Net lease property felt the US rate rise first. According to The Boulder Group's net lease research report for the third quarter of 2026, as reported by MBA Newslink on 10 October, cap rates on single-tenant net lease property rose for a second straight quarter to their highest level in more than a decade. A cap rate is a property's yearly net income divided by its price, so when the cap rate rises while the rent stays the same, the price has fallen. The report linked the move to the Federal Reserve's decision on 16 September to raise its target range by a quarter of a percentage point, and to a 10-year US Treasury rate that ended September above 5 per cent.
The timing matters for advisors with clients weighing US commercial property, because the same rate shock is reaching net lease, self-storage and multifamily property in three different ways. The difference comes from the lease. A net lease usually runs for many years at a rent agreed in advance, a self-storage unit is rented month to month, and an apartment is usually let for a year. How fast the rent can move, and who pays the running costs, decides how each type absorbs higher rates. Raveum's guide to US commercial real estate investment for advisors sets out all three types in more detail.
What net lease, self-storage and multifamily property each are
In a net lease, one tenant, such as a pharmacy, a restaurant chain or a distribution business, signs a long lease and pays most of the costs of running the building. Under a triple net lease, the tenant pays property tax, insurance and maintenance on top of rent. The owner has few running costs, but the whole income depends on one tenant's ability and willingness to pay.
Self-storage is closer to an operating business. Individuals and small businesses rent units, usually on monthly terms, and the owner pays the running costs and sets prices that can change every week. Demand comes from moves, downsizing and households that have run out of space. A self-storage investment therefore depends on local demand and on the operator's skill with pricing.
Multifamily means apartment communities with many households paying rent, usually on leases of about a year. The owner pays for staff, repairs, insurance and property tax, and rents follow local jobs and how many new apartments are being built nearby.
Why the length of the lease decides how rates are felt
A long net lease behaves a little like a bond. The rent is fixed for years, often with small increases written into the lease, so the income cannot catch up quickly when interest rates rise. Buyers then pay less for the same rent, which is what a rising cap rate shows. With the 10-year Treasury rate above 5 per cent, The Boulder Group said, permanent financing is generally priced above net lease cap rates in most instances. In plain words, borrowed money now costs more than the property earns relative to its price, which puts pressure on owners who bought with heavy debt.
Self-storage sits at the other end. Because units are rented month to month, rents can reset quickly, and that flexibility works in both directions. Yardi Matrix reported on 18 September that advertised self-storage rates fell 1.9 per cent year on year in August 2026, citing weak demand and newly built facilities still filling their units. It also said the construction pipeline is steadily contracting.
Multifamily falls in between, because most leases reset once a year. ALN Apartment Data reported on 12 October that national occupancy rose by 30 basis points in the third quarter of 2026 and closed September just under 91 per cent. Demand slowed, with net absorption, meaning the number of newly occupied units, falling to about 107,000 from about 159,000 in the second quarter. Even so, owners were still offering an average of just over four weeks free on an annual lease. An apartment owner can raise rents each year, but only as far as competing new buildings allow.
Who carries the costs and the vacancy risk
In a triple net lease, higher property tax and insurance bills mostly fall on the tenant, which protects the owner's income as long as the tenant stays healthy. In self-storage and multifamily, the owner pays those bills, so rising costs reduce the income left over unless rents rise faster.
Vacancy risk is shaped differently too. A net lease building is either fully let or empty, so the loss of one tenant can stop all income until a new tenant is found, and a tenant in bankruptcy can reject its lease under US law. Self-storage and multifamily spread that risk across hundreds of tenants, but they need active, skilled management and are exposed to new supply in their local market. Neither model removes risk, because each places it in a different part of the business.
How to compare net lease, self-storage and multifamily for a client
The most useful comparison rests on a few checks an advisor can apply to any deal, whatever the property type. It helps to establish how soon the rent can change and by how much, who pays the running costs, and how many tenants the income depends on. It also helps to know how much debt the property carries, whether its interest rate is fixed or floating, and when the loan must be refinanced. Finally, the sponsor, meaning the firm that finds, finances and manages the deal, should have a track record in this exact property type.
The answers matter more than the label. A net lease building let to a strong tenant with fixed-rate debt and many years left on the lease faces different risks from one with a weak tenant and a loan due next year. Holding more than one type spreads exposure across lease structures, although it cannot protect against a broad fall in US property values.
Every route into private US real estate carries real risks. The client can lose capital, and the investment is illiquid, so money is usually committed for several years with no easy way out. Property values can fall, tenants can leave, and distributions may be reduced or not paid at all. Debt magnifies losses as well as gains, a single property is a concentrated position, and movements in the rupee against the dollar can reduce what the client receives in India.
What advisors should do
Start by matching the property type to the client's need, since a client who wants contracted income from one tenant will read a net lease deal differently from one who accepts monthly price changes in self-storage or yearly resets in multifamily. Then apply the checks above to the sponsor's documents, with particular attention to the lease terms, the tenants and the loan maturity date.
The remittance side needs the same care. A resident Indian client sends money for an overseas investment under the Liberalised Remittance Scheme, and TCS of 20 per cent applies to the amount above ₹10 lakh in a tax year for investment remittances, as Raveum's guide to TCS on foreign remittance explains. For example, a client who remits ₹40 lakh for an investment in tax year 2026-27 would see TCS of ₹6 lakh collected on the ₹30 lakh above the threshold, which the client can later claim as a credit in the income tax return. The client's Indian tax position stays with the client and their CA.
Raveum gives eligible investors access to diversified US commercial real estate, including net lease, self-storage, multifamily and other income-producing commercial property, with each deal reviewed by Raveum and held in its own legal entity. Offshore investors, including Indian clients, invest through a US corporation known as a blocker, which holds the property interest, and they typically receive Form 1042-S, the US form that reports income paid to a foreign investor and any tax withheld. Advisors who introduce eligible clients through Raveum's partner page remain responsible for judging suitability, while Raveum handles KYC, agreements and US tax forms.
The rise in net lease cap rates this quarter is a reminder that a predictable rent and a rate-sensitive price are two sides of the same feature. Self-storage and multifamily trade some of that predictability for rents that can adjust, and they take on running costs and local competition in exchange. An advisor who explains the three types through their leases, rather than their labels, shows the client what higher rates actually change. Raveum's guide to US commercial real estate investment for advisors covers the metrics and structures behind that conversation.
Frequently asked questions
What is the difference between net lease, self-storage and multifamily property?
The difference lies mainly in the lease. Net lease property is let to one tenant on a long lease, and the tenant pays most running costs. Self-storage units are rented month to month, and the owner pays the costs. Multifamily apartments are usually let for about a year to many households, with the owner paying operating costs.
What is a net lease and how is it different from a triple net lease?
A net lease is any lease where the tenant pays some of the property's costs on top of rent. In a single net lease the tenant usually pays property tax, and a double net lease adds insurance. A triple net lease adds maintenance, so the tenant covers almost all running costs.
How do rising interest rates affect net lease property?
Rising rates usually push net lease prices down, because the rent is fixed for years and buyers pay less for that fixed income. The Boulder Group reported that net lease cap rates rose in the third quarter of 2026, and that borrowing now often costs more than the property earns relative to its price.
Is self-storage riskier than multifamily?
Neither is simply riskier, because the risks differ. Self-storage rents can fall quickly on monthly terms, and demand depends on local moves and new supply. Multifamily rents reset yearly and depend on local jobs and competing new buildings. Both carry the risk of capital loss, illiquidity, falling values and distributions that may not be paid.
How long are the leases in net lease, self-storage and multifamily property?
Net lease agreements commonly run for many years, often with small rent increases set in advance. Self-storage units are usually rented month to month, so prices can change quickly. Multifamily leases in the US usually last about a year, which lets owners adjust rents annually, subject to local competition and any concessions they offer.
Which US property type is suitable for an Indian client?
No single property type suits every client. The choice depends on the client's need for steady income, tolerance for illiquidity, time horizon and comfort with currency movements. Private US real estate is open only to eligible investors, carries the risk of losing capital, and should be considered with the client's advisor and CA.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
