How Are Apartments Different from Other Commercial Real Estate Investments?

Why Multifamily Real Estate May Be the Smartest First Move for New CRE Investors

If you’re considering diving into commercial real estate, there’s a good chance you’ve heard that multifamily apartment buildings are a smart place to start. But what makes apartments so different from other kinds of commercial real estate—like office buildings, retail centers, or industrial warehouses?

Here’s what you need to know.

Apartments Have Residential Tenants—Not Businesses

Unlike retail or office buildings, apartments serve as homes, not workplaces. This core difference makes apartment investments feel more familiar to most people. After all, everyone has lived in a home—but not everyone has leased an office suite.

Shorter Lease Terms

Most apartment leases are 12 months or even month-to-month. This allows you to adjust rents more frequently and keep pace with the market—something you can’t always do with long-term commercial leases locked in for 5-10 years.

Tenant & Landlord Laws That Protect Everyone

Apartments fall under specific state, local, and federal laws—many designed to protect both tenants and landlords. Programs like Section 8 and HUD guidelines are in place to keep housing accessible while supporting investors who provide quality housing.

Construction & Permanent Financing Is More Accessible

Multifamily properties often qualify for better construction and long-term financing terms—sometimes up to 35 years, with lower rates and even non-recourse options. Compare that to 10- to 20-year terms for most other commercial properties.

No Triple Net Leases

In most commercial real estate, tenants cover expenses like taxes and maintenance. Not so with apartments. As the owner, you typically cover property-level expenses while tenants handle their own utilities. This gives you more control over the asset.

Higher Leverage, Lower Down Payments

Apartments often require less money down—and that means greater leverage. FHA-backed loans may allow financing up to 92.5% of the purchase price. Plus, residential income properties enjoy a much shorter depreciation schedule (27.5 years vs. 39 years for commercial), offering attractive tax benefits.

Easier to Understand, Easier to Manage

For beginners, apartments are often the easiest entry point into commercial investing. The management is more straightforward, the tenant base is broad, and the learning curve isn’t as steep as it is with industrial, retail, or office properties.

The Bottom Line

Not all commercial real estate is created equal. Apartments offer a unique combination of accessibility, flexibility, and financing advantages that make them especially appealing to newer investors.

If you're looking to take your first step into commercial real estate, multifamily housing might just be the perfect fit.