Many investors believe they must choose between high-risk-high-reward real estate strategies and ultra-conservative approaches that provide little growth. But Core-Plus real estate investing provides a strategic middle ground, offering both steady income and long-term growth.
It provides investors with stable, cash-flowing properties while allowing for moderate enhancements that increase value over time. This strategy is particularly attractive in today’s uncertain economic environment, where investors seek both security and strong returns.
In this article, we’ll break down how Core-Plus investing works, how it differs from other real estate investment strategies, and why more investors are choosing it as a smart, balanced approach to building wealth.
What is Core-Plus Real Estate Investing?
Core-Plus is a real estate investment strategy that targets properties that are already in good condition and generating rental income, but can be improved through things like better amenities or improved property management. These properties are typically located in strong, growing markets with high demand for rental units.
The goal is to increase the property’s income-generating potential while keeping the investment relatively low-risk.
Because these properties are already generating rental income, they provide steady income to investors. And because they don’t require major renovations—which require more upfront costs—small updates, like upgrading common areas or implementing operational efficiencies, are sufficient to increase the property’s value. When you combine their starting value with these improvements, Core-Plus properties appreciate in value over time, contributing to long-term wealth for investors.
Why More Investors are Choosing Core-Plus
Core-Plus offers a stable, cash-flowing option with the potential for moderate appreciation, making it an attractive strategy for investors who want to enjoy consistent returns without the higher risk associated with other strategies.
Growing Preference for More Stable, Low-Risk Strategies
According to a 2024 CBRE report, preference for lower-risk strategies like Core and Core-Plus increased from 27% in 2023 to 33% in 2024. As economic uncertainty looms, many investors are turning away from high-risk, debt-heavy investments and seeking strategies that offer greater security.
This shift is also evident in the growing share of investments going toward Core and Core-Plus properties. A 2019 McKinsey report highlighted a significant rise in these types of investments, with their share growing from 21% to 28% from 2014 to 2019. This shift shows that investors are looking for more stable income-generating opportunities without sacrificing growth potential.
Strong Demand for Multifamily Housing
One of the key drivers of Core-Plus’s success is the growing demand for multifamily housing. According to the National Multifamily Housing Council, the U.S. will need an additional 4.3 million apartment units by 2035 to meet the demand for rental properties. With this growing need, Core-Plus properties—often in high-demand urban and suburban locations—are perfectly positioned to benefit from long-term growth and stability.
How Core-Plus Differs from Other Real Estate Investment Strategies
Each real estate investment strategy has its own risk and return profiles, so let’s compare Core-Plus to other common strategies:
Core Investing: A Conservative Approach
With low risk and moderate returns, Core investments are in highly stable, fully-occupied properties in top-tier locations. Typically, there is not a lot of room for improvement since properties are already well maintained, which makes returns relatively steady but low.
Value-Add Investing: High-Risk, High-Reward
With a moderate-to-high risk level, Value-Add investments target properties that need substantial renovations or operational changes. The time and money needed for such improvements add more risk, but offer a greater value appreciation and higher rental income once completed.
Opportunistic Investing: The Highest-Risk Option
Opportunistic investments often involve ground-up developments or major renovations of distressed properties, meaning they often require large upfront investments and a long wait before returns begin to materialize. The higher level of risk brings a level of uncertainty with returns, making these investments much more volatile than Core-Plus.
Why Core-Plus is the Smart Choice for Many Investors
The Core-Plus strategy is an attractive option for those who want to avoid the high volatility and uncertainty of other investment approaches. Here are a few reasons why more investors are choosing Core-Plus as a more balanced investment:
- Lower Risk: Core-Plus properties are already performing well, which reduces the likelihood of major setbacks that are common with riskier strategies like Value-Add or Opportunistic.
- Predictable Income: Core-Plus investments are income-producing properties, meaning investors can count on steady cash flow from rental income.
- Potential for Growth: Even though Core-Plus investments are stable, they still offer growth potential through small improvements, making them a secure option for investors who want to see long-term appreciation.
- Aligned with Market Trends: With an increasing focus on stability and lower-risk investments, Core-Plus is becoming an increasingly popular choice for both institutional and individual investors alike.
Take the Next Step Toward a More Balance Investment Strategy
In today’s unpredictable market, it’s more important than ever to find an investment strategy that balances growth with stability. The Core-Plus approach is the smart choice for investors looking for steady income, long-term appreciation, and a lower-risk profile.
Take the next step toward smart investing by contacting our team to learn how our Core-Plus strategy can help you build long-term wealth while enjoying steady, passive income.
