9 Commercial Real Estate Investment Structures Ideas In 2025

With an estimated $26 trillion tied up in US commercial properties, with roughly $11.7 trillion considered institutional-grade, it’s impossible to ignore the number of opportunities that these figures present.

The figures aren’t just big; they show a wide-open door for smart investors ready to step in. From our experience, those who know how to structure a deal stand to gain the most.

But with so many options out there, the challenge isn’t finding an investment. It’s choosing the right structure to get the most out of it.

This guide breaks down 9 essential commercial real estate investment structures that smart investors are using in 2025 to maximize tax benefits and generate serious passive income.

You’ll discover exactly how to choose the perfect structure for your situation, protect your assets, and potentially double your cash flow compared to typical residential real estate investments. Ready? Let’s start!

Short Summary

• Commercial real estate investment structures impact everything from control and returns to taxes and exit strategies.
• The STACK method helps investors align structure with capital, property type, risk tolerance, management role, and exit plan.
• Nine common structures include direct ownership, limited partnerships, joint ventures, REITs, and more—each with distinct pros and cons.
• Joint ventures and syndications are especially useful for scaling and pooling resources with aligned partners.
• Selecting the right structure helps manage risk, optimize returns, and maintain long-term investment flexibility.

What Are the Best Commercial Real Estate Investment Structures?

There’s no one-size-fits-all when it comes to commercial real estate investment structures. What works for one real estate investor might be totally off-base for another.

That’s why we lean on the STACK Method, a practical way to choose the structure that fits your goals, risk tolerance, and available resources.

Let’s break it down.

Scrutinize Your Capital Resources

Before anything else, figure out how much capital you can realistically put into the deal. Use this guide about individual funding options if you aren’t sure.

We’ve seen plenty of newer investors dive into a real estate investment headfirst without fully knowing their capital limits.

One case had a group looking at a value-add office property but ended up stuck mid-renovation because they hadn’t planned for a higher loan balance and unexpected costs.

Here’s what we recommend:

• Start with what you can bring in: your own investment capital.
• Then look at debt capital options like bank loans, private lenders, or even seller financing.
• If you’re planning on raising capital from other investors, think through who you’re pitching to. Are they friends, family, or accredited investors? Each has different expectations and limits.
• Use those numbers to calculate your optimal capital stack: equity, preferred equity, and debt.

This helps set realistic expectations and guides your choice of deal structure.

Target The Right Property Type

Your investment strategies should line up with the commercial property you’re targeting. Each one comes with its own quirks.

For instance, a retail center may need a structure that accounts for variable tenant risk, especially if you’re relying on net lease income. Compare that to office buildings, which usually have longer leases but higher upfront capital needs.

In one example, a team opted for a joint venture on a flex-space property with a local operator. They split roles and returns in a way that worked because the structure matched the needs of the asset and the market.

Before buying any investment property, ask:

• What kind of due diligence is required for this asset type?
• Are there value-add opportunities that require more capital?
• Which commercial real estate deal structure gives you flexibility for tenant changes, build-outs, or renovations?

This step matters. Structure follows property, not the other way around.

Analyze Risk-Return Profiles

Some folks want passive income with minimal management. Others are fine taking on more risk for higher returns.

Let’s say you’re looking at a preferred equity structure that offers a fixed return but no big upside. That’s great for someone who just wants steady cash flow and protection in a downturn.

However, if you’re aiming for higher net operating income and don’t mind ups and downs, common equity in a real estate project might suit you better.

Here’s how we weigh things:

• If credit risk is a concern, focus on stable tenants and conservative leverage.
• If you’re chasing appreciation, consider long-term holds with equity investment potential.
• Use return metrics like cash flow, IRR, and equity multiple to compare options.

Remember to always factor in how structure affects financial performance over time, not just day one.

Choose Your Management Role

Are you hands-on or happy to step back?

If you want control, direct ownership or a general partner role in a limited partnership gives you full say, but also more management responsibility. Passive setups like Delaware Statutory Trusts or syndicated deals let you ride along without lifting a finger.

We saw one group structure their deal so that local operators handled property management, while the investors got quarterly updates and checks. It worked because responsibilities were crystal clear.

Ask yourself:

• Do I want to be active or passive?
• What’s the right structure for passive investors like me?
• In a joint venture, how are decision-making powers split?
• How does this align with my time and skill set?

If you’re working with limited partners, make sure roles are legally defined through your legal entity docs to avoid disputes later.

Know Your Exit Strategy

You don’t make money until you exit, or refinance.

The way you structure your deal can affect everything from how easily you sell, to what kind of tax advantages you can tap into.

For example, those using a 1031 exchange might lean toward fractional ownership vehicles like Delaware Statutory Trusts, which allow easier transitions into a replacement property.

We’ve seen structures with planned exits at five to ten years, which helps investors know what to expect from day one. Also, how profits get split at the end, aka your profit split or carried interest terms, should be locked down in writing early.

When planning your exit:

• Clarify how liquidation works: who gets paid first?
• Look at sale-leaseback options if you want to hold the asset in a new way.
• Structure your deal so refinancing doesn’t cause tax headaches.

Thinking through the exit now helps you avoid scrambling later.

9 Commercial Real Estate Investment Structures You Need to Know

Understanding how each structure works can help you match the right setup to your goals, team, and timeline. Below are nine of the most common commercial real estate investment structures, along with tips on when each might be a good fit.

1. Direct Ownership Structures

This one’s straightforward. You own the commercial real estate property directly, either on your own or with a partner.

• You make all decisions about the property: leases, renovations, financing, everything.
• You benefit from tax deductions like depreciation, mortgage interest, and operating expenses.
• There are options like fee simple ownership, where you own the land and building outright, or ground leases, where you lease the land but own the improvements.

We’d usually suggest this for experienced investors with strong capital reserves. You carry more risk but gain full control.

2. Limited Partnership Structures

This structure splits control and capital between two types of players: general partners (GPs) and limited partners (LPs).

• GPs handle the business plan, operations, and management responsibility.
• LPs provide most of the investment capital and stay passive.
• You’ll often see waterfall structures, returns flow first to LPs at a preferred return, then the rest is split.
• Carried interest or a promote lets the GP earn more once performance hurdles are hit.

Say you’re raising $5 million to redevelop a mixed-use building—this setup allows you to bring in passive capital without giving up full control.

3. Fractional Ownership Vehicles

Want partial ownership without full operational duty? That’s where fractional ownership comes in.

• A Delaware Statutory Trust (DST) allows for 1031 exchange eligibility while keeping the deal passive.
• Tenant-in-Common (TIC) ownership gives you direct title to a share of the property but with shared decision-making.
• These structures are governed under Delaware law, which provides strong asset protection rules.
• Minimum investments typically range from $25K to $100K, depending on the offering.

We’ve seen DSTs work well for those looking to retire from active management and roll into steady income with low stress.

4. Joint Venture Partnerships

A joint venture (JV) is a custom partnership between two or more parties that bring different strengths to the table.

• One partner may bring capital, while the other brings experience or local market expertise.
• Profit splits can be negotiated based on what each side contributes.
• It’s a great way to get into larger deals by teaming up.
• Make sure to define control rights and decision-making protocols clearly from the start.

Picture this: one group contributes $3M while the other oversees construction. They split profits 70/30 but share risks and upside.

5. REITs And Publicly Traded Options

If you’re after liquidity and simplicity, a REIT might be more your speed.

• Public Real Estate Investment Trusts (REITs) allow you to invest in commercial real estate through the stock market.
• You can also go private with non-traded REITs, but those typically require a longer hold period.
• With UPREIT structures, property owners can contribute real assets tax-deferred and receive operating partnership units.
• REITs must pay out 90% of income as dividends, which appeals to income-seeking investors.

We’ve seen REITs work well for folks who want real estate exposure without owning buildings directly.

6. Debt Position Structures

Investing through the debt side of the capital stack is another route, especially if you want fixed income.

• Mezzanine debt sits between senior loans and equity. It offers higher yield, but slightly more risk.
• Some invest in real estate debt funds, which diversify across many loans.
• You’re not building equity, but you are generating consistent income.
• Make sure to evaluate loan-to-value (LTV), covenants, and the quality of borrower underwriting.

These options work well for those wanting predictable returns and downside protection.

7. Preferred Equity Structures

Sitting between debt and common equity, preferred equity offers a unique blend.

• Investors receive a fixed preferred return, and may also share in upside if structured properly.
• You get paid before common equity holders during distributions or liquidation.
• It’s less secure than debt but often comes with structural protections like covenants or oversight rights.
• Terms usually include a set return rate and clear timelines for exit.

Preferred equity is often used in recapitalizations or bridge funding, especially when a sponsor needs short-term capital without giving up control.

8. Syndication And Crowdfunding Platforms

Thanks to tech, real estate syndication has become more accessible to everyday investors.

• Crowdfunding platforms pool capital from multiple investors into one real estate project.
• You can start with low minimum investments—some platforms go as low as $1,000.
• As a passive investor, your job is to review the offering memorandum and monitor updates.
• Make sure the sponsor follows proper SEC rules for raising capital under Regulation D or A+.

These platforms are ideal for investors who want a foot in the door without handling the day-to-day grind.

9. Tax-Advantaged Investment Structures

Smart structures can lower taxes and boost long-term gains.

• Opportunity Zone funds defer capital gains and offer potential tax forgiveness if held long enough.
• Sale-leaseback agreements let property owners unlock equity while staying operational in the space.
• 1031 exchange compatibility is crucial if you’re planning to swap properties without triggering taxes.
• All this fits into broader tax planning strategies for growing wealth while keeping Uncle Sam at bay.

These structures make sense for those thinking long-term, especially if you’re aiming to pass down wealth or optimize retirement income.

​​What Is A Commercial Real Estate Deal Structure?

Let’s break it down simply: a commercial real estate deal structure is how a property investment is set up, both legally and financially. It defines who owns what, who makes decisions, and how profits are split. 

Without the right structure in place, even the best property can turn into a headache.

Here’s what goes into most deal structures:

• Ownership type (direct, joint venture, syndication, etc.)
• Capital stack positioning (equity, debt, preferred equity)
• Profit distribution models, like waterfalls or preferred returns
• Tax treatment, especially with things like 1031 exchanges or depreciation
• Management responsibility, voting rights, and exit strategies

For instance, in a stabilized Class B office building deal, the structure might include a limited partnership with a 70/30 split between limited partners and the general partner. The LPs might get a preferred return of 8% before the GP shares in the upside.

Choosing the wrong setup can slow deals, hurt returns, or trigger unexpected tax consequences. An unfair equity split can cause tension between partners after a refinance.

Getting the structure right from day one sets the tone for the entire investment lifecycle.

How Can Joint Ventures And Syndication Benefits Transform Your Real Estate Investing?

There’s a reason joint ventures and real estate syndication models are so popular. They make it possible to scale into bigger, better opportunities, even if you’re not swimming in capital.

These structures allow you to combine strengths and spread risk. Here’s how they help:

• Joint ventures match capital providers with experienced operators
• Syndications let multiple passive investors pool funds under one managing sponsor
• Both structures unlock access to larger properties or more complex value-add deals
• You can invest passively or actively, depending on your goals and experience
• They’re both supported by legal frameworks that define roles, risks, and returns

Say a group of investors is eyeing a $12M multifamily repositioning in a secondary market. Rather than go solo, they form a joint venture where one party brings the capital and the other brings the development know-how.

Their agreement lays out control rights, a promote structure, and a waterfall model for sharing profits after hitting key return hurdles.

In another scenario, a syndicator might raise $3M from 30 investors using a Regulation D 506(b) offering, with a preferred return of 7% and a split on upside gains.

Both setups open the door for investors to get into commercial real estate without needing to manage properties or raise massive funds solo. That’s the real power: collaboration meets scalability. When structured right, they let everyone win.

Comparing Common Structures For Real Estate Investment Companies

When you’re setting up or investing through a real estate investment company, the structure you choose shapes everything, from liability and taxes to fundraising and decision-making.

The right setup not only supports your growth, it helps you avoid a ton of legal and financial headaches later.

Here’s a breakdown of the most common structures, along with the pros and cons of each:

LLC (Limited Liability Company)

Ideal for: Small to midsize real estate teams looking for flexibility

• Limits personal liability for investors and managers
• Allows pass-through taxation (income passes to owners, avoiding double taxation)
• Easy to manage compared to corporations
• Can own multiple properties under one entity or use a series LLC
• Works well with joint ventures and syndications

But: Some states charge hefty franchise fees or don’t recognize series LLCs.

C Corporation

Ideal for: Large firms aiming for institutional capital or going public

• Great for reinvesting profits without distributing them
• Easier to issue stock to raise capital
• Helps with long-term planning and scaling

But: Comes with double taxation: corporate profits and shareholder dividends are both taxed.

S Corporation

Ideal for: Small companies that want tax benefits with a corporate structure

• No corporate tax; income passes through to shareholders
• Offers some protection from self-employment taxes

But: Can’t have more than 100 shareholders, and only U.S. citizens or residents can invest.

LP (Limited Partnership)

Ideal for: Structured investments with passive limited partners

• Clear split between management (general partner) and investors (limited partners)
• Preferred for commercial real estate investment structures involving outside capital
• Often used in development projects and fund-style investments

But: General partners carry liability unless wrapped in an LLC.

REIT (Real Estate Investment Trust)

Ideal for: Investors seeking liquidity, diversification, and stable income

• Must pay out 90% of taxable income as dividends
• Offers exposure to real estate without owning property directly
• Public REITs are traded on stock exchanges; private REITs have limited liquidity

But: Tight regulatory requirements and limited tax flexibility.

Many midsize firms start with an LLC and later build out separate LPs or C Corps as they grow. It all comes down to how much control you want, how you plan to raise funds, and what your exit strategy looks like.

If you’re eyeing a long-term buy-and-hold portfolio with limited partners, the LP/LLC combo is a classic approach. If you want passive income and don’t mind less control, investing through a REIT or syndication might be a better fit.

Choosing the right structure, more than just a legal formality, is a strategic move that can unlock financing, attract partners, and protect your interests.

Final Thoughts

Choosing the right commercial real estate investment structure is about making sure your deals actually work for you and not the other way around. It’s not just legal paperwork.

There’s no one-size-fits-all setup, and that’s okay. What matters most is knowing your capital, goals, and role in the deal, then building around that. If you’re serious about growing your portfolio or just need help picking the structure that fits, take the next step. Check out our homepage and see how we can help you invest smarter.