Why CRE Offers Higher Returns Than Residential or REITs
developer
August 29, 2025
Commercial Real Estate
Unlock the potential of commercial real estate as a wealth-building vehicle.
Commercial real estate (CRE) refers to income-generating properties such as office buildings, retail centers, warehouses, and medical facilities. Unlike residential real estate, CRE tenants are typically businesses that sign long-term leases, cover more of the operational costs, and bring more stability to cash flow.
While REITs offer diversification, they often underperform private CRE investments due to fees, market correlation, and limited tax benefits. Direct investment in CRE—especially through platforms like Fund Momentum—offers access to institutional-grade opportunities with potential for greater upside and control.
According to JLL’s 2025 CRE Investment Outlook, investors are shifting away from retail-heavy strategies and toward “mission-essential” asset classes like healthcare, industrial, and specialized office.
Understanding Triple Net Leases, Cap Rates, and NOI
- Triple Net (NNN) Lease: A lease structure where the tenant is responsible for property taxes, insurance, and maintenance. This means investors enjoy more predictable income.
- Cap Rate: The ratio of a property’s net operating income (NOI) to its purchase price. A 6% cap rate on a $10 million property means $600,000 in annual NOI.
- NOI (Net Operating Income): Total income from the property minus operating expenses (excluding financing and taxes).
These metrics help evaluate risk and return when analyzing CRE opportunities.
The CRE Investor’s Guide to Equity, Debt, and Preferred Shares
Fund Momentum structures its offerings with flexibility, allowing investors to participate through:
- Equity: Direct ownership with participation in profits after debt is paid. Higher risk, higher reward.
- Debt: Loans to the project with a fixed return. Lower risk, no equity upside.
- Preferred Equity: A hybrid that receives fixed returns before common equity, with limited upside.
Each project clearly outlines its structure, distribution waterfall, and return profile so you can choose the right strategy based on your risk tolerance.
“Commercial real estate offers one of the most tax-efficient paths to building generational wealth.” —David, Fund Momentum Co-Founder
