If you’ve started looking into passive real estate investments, you’ve probably heard the term “preferred return” (or “pref”). It sounds straightforward — you get your preferred return before anyone else, right? Well… yes and no. Let’s break it down in plain English so you can start vetting opportunities with confidence.

Learn how the capital stack works in commercial real estate deals. Discover where passive investors sit in the hierarchy, what risks they take on, and how it impacts returns.