Real Estate Investment Strategies for Accredited Investors in 2026

Commercial real estate investing means many things to many different investors. Multifamily, industrial, and other subasset classes bring different risk/return profiles. Different geographic markets across the U.S. (and across the globe) bring unique demand drivers, risks, and opportunities. Different types of business plans also bring their own unique risk/return dynamics, execution nuances, and asset profiles, which real estate investment professionals typically group into strategies. For the self-directed accredited investor, investing in commercial real estate involves choosing a strategy that aligns with your risk tolerance, liquidity needs, time horizon, and return goals. Accredited investors today can access a range of strategies within private-market real estate – from more conservative core investments to high-octane opportunistic deals – each with distinct risks and return potential. 

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In this article, we break down six major real estate investment strategies (core, core plus, value-add, buy-and-hold, opportunistic/distressed, and development), explaining the investment mindset, typical assets profiles, risk/return potential, and current market dynamics. We’ll also highlight trends in multifamily and industrial sectors, the two CRE asset classes currently available via Lightstone DIRECT. Finally, we will argue that “light” value-add strategies in industrial and multifamily are especially compelling today for self-directed investors.

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Let’s discuss commercial real estate investment strategies one at a time.

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Core Real Estate Investments

Approach & Assets: Core real estate investments focus on high-quality, recently built, stabilized properties that generate steady income with minimal effort. These are often Class A assets in prime locations – a fully leased modern office tower, a trophy multifamily high-rise, or a top-tier logistics warehouse with long-term credit tenants. Core properties are typically well-maintained, require little capital improvement, and boast high occupancies (90–100%). Investors in core deals prioritize high-quality bricks, top markets, solid rent growth, low cash on cash yields, and appreciation to drive returns. 

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Risk & Returns: Core investments carry the lowest risk of the major strategies, but consequently offer the lowest returns. They are often financed with modest leverage (~40–50% loan-to-value) to keep risk low. Expected IRRs for core assets generally fall in the high single-digits (roughly 8–10%). Values tend to be less volatile than other strategies and preserving capital even in downturns. For example, NCREIF indices show core real estate delivering stable returns with minimal drawdowns historically. The trade-off is that core deals won’t typically generate huge gains – they are about wealth preservation akin to an alternative to bonds.

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Current Market Relevance: In today’s macroeconomic environment, core strategies remain a safe harbor for conservative investors, but many are seeking a bit more yield. After the 2022–2024 market correction, core asset valuations have reset and cap rates are slightly higher, making entry points more attractive and income yields better than last cycle. However, investor appetite in 2025 has shifted somewhat away from pure core toward strategies with higher return potential. According to CBRE’s latest Investor Intentions Survey, only a minority of investors are focused solely on core deals, while nearly two-thirds are favoring core-plus and value-add strategies to achieve higher returns in the current expansion. Core assets are still highly relevant – especially for institutions and those looking to “buy-and-hold” through volatility – given the typical long-term horizon of most core investments, many accredited investors instead opt to allocate to slightly riskier buckets for growth.

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Multifamily/Industrial Focus: Core properties exist in every sector, but multifamily and industrial have been standout favorites for core investors. In 2025, multifamily remained the top target for investors by a wide margin (75% of investors surveyed plan to acquire apartments), and industrial/logistics is second (37% targeting). These sectors’ strong fundamentals (high occupancy and resilient demand) make them ideal for core strategies. For instance, vacancy rates in top-tier apartment communities are low and rent collections steady, providing dependable income. In the industrial space, mission-critical logistics facilities leased to quality tenants (e.g. an Amazon fulfillment center) fit core criteria and continue to see solid rent bumps even as overall industrial occupancy has cooled slightly. Core investors in 2026 are particularly focused on newer multifamily in supply-constrained markets and modern warehouses in major distribution hubs – assets that can be held long-term for stable yield. Even in the Midwest, traditionally considered a stable but slower-growth region, core assets are performing well. Chicago’s apartment market, for example, had an occupancy around 97% as of Q2 2025, with a relatively modest development pipeline (new units under construction equate to only a small fraction of existing stock). Such stable conditions underscore why core multifamily, across many regions, remains a cornerstone for income-focused investors.

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Core Plus Strategy

Approach & Assets: think of Core Plus is often described as core’s slightly more adventurous sibling – still focused on quality assets and income, but with an element of growth or improvement. Core-plus properties are typically well-located and mostly stabilized, but offer some “plus” factor that an owner can capitalize on. This might be a building that’s a bit older or under-managed, requiring light upgrades or leasing efforts to boost cash flow. For example, a 15-year-old suburban apartment complex with 95% occupancy but dated interiors and below-market rents would be a classic core-plus opportunity. By investing in minor renovations or improved management, the owner can increase NOI moderately. Likewise, an industrial warehouse that’s fully leased but perhaps to shorter-term tenants or with upcoming rollovers could be core-plus – it’s solid real estate, but with a value-uplift angle (re-tenanting, modest capital improvements, etc.). Core-plus investors still seek fundamentally good assets (often similar property types as core) but are willing to take on a bit more risk in exchange for moderately higher returns.

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Risk & Returns: Core-plus deals are considered low-to-moderate risk, sitting between core and value-add. They usually involve slightly more active asset management than core – e.g. handling some tenant turnover or capital projects – but far less risk than major redevelopment. Leverage usage is often in the mid-range (~50–60% LTV). Because of the incremental risk, expected returns for core-plus investments are higher than pure core. Investors typically target around 11% to 13% IRRs on a core-plus strategy. These returns come from a mix of ongoing income and appreciation (once the “plus” improvements are implemented and rents grow). Cash flow is meaningful, though slightly less predictable than core since occupancy or expenses might fluctuate during value-add efforts. In essence, core-plus offers a balance of stability and upside – “growth and income” in one package.

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2026 Market Relevance: Core-plus has gained significant popularity in 2026 as investors seek better yields without jumping to high-risk bets. In fact, along with value-add, core-plus is one of the two most favored strategies this year (per the CBRE study). The reasoning is clear: with interest rates having been elevated, purely core yields can appear thin, so many investors are willing to do a bit of extra work (or partner with sponsors who will) to bump returns. The current market cycle – which is transitioning from a correction in 2024 to a gradual recovery in 2025 – presents ample core-plus opportunities. Many properties that were high-flying “core” deals a few years ago now have value to be unlocked (for instance, an apartment building lease-up slowed by the pandemic might still have units to fill or rents to push). Investors are adjusting their strategies accordingly, aiming for those moderate risk/reward plays. CBRE’s 2025 survey noted that about two-thirds of investors prefer value-add and core-plus strategies now, reflecting this tilt toward mid-risk opportunities.

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Multifamily/Industrial Focus: In multifamily, core-plus often means slightly older Class B+ or A- apartments that need modernization. Given the continued housing demand, owners can renovate units and achieve higher rents relatively safely. Rent growth trends: National apartment rent growth has cooled from double-digits in 2021 to more normal levels (~2-4% annually in many markets), but that still supports the core-plus thesis: modest upgrades can capture this rent upside. In the Midwest, many apartment assets fall in the core-plus category – solid workforce housing or suburban communities with stable occupancy but room for improvement. These markets may not see the explosive growth of the Sun Belt, but they offer dependable tenant demand and often higher cap rates, giving core-plus investors a nice entry yield. On the industrial side, core-plus might involve acquiring a fully leased warehouse in a secondary market or a last-mile distribution facility where a few leases roll soon – providing a chance to mark rents to market (industrial leases signed 5+ years ago are often under-market now due to the e-commerce boom). Industrial fundamentals heading into 2026 remain favorable for such moves: although overall industrial occupancy is down ~300 bps from the 2022 peak, demand for well-located facilities is still robust and new supply delivery is slowing. Investors can buy a decent, income-producing industrial asset and trust that, with minor improvements or releasing, they can grow NOI. For instance, a Midwest logistics warehouse might have older lighting or need additional loading docks – relatively small enhancements that improve its appeal in a tight market. Core-plus thus continues to be a “sweet spot” for accredited investors: it combines quality real estate with actionable upside, a particularly appealing mix in the current environment of cautious optimism.

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Value-Add Strategy

Approach & Assets: Value-Add strategies entail acquiring and improving properties that have significant potential to increase in value. As the name implies, this real estate investing strategy means “adding value” through capital improvements and better management. After executing on the most significant aspects of the business plan, the operator can increase rents, occupancy, NOI, and ultimately the property’s value. One way to look at it: by boosting rents at the property, the investor can boost operating margin at the property – prevailing cap rates in the market will dictate the multiple this property can trade for, giving the investor a blueprint for appreciation. 

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A few examples may include: 

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• Acquiring a 1980s vintage apartment complex with worn interiors and renovating units and amenities to attract higher-paying tenants; 
• Buying a ‘90’s vintage industrial park in a solid market, but with functional barriers to occupancy; i.e. features of the property no longer serve the current typical tenant in the market. The value-add business plan may involve improved features (roof, HVAC, loading doors) and an aggressive leasing program to stabilize occupancy. 

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Sometimes value-add can mean re-tenanting a building from lower-credit tenants to higher-credit ones, or repurposing some space (like adding self-storage units or parking in an unused basement of a multifamily property, etc.). These projects require more intensive asset management, operational expertise, and often a few years of intensive cap ex to execute the improvements.

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Risk & Typical Returns: Value-add investing is generally thought of as moderate-to-high risk versus other real estate investment strategies. Unlike core or core-plus, a value-add property may have little to no cash flow at closing (for instance, if occupancy is low or a large percentage of the property’s square footage is offline for renovation). The investor assumes execution risk – the success of the project hinges on making the right improvements on budget and then achieving higher rents or occupancy afterward. Leverage is often higher (60–75% debt is common) to amplify returns, which also adds risk. Because of these factors, investors demand a significantly higher return potential for value-add deals – typically targeting mid-teens net IRRs to LPs. A successful value-add project can indeed achieve these returns through a combination of income growth (once the property is stabilized at higher rents) and capital appreciation (properties are worth more after improvements and lease-up). However, if things go wrong (cost overruns, leasing shortfalls, market downturn), returns can underperform or even turn negative. In short, value-add offers substantially greater upside than core/core-plus, but with correspondingly higher risk. 

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Not all value-add investments entail significant cap ex or vacancy risk. Sometimes referred to as “light value-add,” Lightstone often focuses on these opportunities, where we see an attractive combination of lower complexity, better near-term cash flow prospects, but with significant upside potential.  

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Current Market Relevance: Heading into 2026, current real estate cycle dynamics favor value-add investing strategies. After the pandemic and 2022 interest rate spike, commercial real estate asset values across many sectors and markets. Inflationary pressures and elevated interest rates challenged operating margins, prime conditions for value-add players to step in and recapitalize or reposition assets at a discount. Furthermore, the need for market-rate housing is as acute as ever. America faces a severe shortfall of rental units, and new construction is difficult to make pencil given the above factors and the relatively high volume of new class A supply, as the new starts from the prior phase of the cycle play out.  

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Investor surveys show value-add is a preferred strategy for a large percentage of institutional investors this year, as they seek higher returns while betting on continued economic expansion. That said, the appetite for value-add is a bit more specific now: PGIM notes that the uncertain economic environment has led some investors to scale back riskier plays in the short term, focusing on the best opportunities and strong geographies. In other words, while value-add is attractive, investors are being selective – targeting deals with clear upside in fundamentally solid markets (and being cautious on riskier sectors like CBD office). 

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The good news is that several trends favor value-add strategies in 2026:

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• Limited New Supply: After a construction surge in 2021-22, new development has pulled back. Globally and in the U.S., supply growth in previously fast-expanding sectors like apartments and logistics has slowed to historically low levels. In many markets, demand still exceeds supply, especially in the workforce and market-rate housing segment. So, renovating existing properties (instead of building new) is a smart way to meet excess demand, especially considering the time-to-market, and the magnified cost of capital in a higher rate environment for longer-dated development projects. Value
• Cap Rate Compression Potential: Property values in 2024 corrected, with some softening in multifamily and industrial cap rates. As the next cycle begins, there’s still plenty of room for additional cap rate compression in markets like the U.S. where values declined, including certain gateway markets that were his especially hard during COVID and/or when rates rose. There are plenty of opportunities for well-capitalized, experienced operators to acquire viable assets and execute value-add strategies until improved rent rolls can yield outsized gains when the market recovers.
• Operational Improvements: rapidly improving technology and evolving tenant demands are driving the need for upgrades, especially among older apartment stock. Many older buildings aren’t up to modern code or tenant expectations, which creates opportunities to add value by retrofitting and improving properties. For instance, upgrading an older apartment’s energy efficiency or an old warehouse’s layout can attract quality tenants willing to pay more. A highly scaled operator like Lightstone may be at an advantage with higher unit-count properties by leveraging economies of scale. For example, a solid vendor relationship and prior feedback from elsewhere in the portfolio may mean that Lightstone can secure volume discounts on upgraded appliances, and improve a large number of apartment units at a low cost-per-unit relative to the rental increase that these improvements may yield.
• Low Liquidity = Less Competition: There are fewer bidders for properties, allowing value-add investors to acquire assets below their intrinsic value. This attractive entry pricing can itself add immediate “paper value” if cap rates compress later.

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While tailwinds abound for well-positioned value-add operators, challenges still exist. Capital is more expensive than in the prior cycle, and not every market is thriving. For an individual LP investor evaluating opportunities, this is a critical moment to consider the breadth and experience of the GP.

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Let’s take a look at the state of play in value-add Industrial and Multifamily (the two asset classes Lightstone DIRECT focuses on). 

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• In multifamily, demand for rentals remains high (driven by demographic trends and high single-family housing costs). Many markets, including parts of the Midwest, have older apartment stock that hasn’t been updated in decades. Renovating units and adding amenities can significantly increase rents and value. Importantly, housing shortages in many areas create a safety net – even older Class B/C apartments have low vacancy. For example, Midwestern cities like Chicago or Columbus have thousands of legacy units in need of modernization, while their development pipelines remain modest (Chicago’s active pipeline is only ~2-3% of inventory). With occupancy in Chicago around 97% , a value-add investor can confidently renovate units knowing the demand will be there, and at higher rents. Nationally, apartment rent growth has slowed from the torrid pace of 2021, but it is still positive. 
• Even as supply increased, industrial fundamentals have benefitted from major macroeconomic tailwinds (e-commerce, supply chain reconfiguration, and now reshoring). While delivery of new inventory has increased through 2025, much of the new supply has been concentrated to large-format warehouses. Smaller and mid-size industrial facilities, or older warehouses in infill locations, present great value-add targets. They often have below-market rents or minor physical deficiencies (lack of modern sprinkler systems, limited clear heights, etc.) that can be addressed by smart value-add strategies. “Light industrial” properties (<200k sq. ft.) have outperformed larger warehouses in rent and occupancy growth since 2022, partly due to limited new supply serving local needs. A value-add industrial investor might buy an older 100,000 sf warehouse in a land-constrained metro, refurbish it (new roof, LED lighting, upgraded loading docks), and re-lease it at current market rents – taking advantage of the fact that modern tenants are seeking quality space and many older facilities are functionally obsolete. As Green Street noted, smaller-footprint industrial markets like Miami and Minneapolis have very tight conditions and are well-positioned to weather challenges , so improving assets in those markets can pay off. Even in logistics-heavy regions, there’s opportunity: some bulk distribution markets saw vacancy rise with new supply, but that means older vacant warehouses could be bought cheap and repositioned for new uses or last-mile distribution where demand is still strong.

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In summary, value-add is an attractive strategy in 2026, especially in multifamily and industrial. It does require careful execution and a good read on local market trends. Investors pursuing value-add deals today are often experienced operators (or partnering with experienced sponsors) who can navigate construction operations, local permitting, and market-specific leasing strategies. For accredited investors, accessing a value-add deal typically means investing passively alongside a GP. Irrespective of the asset class, be sure to understand the specific experience of the GP or the sponsor within the type of value-add strategy that is being employed. Done right, value-add offers the potential for high-teens returns. While individual LPs may not see the same type of projected net IRRs they saw in, say, 2021, typical returns for well-executed value-add deals are still compelling versus other asset classes, and by historical standards. In the conclusion of this article, we will circle back to why Lightstone DIRECT is targeting the “light value-add” strategy for both multifamily and industrial.

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Buy-and-Hold Strategy

Approach & Philosophy: Buy-and-Hold is a long-term investment approach where the investor acquires real estate and holds it for an extended period (often many years or even decades), focusing on long-term income and appreciation rather than quick resale profits. It’s somewhat unique on this list, as buy-and-hold is less about a property’s profile and more about the investor’s strategy. In practice, core and core-plus may be synonymous with a buy-and-hold approach: the investor intends to enjoy stable cash flow year after year and only sell when the timing is optimal (if ever). Some real estate investors will refer to a buy-and-hold investment colloquially as a “coupon clipper.”  The key element is a patient capital mindset. This strategy is often favored by high-net-worth families, generational real estate owners, and some institutions/endowments that seek wealth preservation and steady growth over chasing short-term gains. For an individual investor, close-ended income funds may offer a reasonable facsimile: an investment that returns predictable income, without necessarily presenting a finite term. 

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Risk & Return: The risk profile of buy-and-hold depends on the assets chosen – a buy-and-hold core asset is very low risk, whereas buying and holding a distressed property would be higher risk. However, generally buy-and-hold is seen as a conservative, wealth-building strategy. By not being forced to sell in the short term, investors can ride out market dips; real estate values have historically trended upward over long periods, so holding a good property for 10+ years greatly increases the likelihood of a positive outcome. On the other hand, this strategy requires a longer time horizon, and comfort with a highly illiquid position. 

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2026 Market Relevance: Depending on return objectives, leverage, and time horizon, any moment in the market cycle could be relevant for a buy-and-hold play. However, a period of elevated interest rates means that attractive immediate cash flow is not always easy to find. Certain markets may exhibit cap rate expansion over the past several years that make buy-and-hold strategies attractive in the near and long term. However, many projects that involve significant leverage will not pencil to attractive return dynamics for individual investors operating on a shorter timeframe.

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Opportunistic & Distressed Strategy

Approach & Assets: Opportunistic real estate investing is at the far extreme of the risk/reward spectrum. Opportunistic investors seek out complicated or distressed assets with the goal of transforming them and achieving outsized gains. This category includes projects like ground-up development in more speculative locations, major redevelopment, or conversion of existing properties (e.g. converting a centrally located, older vintage office building into apartments. Some operators make a business of acquiring distressed assets or loans out of foreclosure, seeking to employ specific experience and operational focus to uncover value. For the most part, opportunistic and distressed assets have little to no current income. 

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Examples: 

• Acquiring a half-empty office building to convert it into apartments, introducing atriums and rooftop amenities to make up for a lack of windows; 
• Buying a foreclosed hotel for pennies on the dollar with plans to renovate and rebrand it;
• Taking on complex environmental remediation to develop an infill mixed use and residential property

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Distressed investments overlap with opportunistic strategies, but they aren’t necessarily synonymous. “Distress” usually means the owner is in financial trouble (e.g. can’t refinance a loan) or the property’s performance has severely declined. In today’s cycle, there may be more and more distressed asset opportunities emerging as operators who took on debt in prior years have loan maturities coming due, and are now facing refinancing prospects in a higher rate environment.

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Risk & Returns: This strategy carries the highest risk in real estate investing. Many things can go wrong: construction delays, cost overruns, leasing/marketing fail to attract tenants, local demand drivers fizzle out. Opportunistic deals are heavily reliant on a successful exit (sale or refinance) after the value is created – and if market conditions shift (say, cap rates move unfavorably or financing dries up), the exit might not achieve the expected price. Leverage is often used aggressively (70%+ debt when available) to boost returns, although some very distressed deals might actually use less debt due to difficulty obtaining financing. Because the risk is so high, investors demand correspondingly high return potential. Opportunistic projects typically underwrite for IRRs above ~18-20%, and the most successful can yield well over 20% annually. However, opportunistic development deals and distresses asset strategies can entail a higher risk of significant loss of capital versus other strategies. Because of the added risk, GPs often command more aggressive promotes (the share of profit the GP is entitled to above a specified IRR threshold) and/or additional fees. Be sure to understand these dynamics, as well as the entire universe of risk factors, should you consider an opportunistic or distressed deal. 

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2026 Market Relevance: Today’s market is not without opportunity for distressed asset plays. On the other hand, higher input costs and capital costs make it very difficult to make complex opportunistic strategies pencil.  

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Distressed Spotlight: Distressed real estate opportunities often emerge in times of dislocation, following major economic shocks. We have had two such major moments of dislocation over the past decade: the outbreak of COVID, and the rapid rise of interest rates starting in mid-2022. In both cases, many operators took an “extend and pretend” approach – hoping conditions would improve before they were forced to liquidate. For many markets and sectors, this worked out following the pandemic. Gradually, though, a period of elevated interest rates, and maturing debt, is causes ripples of distress throughout CRE markets. 

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Much of the narrative still centers around office, where operators in many markets continue to face dwindling tenant demand. But even in otherwise healthy sectors there are owners in trouble due to debt maturity. For instance, a multifamily owner who took on a short-term loan that’s now coming due at twice the interest rate might be forced to sell – potentially at a discount if the property’s NOI hasn’t grown enough to support revised debt service costs. Opportunistic investors are scanning for these situations in multifamily and industrial as well. So far, industrial distress is minimal (logistics fundamentals are decent), but some highly leveraged deals from 2022 could be feeling pain. Multifamily rents peaked in 2021, but many markets became oversupplied by 2023, especially in Class A. Several of the Sun Belt markets that were the multifamily darlings of 2020-2022 are now facing occupancy or rent softness, potentially creating distressed asset opportunities. These could be targets for recapitalization by opportunistic investors who believe in the long-term story of those markets.

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Multifamily/Industrial Focus: Opportunistic strategies in multifamily might include things like: ground-up development of a new apartment community (taking on construction risk to meet housing demand); heavy rehabilitation of an older apartment building (far beyond a value-add “lipstick” renovation – e.g., gutting a historic building to its studs and rebuilding luxury units); or acquiring a non-performing loan secured by an apartment property at a discount, with the plan to foreclose and take ownership. In industrial, opportunistic plays could be: speculative development of a large warehouse project; brownfield redevelopment (taking an old factory site and developing modern logistics facilities); or buying a portfolio of vacant industrial buildings to reposition and lease up. One trend in industrial is development in emerging logistics hubs – some investors are building massive distribution centers in places like central Florida or tertiary Midwest cities ahead of demand, which is high risk but if the demand materializes, outsized returns may materialize.

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In summary, opportunistic and distressed investing is not for the faint of heart or the inexperienced. These strategies offer the highest potential returns in commercial real estate, but risk always goes hand-in-hand, especially at aggressive leverage. A wise approach for opportunistic real estate investors could prove to be focusing on fundamentally strong sectors (like residential or logistics) while waiting for idiosyncratic distressed entry points, rather than diving into structurally troubled sectors. For accredited investors, the prior cycle offers a cautionary tale. Some real estate investment platforms offered distressed asset or opportunistic deals alongside relatively unproven third-party sponsors, often employing aggressive leverage. A single-access-point marketplace of deals, including distressed asset opportunities, and ground-up development, may have given some investors a false sense of security: all available deals must have similar downside, backed by real collateral but certain of the deals offered much meatier returns. Experiences of some investors, on some platforms, have since told a different story. The bottom line: be sure to understand the risk factors, the operational capabilities of the GP, and the implications of leverage in any deal you invest in – but especially a distressed asset play or opportunistic development deal.

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Conclusion: Why “Light Value-Add” Shines Now (Multifamily & Industrial Focus)

Given the above strategies, many accredited investors are asking: Which approach makes the most sense in 2026? While each strategy has its place, current trends point to light value-add in multifamily and industrial as particularly compelling now. Light value-add refers to projects that involve moderate improvements to fundamentally solid properties – in other words, not full gut rehabs or risky ground-up developments, but rather upgrading and optimizing well-located assets that require relatively little cap ex and a relatively simple business plan to create value and boost NOI. This could mean acquiring a 90%-leased apartment property that needs $4k/unit in renovations, or a mostly-occupied small warehouse where adding new loading docks, installing LED lighting, and improving fire response systems can make units more attractive to the median tenant.

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This strategy broadly aligns with where the growth is (housing and logistics demand), takes advantage of market conditions (soft prices and likely improving cap rates), and manages risk by targeting income-generating assets.

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Lightstone’s Value Proposition: This is precisely the approach that Lightstone has honed and made accessible to accredited investors. Through Lightstone Direct, the company’s direct-investment platform, investors can deploy capital into curated multifamily and industrial deals that embody this light value-add philosophy. Lightstone focuses on high-quality assets – say a stabilized Class B apartment or a modern industrial facility – where it sees opportunity for operational or minor physical improvements to drive returns.

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To conclude, the picture in today’s market rewards those who can find the middle ground: balancing caution with opportunism. Light value-add in multifamily and industrial represents that middle ground – where nimble operators can capitalize on the enduring need for housing, or sectoral shifts in manufacturing and logistics. In 2026, Lightstone is focused on acquiring assets at an attractive discount to replacement cost with strong going-in yields. We seek to drive returns through light value-add strategies, focused on targeted capital improvements, and mark-to-market leasing strategies. Our approach prioritizes durable cash flow and downside protection, with multiple paths to value creation. With Lightstone DIRECT, accredited investors can capitalize on these opportunities in a particularly interest-aligned manner, with Lightstone contributing 20%+ of the equity in each deal.

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FAQ: Real Estate Investment Strategies

Q: What is a “core” real estate investment?

A: A core real estate investment is a low-risk strategy focusing on prime, stabilized properties that generate steady income. Core assets (like fully leased Class A buildings in top locations) require little active management. Investors expect modest but reliable returns (often ~8-10% IRRs ) primarily from rental income. Core investments prioritize capital preservation and are akin to bond substitutes in a portfolio.

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Q: How does core plus differ from core?

A: Core plus is similar to core in that it involves quality assets with good occupancy, but with an added “plus” – some upside potential through light improvements or better management. Core plus properties might be slightly older or not fully optimized, giving the owner a chance to increase cash flow (for example, through minor renovations or leasing). Risk is slightly higher than core, and so are returns (often ~10-13% IRRs). Think of core plus as core with a kicker: mostly stable income with a bit of growth.

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Q: What does value-add real estate investing mean?

A: Value-add investing involves buying properties that are underperforming and actively improving them to create value. These properties could have issues like low occupancy, outdated interiors, or management problems. The investor “adds value” via renovations, leasing efforts, or operational efficiencies, aiming to increase the property’s net operating income and market value. It’s a moderate-to-high risk strategy with higher return targets (often mid-teens IRRs). During the value-add process, cash flow might be low, but once the improvements are done, the property can be re-financed or sold at a profit. Essentially, value-add is about buy, fix, and profit, leveraging real estate expertise to turn around an asset.

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Q: Why are many investors interested in value-add and core-plus in 2026?

A: In 2026, investors are seeking better returns to outpace higher financing costs and inflation, which makes value-add and core-plus attractive. According to a CBRE survey, about two-thirds of investors prefer value-add or core-plus strategies this year . These strategies offer a balance of risk and reward – higher potential returns than pure core, but not as speculative as opportunistic deals. Also, market conditions (corrected property prices and improving fundamentals) provide an opening for investors to create value. For example, apartment and industrial demand remains solid, but some assets are mispriced or under-managed due to the recent market turmoil – perfect targets for value-add/core-plus strategies to generate gains as the market recovers.

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Q: What is an opportunistic real estate investment?

A: Opportunistic investments are the highest risk real estate plays, targeting situations of distress or major transformation. This includes ground-up development, heavy redevelopment, or buying deeply distressed properties. Opportunistic deals often have little current income and depend on a successful execution of a complex business plan (building a new property, leasing up a largely vacant building, etc.). Investors pursue them for the potential of very high returns (20%+ IRRs in a successful project ). Essentially, opportunistic investing is about big repositionings or creations – it’s high risk, high reward, and typically undertaken by experienced teams who can navigate development, construction, and leasing challenges.

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Q: What does “buy-and-hold” mean in commercial real estate?

A: Buy-and-hold is a long-term investment strategy where the investor plans to keep a property for an extended period rather than selling it quickly. The goal is to benefit from ongoing rental income and appreciation over time. Buy-and-hold investors often use moderate leverage and may focus on properties with durable demand (like housing or warehouses in good locations). The strategy is about steady wealth accumulation – by holding through market cycles, investors can ride out dips and capitalize on long-term growth. It’s commonly practiced with core and core-plus assets that generate stable cash flow, but any property can be buy-and-hold if the investor’s intent is long-term ownership.

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Q: Why is “light value-add” considered attractive now?

A: “Light value-add” refers to making modest upgrades to already-stable properties (as opposed to heavy construction). It’s attractive in 2026 for several reasons:

• Market fundamentals in sectors like multifamily and industrial are strong (high occupancy, decent rent growth), so improving a property can quickly translate into higher income without fighting against high vacancy or oversupply .
• Property values underwent a correction and cap rates are starting to compress again in 2026 , meaning if you buy now and improve an asset, you might benefit from both NOI growth and a favorable valuation environment upon exit.
• Light value-add carries lower execution risk than heavy redevelopment – projects are smaller in scope and quicker to complete, yet can still significantly boost a property’s appeal and revenue.
• Investors get a blend of income and growth: the property often yields some cash flow during improvements and much more after, making it easier to hold through any short-term volatility.

In short, light value-add lets investors capitalize on today’s opportunities (like discounted prices, solid demand) without the extreme risks of development or distress. It’s seen as a timely sweet spot strategy, which is why firms like Lightstone are focusing on it for their direct investment offerings.

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Q: How does Lightstone Direct differ from other real estate investment platforms?

A: Lightstone Direct is a sponsor-direct investment platform – meaning the platform is run by Lightstone, the real estate sponsor, and it offers deals directly to investors without middlemen. Key differences:

• No intermediary fees: Many crowdfunding platforms or fund aggregators charge extra fees. With Lightstone Direct, you invest straight with the sponsor (Lightstone), avoiding additional platform or broker fees . The fee structure is transparent and similar to institutional deals (typically an acquisition fee, asset management fee, and performance-based promote, but no double layer of promotes or carried interest to a third-party platform).
• Sponsor co-investment: Lightstone puts its own capital into each deal (usually at least 10% of the equity) . This co-investment is higher than the industry norm and aligns Lightstone’s incentives with investors – they succeed only when investors do.
• Focus on select deals: Lightstone Direct curates single-asset opportunities, primarily in multifamily and industrial, and often with a light value-add approach . Investors can choose deal by deal, rather than a blind pool, and know exactly what property they are investing in, with full due diligence materials provided.
• Track record & vertical integration: When you invest via Lightstone Direct, you’re investing with an experienced sponsor that has a long track record (over 30 years) and in-house teams handling development, construction, and management. This differs from some platforms that list deals from various third-party sponsors of varying experience. Lightstone’s vertical integration means it oversees the project end-to-end, potentially reducing execution risk.

In summary, Lightstone Direct offers access to institutional-quality real estate deals on a direct basis – combining the convenience of an online platform with the confidence of a well-capitalized sponsor who is alongside you in the investment. For accredited investors, it’s an opportunity to bypass the typical fund-of-funds or crowdfunding layers and invest more efficiently in attractive real estate opportunities.

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Q: What kind of returns can I expect from different real estate strategies?

A: Returns vary by strategy due to differing risk levels:

• Core: Lowest risk; returns often in the 8-10% annual range , mostly from income.
• Core Plus: Low-to-moderate risk; returns roughly 10-13% annually , a mix of income and some appreciation.
• Value-Add: Moderate-to-high risk; target returns in the low-to-mid teens (around 12-18% IRR). A successful value-add deal might exceed 15% if executed well.
• Opportunistic/Distressed: Highest risk; expected returns 20%+ IRR in many cases , given the substantial transformation involved. These can vary widely – some deals might aim for 25-30% if extremely risky.
• Development: Similar to opportunistic (actually a subset of it); often pro forma returns around 20% IRR or higher to justify ground-up risk.

Keep in mind these are general ranges. Actual outcomes depend on execution and market conditions. Also, these are project-level returns before any platform or fund fees – investing through certain funds might lower net returns to you. This is why a direct investment approach (with lean fee structures) can be beneficial, as it lets more of the project’s return flow through to the investor. Always evaluate the specific deal, the assumptions behind projected returns, and remember that higher returns come with higher risk and volatility.

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Q: How should an accredited investor decide which strategy is right for them?

A: It depends on your risk tolerance, time horizon, income needs, and expertise:

• If you prioritize capital preservation and steady income, core or core-plus might be best. These will likely deliver consistent dividends and lower volatility – good for someone who wants a bond-like investment and is okay with modest growth.
• If you want higher returns and don’t mind some hands-on activity (through a sponsor), value-add could be a fit. It’s suited for investors who are comfortable with moderate risk and a 3-7 year horizon for realizing gains. You should be prepared for possibly uneven cash flow (lower in early years, higher after improvements).
• For those who are very aggressive and experienced (or investing alongside experienced partners), opportunistic deals or development can be lucrative. But you must be able to withstand potential losses or long periods with no liquidity. This is usually a smaller portion of a well-diversified portfolio due to the high risk.
• Buy-and-hold isn’t mutually exclusive with the above – it’s more about your approach. If you have a long-term outlook, you might invest in a core or core-plus deal with the intention to hold indefinitely. Or you might do a value-add, then decide to keep the property for cash flow after adding value (turning a flip into a long-term hold). So decide if you want to be in and out of deals quickly or build a long-term real estate portfolio; that will guide whether you seek quick realization (opportunistic/value-add flips) or enduring assets (core/core-plus holds).
• Consider diversification too. Many accredited investors allocate some funds to each strategy to balance their real estate portfolio – e.g., some stable core investments for income, some value-add for growth, maybe a small opportunistic play for a shot at high returns.
• Lastly, think about alignment and access. Do you have access to quality deals in each category? Platforms like Lightstone Direct can provide access to institutional-grade core-plus or value-add deals. If you’re evaluating a specific sponsor or fund, look at their track record in the strategy they pursue.

In short, match the strategy to your financial goals and risk appetite. If uncertain, starting with core/core-plus to learn the ropes and then moving up the risk spectrum as you gain comfort can be a prudent approach. Always perform thorough due diligence or consult with a financial advisor familiar with private real estate before committing capital.

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Sources

1. PGIM Real Estate – 2025 U.S. Real Estate Market Outlook (May 2025): Analysis of core vs. higher-risk strategies in the post-correction environment .
2. CBRE – 2025 U.S. Investor Intentions Survey (Jan 2025): Investor strategy preferences (66% favoring core-plus/value-add) and top asset classes (multifamily #1 at 75% preference, industrial #2 at 37%) .
3. Origin Investments – Core, Core Plus, Value-Add, Opportunistic Definitions (Feb 2018): Return targets and leverage ranges for each strategy .
4. Green Street – “The Little Warehouse That Could” Market Insight (June 25, 2025): Industrial sector trends showing stronger rent/occupancy growth in smaller (<200k sf) warehouses vs. big-box, and overall occupancy declines since ’22 .
5. Newmark Research – U.S. Industrial Market Trends 1Q25 (May 2025): Industrial absorption leaders (e.g., Kansas City) and high vacancy in newly delivered warehouses (47% of 2024–25 deliveries vacant in 1Q25) .
6. Walker & Dunlop – Midwest Multifamily Market Update Q2 2025: Example of Midwest fundamentals – Chicago ~97% occupied, moderate development pipeline (~2-3% of inventory) supporting stable conditions .
7. CBRE Econometric Advisors – United States Cap Rate Survey H1 2025 (Aug 2025): Noted a ~9 bps decline in all-property cap rates in H1 and consensus that cap rates have likely peaked, signaling a turn toward compression .
8. Lightstone Direct – Platform Overview: Emphasizes focus on single-asset multifamily & industrial deals, no middleman fees, and substantial sponsor co-investment aligning with investors.