How to Get Started in Commercial Real Estate Investing

Last updated: November 7, 2026  ·  By Brandon Lehman, Managing Partner, West Hive Capital

Commercial real estate can look like a closed door to a first time investor. The options range from buying a building outright to owning a share in a public company. This guide lays out the main routes, explains the accredited investor definition and gives you a short list of questions to take into any conversation with a sponsor.

What Are the Main Ways to Invest in Commercial Real Estate?

The main routes are direct ownership, REITs, private syndications and funds, 1031 exchanges with tenants in common and partnerships. Each places different demands on your time and capital.

• Direct ownership. You buy, finance, lease and manage a property yourself or through hired managers. You hold the most control and carry the most responsibility.
• REITs. A real estate investment trust is a company that owns, operates or finances income producing real estate. Public REITs trade on national stock exchanges, which makes them easier to buy and sell.
• Private syndications and funds. A sponsor pools capital from several investors to buy one property or a portfolio. Investors are passive and rely on the sponsor. Our post on GP vs LP roles explains how that works.
• 1031 exchanges and TIC. A 1031 exchange lets an owner defer gain by exchanging into other real property. A tenants in common interest is one way to hold a share of a larger property.
• Partnerships. You can partner directly with an operator, for example in a co GP structure, where the investor holds a defined role beside the sponsor.

How Does a REIT Differ From a Private Real Estate Investment?

A public REIT offers daily liquidity and a broad portfolio, while a private investment offers a more focused strategy with limited liquidity. Public REITs trade on national stock exchanges, and REITs must pass along 90 percent of taxable income to shareholders. Private deals are different. Purchasers in a Rule 506(b) offering receive restricted securities, so you should expect to hold your interest for the full term. The two routes fit different goals.

How Do 1031 Exchanges and TIC Fit In?

A 1031 exchange is a tax deferral tool for owners who already hold real estate, and TIC is one way to hold replacement property. Section 1031 applies to real property held for productive use in a trade or business or for investment. The statute also sets deadlines: replacement property must be identified within 45 days of the transfer and received within 180 days. The IRS addressed fractional ownership as replacement property in Revenue Procedure 2002-22, and one summary notes that the maximum number of tenants in common permitted is 35. Check current guidance with your advisor. Work with a qualified intermediary.

What Does Accredited Investor Mean?

An accredited investor is a person or entity that meets financial or professional tests set by the SEC. Many private placements are available only to accredited investors. Under the SEC accredited investor definition in Rule 501(a), an individual can qualify with net worth over $1 million, excluding the primary residence, individually or with a spouse or partner. An individual can also qualify with income over $200,000, or $300,000 with a spouse or partner, in each of the prior two years. Holders of the Series 7, Series 65 or Series 82 license in good standing qualify as well. Certain entities qualify with more than $5 million in assets or investments, or when all equity owners are accredited. A Rule 506(b) offering can sell to an unlimited number of accredited investors but is limited to 35 investors who are not accredited in any 90 day period. If you want to understand the confirmation process, see our verify accreditation page.

How Do I Define My Goals, Time Horizon and Liquidity?

Start with three questions. Do you want income now, growth later or a mix? How many years can you leave the capital untouched? How much of your total net worth are you comfortable placing in a hard to sell asset? Private real estate typically ties up capital for years, so liquidity needs matter more than any projection. If you may need cash on short notice, a private deal is a poor fit.

How Do I Start Learning a Commercial Real Estate Sector?

Pick one sector and one or two markets and learn them thoroughly before you commit capital. Retail, industrial, office, multifamily and self storage each have different tenants, lease structures and risks. Read local broker research and visit properties in person. Talk to leasing brokers and track vacancy, rents and new construction in your chosen submarket over several quarters. Learn the vocabulary, including net operating income, cap rate, tenant rollover and the capital stack. Our investment thesis and acquisition playbook show how one operator frames neighborhood retail, and our post on how to invest in commercial real estate gives a broader view of why investors consider redevelopment retail.

What Questions Should I Ask Any Sponsor?

Ask how the sponsor is paid, what it invests alongside you and what happens when plans change. Good questions include the following.

• How is the sponsor paid, and are all fees disclosed upfront, and do they depend on property performance?
• How is the sponsor paid during the hold period?
• Does the sponsor invest its own capital in the deal?
• Can investors remove the sponsor, and what happens on a capital call that an investor does not fund?
• What reports will I receive, and how often?
• What is the exit plan, and who controls its timing?

Have a securities attorney review the documents before you sign.

FAQ: How Do I Begin Investing in Commercial Real Estate?

Do I need to be an accredited investor to invest in commercial real estate?
No. You can invest through a public REIT or buy property directly without being accredited. Many private placements, however, are open only to accredited investors, and a Rule 506(b) offering limits the number of investors who are not accredited.

What is the easiest way to start in commercial real estate?
A public REIT is typically the simplest entry point because it trades on an exchange and does not require direct property management. It offers a different experience from owning property or investing in a private deal.

How much time does private real estate investing require?
A passive investor in a private deal spends time on research before investing and on reviewing reports afterward. The sponsor handles day to day operations, so the investor is not managing the property.

If you are a family office, co GP or accredited investor who wants to learn more about how West Hive Capital approaches neighborhood retail, connect with our team.

About the Author

Brandon Lehman

Managing Partner, West Hive Capital

Brandon brings 20+ years of experience in retail real estate development and operations. He previously led projects with SCG West and oversaw the acquisition, renovation, and exit of Western Plaza in Rancho Palos Verdes. He focuses West Hive Capital on neighborhood strip centers in Southern California and metro Phoenix.

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This article is for educational purposes only and is not an offer to sell or a solicitation of an offer to buy any security. Any offering is made only through confidential offering documents to qualified investors.