Public equity offers investors a gateway to a diverse range of industries and assets, including real estate, through vehicles like REITs and ETFs. While public equity provides accessibility and liquidity, it also presents unique challenges that can impact returns and risk exposure in ways that aren’t always obvious at first glance.
For investors exploring real estate exposure via public markets, understanding the distinctions between REITs, ETFs, and private investment options is critical. Factors such as transparency, control, tax implications, liquidity, and market volatility all play a significant role in shaping outcomes. In this article, we’ll unpack the complexities inherent in public equity, highlight the trade-offs investors face, and explore what you need to know before committing capital.
Whether you’re a seasoned investor or new to the space, gaining clarity on these issues will empower you to make more informed decisions and better align your portfolio with your financial goals.
WHAT IS PUBLIC EQUITY?
Public equity refers to ownership in companies whose shares are traded on public stock exchanges like the NYSE or NASDAQ. It represents a stake in a company that is available for anyone to buy and sell on the open market. This contrasts with private equity, where a smaller group of investors holds ownership and the company does not trade publicly. [1][2] Public real estate investment vehicles are limited to real estate investment trusts (REITs) and exchange-traded funds (ETFs). Let’s review a more detailed explanation of both below.
DEFINING A REIT
A real estate investment trust (REIT) is a company that owns, operates, or invests in (or a combination of all three) income-producing commercial real estate. [3]
These companies may specialize in property types such as office buildings, shopping malls, or multifamily apartment communities. [3]
REITs allow investors to participate in real estate without directly owning or managing properties. Instead, investors buy shares in the REIT, which pools capital to acquire and manage real estate assets. REITs can be public or private. In either case, they distribute dividends to investors in exchange for their investment. [1][3]
DEFINING ETF
An exchange-traded fund (ETF) is a pooled investment vehicle that offers exposure to a broad range of underlying assets, such as stocks, bonds, commodities, or market strategies, while trading on public exchanges with the liquidity of individual stocks. [4]
ETFs can be tailored to mirror the performance of specific indices, sectors, or investment themes, making them versatile tools for generating income or implementing tactical positioning. [4]
Widely accessible and cost-efficient, ETFs have become a cornerstone of modern investing. The SPDR S&P 500 ETF (SPY), launched in 1993, was the first U.S. ETF and remains one of the most actively traded today. [4]
Within this investment vehicle are Sector ETFs, which “track individual industries and sectors such as oil (OIH), energy (XLE), financial services (XLF), real estate investment trusts (IYR), and biotechnology (BBH).” [4] Real estate ETFs offer a distinct structure and investment approach compared to REITs, as REITs are directly owned and operated by a qualifying individual or entity, whereas ETFs function more like a fund, providing indirect ownership through shares of REITs. [1]
REIT VS. PRIVATE PLACEMENT/SYNDICATION
Number of Properties Involved:
REITs typically maintain a broad and diversified portfolio, encompassing a large number of properties spread across various geographic regions and asset classes. However, prior to committing capital, individual investors often have limited visibility into the specific assets being acquired or their precise locations. [3]
By contrast, real estate syndications offer a more targeted investment approach. Depending on the sponsor’s structure and preferences, investors may participate in either single-asset or multi-asset opportunities. For instance, specific offerings by BAM Capital adopt a fund-based model, whereby investors participate as limited partners (LPs) in a pooled vehicle. [1][3]
While REITs tend to provide exposure to a broader array of assets, syndication investments typically offer greater transparency and control, allowing investors to evaluate and select opportunities based on predefined asset types, geographic markets, and strategic objectives. [1][3]
Investment Parameters:
In a multifamily syndication, you do not own the property directly. Two main parties are typically involved: the sponsor and the limited partners (LPs). The real estate sponsor serves as the deal’s general partner (GP), which identifies investors seeking to participate in the syndication. Conversely, investing in REITs means purchasing shares in a company that owns and manages real estate assets. [1][3]
Ease of Access:
REITs are generally more accessible to the broader investing public, as many are listed on major securities exchanges and can be purchased with relative ease through traditional brokerage accounts. Their public availability enhances liquidity and simplifies the investment process for individuals seeking exposure to real estate. [1][3]
In contrast, real estate syndications typically operate as private placements, often conducted under exemptions from public registration. These opportunities are not always widely marketed and are frequently restricted to accredited investors who meet specific income or net worth thresholds as defined by regulatory standards. As such, syndications involve a more selective and less accessible investment process, often appealing to individuals seeking tailored, direct exposure to real estate ventures. [1][3]
Minimum Investment:
Some REITs allow investors to start with a minimal investment amount, sometimes as little as a few dollars or a single share. This flexibility makes REITs an attractive option for those new to real estate investing. [1][3]
In contrast, multifamily syndication deals typically have higher minimum investment requirements. While the minimum investment is higher, syndications can offer the potential for higher returns. [1][3]
Liquidity:
One of the biggest advantages of a REIT is liquidity. Investors can typically buy or sell shares at any time, allowing them to adjust their portfolios as needed. [1][3]
Multifamily syndications, however, are long-term investments. Capital is typically locked in for several years, as real estate transactions and property-level strategies take time to execute. However, syndications with a cash flow component can also offer cash via distributions. BAM Capital offers income products with the potential for distributions, as well as those for investors seeking growth. [1][3]
TAX BENEFITS: SYNDICATION VS. REIT
Investing in multifamily real estate through syndication can offer considerable tax advantages, notably through deductions such as depreciation. In many cases, investors may also benefit from accelerated depreciation strategies (e.g., cost segregation), which can significantly enhance after-tax returns. These tax efficiencies are often cited as a compelling incentive for investors. [1][3]
By comparison, while REITs also utilize depreciation at the corporate level, the tax benefits are largely absorbed before distributions are made to shareholders. As a result, individual investors in REITs typically realize fewer direct tax advantages. In contrast, real estate syndications enable investors to receive a proportionate share of tax deductions, potentially resulting in more favorable personal tax outcomes. [1][3]
Given the complexity and variability of tax implications, prospective investors are strongly encouraged to consult with a qualified tax advisor or financial planner. Personalized guidance is essential for developing an investment strategy that aligns with one’s broader financial objectives, risk profile, and tax planning needs. [1][3]
RETURNS
Investment returns can vary significantly depending on a range of factors, including the quality and location of the underlying property, the experience and strategy of the sponsor or manager, prevailing market conditions, and the timing of entry and exit. Historically, multifamily syndications have aimed to deliver higher projected internal rates of return (IRRs), often in the range of 15–20% or more, reflecting the increased risk, hands-on management, and illiquid nature of these private investments. [1][3]
In contrast, publicly traded REITs typically target more moderate annual returns—generally between 8% and 12%—while offering the benefit of liquidity through daily trading on major stock exchanges. However, because REIT shares are publicly traded, they are subject to short-term price volatility driven by broader equity market sentiment, which can sometimes decouple from the intrinsic value of the underlying real estate. [1][3]
Multifamily syndications, by comparison, may offer greater perceived stability due to their direct ownership of tangible real estate assets and insulation from daily stock market fluctuations. That said, these investments are inherently illiquid and reliant on the sponsor’s ability to execute the business plan effectively. As such, while REITs may appeal to investors seeking diversification and ease of access, syndications are often favored by those seeking higher returns and willing to assume longer holding periods and greater investment-specific risk. [1][3]
WORK WITH BAM CAPITAL FOR MULTIFAMILY REAL ESTATE INVESTING
BAM Capital partners with accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement. As the private equity arm of The BAM Companies, BAM Capital has been focusing on buying the most profitable assets and staying disciplined in its investment thesis. BAM Capital’s investment strategy aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units.
This article is an excerpt from Multifamily Real Estate Funds: A Guide for RIAs. For additional multifamily real estate insights, visit Pathways to Passive Wealth, BAM Capital’s new platform designed to make real estate investing more accessible, transparent, and achievable for aspiring and experienced investors.
SOURCES
[1]: Multifamily Real Estate Funds: A Guide for RIAs. (2025). “Topic 1.3 | Public vs. Private Real Estate Investing: What RIAs Should Know.”
[2]: Google Generative AI. (2025). “What is public equity?” https://www.google.com/search?q=what+is+public+equity
[3]: BAM Capital. (2025). “REIT vs multifamily syndication: Real estate investing.” https://bamcapital.com/reit-vs-multifamily-syndication-real-estate-investing-2/
[4]: Investopedia. (2022). “Exchange-Traded Fund (ETF): What It Is and How to Invest.” https://www.investopedia.com/terms/e/etf.asp
[5]: Google Generative AI. (2025). “affordable apartments in waukee iowa.” https://www.google.com/search?q=affordable+apartments+in+waukee+iowa&rlz=1C1GCCA_en&oq=affordable+apartments+in+waukee+iowa&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIKCAEQABiABBiiBDIHCAIQABjvBTIHCAMQABjvBTIHCAQQABjvBTIKCAUQABiABBiiBNIBCDk2MDhqMGoxqAIAsAIA&sourceid=chrome&ie=UTF-8
[6]: BAM Capital. (2025). “The role of technology in property management.” https://bamcapital.com/the-role-of-technology-in-property-management/
[7]: 11Fiftyapts. (n.d.). “Home.” 11fiftyapts.com
[8]: Waukee.org. (n.d.). “Trailside Dog Park” https://www.waukee.org/929/Trailside-Dog-Park
