Why institutional investment strategies look different at scale

Commercial real estate investment strategies are the approaches investors take to buy, operate, improve, and sell property in order to generate returns. Four standard categories exist: core, core-plus, value-add, and opportunistic. These strategies range from stable income and lower risk, to heavier execution at higher potential returns.

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A large part of which commercial real estate investment strategies an investor adopts comes down to risk tolerance. 

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For a single-property buyer, risk tolerance is personal: how much can you afford to sink (and lose) in one deal? For an institutional buyer, risk is spread across five to ten live bids at once. 

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While spreading risk across a pipeline doesn’t automatically raise a firm’s overall risk appetite, it changes what any one bid can absorb. When one failed bid or one forfeited deposit barely moves the portfolio, that's diversification doing its job.

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That kind of scaled approach also changes what commercial real estate investment strategies optimize for. 

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It’s no longer about chasing the single highest return on investment on an individual rental property. Institutional investors prefer seeing steady rental income from multifamily properties to cover operating expenses while betting on capital appreciation.

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For institutional investors, a capital efficient CRE acquisition strategy keeps working capital free to bid on the next opportunity while pending deals go through due diligence.

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The institutional investors who can post multiple deposits fast are best placed to capture a 15-20% jump in total sales volume, forecasted by CRE firm Colliers, as institutional capital returns to the market. But juggling multiple bids simultaneously – and posting a strong deposit on each – can quickly stretch resources. 

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It explains why institutional buyers are building more flexible capital structures across a wider mix of deal sizes, as consultancy Deloitte's 2026 CRE outlook shows. 

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David Hirschfeld, partner at Sahara Investment Group, shares his experience. “EMD financing is a capital efficiency play, not just a liquidity tool. When we were underwriting acquisitions through Fiume Capital's direct investment platform, freeing personal equity from deposit obligations meant we could simultaneously pursue multiple targets without concentration risk.”

6 common institutional commercial real estate strategies at scale

 The first four strategies are standard property-level strategies. Because you're spreading capital across multiple assets, the last two strategies work at a portfolio level.

1. Core

Core investments are fully leased, high-quality assets in prime markets, bought for steady rental income. This type of competitive asset carries minimal risk at lower target returns. J.P. Morgan estimates core real estate to generate an average 8.2% annual return over the next 10-15 years. 

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Deposit exposure on core assets is low for multi-bid buyers: diligence rarely causes surprises, so bids close more often and deposits spend less time at risk. The downside is that deposits sit on large, competitive deals.

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2. Core-plus 

Core-plus buys similar stable, income-producing assets but with a small upside like light renovations, better management, or a lease-up. They’re more management-intensive and slightly more exposed to market shifts than core. Return targets lie between core and value-add investments.

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Compared to core assets, deposit exposure rises modestly: renovations and shorter leases add diligence checks, so capital sits in escrow a little longer.

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3. Value-add

A value-add strategy targets poorly managed or transitional properties where renovations, repositioning, or lease-up can lift net operating income. Risk is moderate to high due to heavy upfront costs and greater sensitivity to the market. J.P. Morgan estimates value-add assets to generate an average 10.1% annual return. 

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Capex and vacancy questions stretch diligence, so multi-bid investors should count on deposits staying in escrow longer on every parallel bid.

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4. Opportunistic

Opportunistic deals cover ground-up development and distressed assets in high-growth areas. They offer the highest potential return but sit at higher risk – as they’re exposed to market volatility, development risk, and financial uncertainty. The opportunistic target return is 10-16%, per the Wharton School of the University of Pennsylvania.

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Construction unknowns and distress factors mean more bids fall away or need extensions, so deposit exposure per bid is the highest.

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5. Portfolio diversification across asset classes

Spreading capital across office, retail, industrial, and multifamily deals means one underperforming submarket doesn't tank your portfolio. It's the same bid-spreading logic covered above, applied across property types instead of just deal count.

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Institutions also decide, deal by deal, how much of each acquisition to fund with debt versus equity, then rebalance that across the pipeline with deals running their own EMD loan for commercial real estate, so no single financing source is drained.

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6. The multi-bid acquisition strategy

Running five to ten live bids at once can improve the odds of securing one or two acquisitions, provided the buyer can fund earnest money across each offer without freezing the capital any one deal needs. That's the strategy the rest of this guide breaks down in full.

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How institutions choose a strategy

Institutions don’t pick a single commercial real estate investment strategy but build a customized portfolio around the return target, risk tolerance, liquidity needs, and capital available across the acquisition pipeline. 

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They then combine strategies for different reasons: protecting downside, producing income, or creating more upside, all the while keeping enough capital free to act on the next opportunity.  

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Kaj Lea, Managing Director of the Pacific Northwest and Central Region for Commercial Term Lending at Chase, illustrates how an institutional portfolio might aim to generate a mix of stable income from core and core-plus investments and capital appreciation from value-add and opportunistic investments. “These investments offer a balance between stability and growth potential, with opportunities for minor improvements to enhance value.”

How do institutional buyers fund earnest money on multiple simultaneous deals? 

The majority of CRE investors self-fund deposits with available cash or through financing tools built for one deal. Institutional buyers raising capital for commercial real estate and bidding on multiple commercial properties at once can’t follow that playbook. They need cash on demand.

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Let’s say you’re running an acquisition pipeline that’s diversifying your portfolio across different property types: an office building at a purchase price of $18M, a retail center at $12M, and a multifamily property at $30M. Financial analysis of each deal alone takes time, and capital tied up in one deposit isn't free for the next commercial property in the pipeline. The result is that the whole acquisition pipeline slows down. 

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Financing options might exist to bridge cash flow gaps, but access isn't evenly distributed. “The equity capital markets remain constrained, primarily for mid-market fund sponsors, not for the Big Five, Blackstone, Brookfield and the other largest managers,” says Howard Grossman, senior counsel at Cozen O'Connor, in comments to Connect Money.

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For sponsors below that top tier, equity shortage is curbing deals. Bidding on multiple earnest money deposits at once is stretching their capital thin, and it’s keeping them from moving on the next deal.

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It’s this capital constraint that Duckfund's soft deposit financing is built to solve, covering deposits from $25,000 up to $20 million with no collateral. 

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Rather than drawing on the same capital pool for every bid, institutional sponsors can fund each earnest money deposit independently, deal by deal, freeing up capital for whatever comes next in the pipeline. 

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What happens to earnest money if you win more than one bid?

Winning more than one bid means that the earnest money deposits have gone hard and are legally binding. You have to close each deal, or forfeit that money – even if you only wanted one of the properties. That exposure compounds with every additional bid you win. 

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Earnest money for multiple offers going hard simultaneously is the risk you carry running institutional commercial real estate investment strategies with a scaled pipeline. 

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Multiple offers are meant to create optionality – the right to walk from three deals while closing on one – but that optionality can turn into a liability when multiple earnest money deposits go hard at once.

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Due diligence exists to catch this early: property values, title search, zoning laws, local regulations, and outstanding property taxes, all checked before a deal goes hard.

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Rigorous evaluation before you bid and during due diligence isn’t just a way to avoid getting caught over-extended. It’s how to successfully ride market trends. “The key in navigating current market fluctuations is to have strong in-house analytical and financial skills to make sure every investment opportunity is well evaluated,” says Anna Kogan, CEO and Founder of Duckfund.

Every dollar tied up in a hard deposit is not put to work anywhere else along the pipeline. That has a cost, and it's worth putting a number on it.

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The hidden cost of self-funded deposit pipelines

If your earnest money deposits are sized at 1-10% of a $10M-$50M purchase price, and across five to ten simultaneous bids, you're looking at $1.5M to $25M or more in earnest money sitting in escrow at any given time. 

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Most of that capital won't convert to a closing. It’s just sitting idle.

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That's capital that isn't compounding anywhere else. It could be funding renovations and repositioning as part of value-add strategies, or waiting to be redeployed in your acquisition pipeline. 

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Every dollar sitting in escrow is a dollar that isn't generating a return on investment. The same logic applies whether you're underwriting core investments for steady income or opportunistic upside.

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A smart investor treats idle escrow capital as a real cost of scale. Closing that capital gap without leaning entirely on gap funding or a dozen open credit lines is where soft deposit financing earns its place in the stack.

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Soft deposit financing: the solution to scaling your pipeline 

Being active in multiple bids and still having capital to proceed on the next deal requires one thing: funding. But which of the financing options available to an institutional investor fit an EMD timeline?

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A traditional lender or an LP capital call can take days or weeks to release funds. Duckfund's EMD lending model funds earnest money deposits in as little as 48 hours, which means a fund running five live bids doesn't have to choose which one gets capital first.

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Matt Morgan, Commercial Real Estate Salesperson at Institutional Property Advisors, a division of Marcus & Millichap, sees that gap play out deal by deal: "our consulting often involves guiding clients to explore rapid, short-term financing specifically for earnest money shortfalls, allowing sponsors to confidently make offers, securing properties ahead of slower, traditional financing approvals."

That's what successful commercial real estate investment strategies look like: capital committed only where it's needed, released the moment a deal proves out, free to move again for the next one. 

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Winning five bids doesn't help if you can only afford to close one. The sponsors who scale fastest don’t necessarily have the deepest pockets – they’re the ones who can fund earnest money without dipping into their own capital. 

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Duckfund has already backed over $1.5B in CRE acquisitions by funding deposits deal by deal, with no collateral, so capital never sits idle while a fund waits on the next opportunity.

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Ready to put more bids in play without tying up your own capital? Apply for EMD financing with Duckfund and get funded within 24 hours.

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Frequently Asked Questions

Can you have multiple earnest money deposits at once?

There's no hard limit on how many deposits you can carry at once. The real limit is exposure: every deposit that goes hard becomes binding.

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What percentage is earnest money on a commercial property?

Typically 1%-10% of the purchase price, depending on the market and how competitive the bidding is. On a $20M property, that's $200,000 to $2 million.

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Is soft deposit financing the same as a bridge loan?

No. A bridge loan covers a funding gap between, often post-closing. Soft deposit financing funds the earnest money deposit itself. Both can be short-term, but they address different stages in the deal timeline.

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Is a financed deposit refundable if the deal falls through?

That depends on when the deal falls through, not on how the deposit was funded. Walk away during due diligence and it's typically refundable; once it goes hard, it isn't.

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Who is Duckfund's EMD financing built for?

CRE sponsors and institutional buyers who need to move on multiple deals at once without tying up their own capital in every deposit. That includes private equity firms, bank-affiliated funds, and syndicators running a live acquisition pipeline rather than a single, one-off purchase.