min Investment | Best For |
|---|---|---|---|---|---|
| Multifamily | 5–8% | Low–Medium | Medium | $500K–$2M | Stable cash flow, recession-resistant |
| Office | 6–9% | Medium–High | Low | $1M–$5M | Long leases, credit tenants |
| Retail | 5–8% | Medium | Medium | $500K–$3M | NNN leases, location-driven |
| Industrial | 5–7% | Low–Medium | Low | $1M–$5M | E-commerce tailwind, long leases |
| Mixed-Use | 6–9% | Medium–High | High | $500K–$3M | Diversified income streams |
Multifamily properties — apartment buildings, garden complexes, and mid-rise residential — are the most popular CRE asset class for first-time commercial investors. Everyone needs a place to live, which makes demand durable across economic cycles.
Typical deal structure: Acquire with 25–35% down, finance with agency debt (Fannie Mae, Freddie Mac) or local banks. Stabilized assets trade at 5–7% caps; value-add plays (rent below market, deferred maintenance) can trade at 7–8% with upside.
Key metrics to watch: Cap rate, physical and economic vacancy, rent-to-income ratios, and expense ratio (operating expenses as % of gross revenue). NOI is particularly sensitive to vacancy here — each empty unit hits the bottom line directly.
Office properties range from suburban single-tenant buildings to downtown Class A towers. Post-2020, the sector is bifurcated: Class A in strong markets has held up; Class B/C has seen persistent vacancy pressure as companies downsize or shift to hybrid work.
Typical deal structure: 30–40% down, commercial bank or life company financing. Leases are typically 5–10 years with annual bumps (3% or CPI). Tenant improvement allowances (TIs) and free rent concessions are significant — factor them into your effective yield.
Key metrics to watch: Weighted average lease term (WALT), tenant credit quality, TI and leasing commission costs, and DSCR. Office buildings carry high fixed operating costs whether occupied or not.
Retail covers strip centers, single-tenant NNN properties (net-net-net leases), power centers, and neighborhood shopping centers. NNN retail — a fast food chain or pharmacy on a 15-year lease — is among the most passive CRE investments available. Strip centers anchored by necessity tenants (grocery, dollar store, medical) have held up well against e-commerce pressure.
Typical deal structure: 25–35% down. NNN single-tenant trades at tight caps (4–6%) due to low risk; multi-tenant strips at 6–8%. NNN leases pass taxes, insurance, and maintenance to the tenant — landlord has minimal ongoing obligations.
Key metrics to watch: Cap rate vs. lease term remaining (cap rate climbs as lease shortens), tenant sales-per-square-foot, anchor tenant health, and location demographics.
Industrial — warehouses, distribution centers, flex/light manufacturing — has been the strongest performing CRE asset class of the past decade. E-commerce growth and supply chain onshoring have created structural demand for logistics space that shows no sign of reversing.
Typical deal structure: 25–35% down, bank or CMBS financing. Leases run 5–15 years with rent escalators. Operating expenses are minimal — industrial buildings are simple structures with low maintenance costs relative to other asset classes.
Key metrics to watch: Clear height (ceiling height — limits what tenants can store), dock doors and truck court depth, power availability, and proximity to highways and ports. These physical specs determine tenant quality and lease rate more than almost anything else.
Mixed-use properties combine two or more uses — typically retail on the ground floor with residential or office above. They're common in urban and suburban infill locations where land is expensive and zoning supports density. The diversified income stream can buffer against single-sector weakness, but the complexity is real.
Typical deal structure: 30–40% down. Financing is more complex — lenders underwrite each use separately, which can complicate appraisal and loan sizing. Value-add mixed-use (underutilized retail, below-market residential) can offer strong upside if you have the operating expertise.
Key metrics to watch: Blended cap rate by use type (see cap rates by market →), lease rollover by component, management cost allocation, and zoning constraints on future use changes. DSCR should be calculated component by component — a weak retail component can drag the entire deal below lender thresholds.
Deal Scout analyzes any commercial property in seconds — cap rate, NOI, DSCR, comps, and a full investment summary. Any property type.
Try Deal Scout Free →Or get weekly CRE insights: