Beige is no longer just a natural-wool-inspired, light, and earthy tone. Instead, it’s a way to label strange habits that border on behavioral oddities. According to The New York Times, a beige flag is “an odd trait […] that is not quite a deal breaker, but not exactly a plus, either.” [1] 

We generally approach subjects with a binary viewpoint—black and white, red and green. So, what are some quirkier traits of multifamily real estate sponsors that are conventional enough to be considered neither good nor bad?

WHAT IS A SPONSOR?

First, let’s discuss what a sponsor is. A general partner is sometimes referred to as a sponsor or owner/operator. In a private placement deal (syndication), the individual or company managing the property or investment typically plays the role of the general partner (GP); the GP is responsible for finding, acquiring, and managing real estate properties on behalf of passive investors (limited partners).

As is the case with most business ventures, direct ownership can expose you to risk. Being a sponsor is time-consuming as it requires 24/7/365 resident management, maintenance, and expert market knowledge to assess current and future market values. [2] When it comes to beige flags with sponsors, the following five factors are what to look out for.

DOES NOT ALLOW 1031 EXCHANGES INTO A FUND PRODUCT

A 1031 exchange is a tax strategy that allows investors to sell a property and reinvest the proceeds into another like-kind property without immediately paying capital gains taxes on the sale. [2] By deferring these taxes, real estate investors can leverage their capital more effectively, increasing their potential return on investment (ROI).

In a private placement fund, however, the decision to pursue a 1031 exchange rests solely with the fund manager, not the individual investor. So, investors may not benefit from a 1031 exchange. [2] 

If a general partner does not allow 1031 exchanges into their funds, there may be an alternative option, making this a “beige,” minor, or insignificant trait. 

For example, at BAM Capital, we recognize that a traditional 1031 exchange has stringent requirements regarding the type of investment structure, which renders it incompatible with a fund investment in one of our partnerships. However, the losses you receive as a member of one of our growth funds can potentially offset some gains you may have from selling your asset. So, while you cannot technically do a 1031 with BAM Capital, you may be able to achieve a similar effect and reduce your tax liability/obligation. 

Always consult your CPA for guidance on your portfolio’s suitability for this type of investment. [3]

DOES NOT OFFER REITS AS A PRODUCT

REITs and multifamily private placements (syndications) have several differences, including portfolio composition, ownership structure, accessibility, minimum investment requirements, liquidity, tax benefits, and potential returns. [4]

Learn more about REITs vs. multifamily syndication here.

If a general partner does not offer REITs, it is likely because their business plan relies on long-term wealth creation product types. Unlike REITs, which typically provide a steady but generally lower return profile, private placements often employ strategies more suited for capital appreciation and wealth creation.

In multifamily syndication, a sponsor, such as BAM Capital, is responsible for identifying a property, developing the investment strategy, facilitating the transaction, securing financing, and managing the investment once the property or portfolio is acquired. Depending on the deal structure, investors supply a portion of the capital required in exchange for equity. [4] 

This strategy affords investors more control over the types of assets they invest in or include in their portfolios.

PRIVATE VS. PUBLIC SECURITIES

A security is a financial instrument representing an investment with monetary value (or equity). There are private (nonmarketable) and public (marketable) securities. Examples of public securities include stocks, bonds, and other securities traded on public exchanges, such as NASDAQ, where investor qualifications are generally minimal. Private securities, such as BAM Capital products, are limited to a select group of accredited investors.

Private equity represents one’s ownership (stake) in a private business. PE is managed by general partners (GPs), also called sponsors. GPs raise capital from limited partners (LPs) or investors. In real estate private equity (REPE), these investors may include pension funds, insurance firms, endowments, family offices, and high-net-worth (HNW) individuals. Typically, the firm will focus on offices, retail, industrial, and multifamily properties. [5] 

Choosing between private and public securities truly depends on your investment goals and whether you are an accredited investor. Since accessibility, liquidity, transparency, and regulation all play a significant role in their distinctions, it’s essential to consider your financial needs and consult a professional tax advisor or CPA. Keep in mind that it’s not uncommon for a sponsor to exclusively offer private securities.

DOES NOT PARTICIPATE IN SINGLE-ASSET DEVELOPMENT DEALS

A development deal is a partnership between sponsors and developers in which they pool resources and share the risks, profits, and costs. A single-asset development deal can involve transferring ownership of an existing asset into a different business or fund. In other words, this generally occurs when a developer, an individual or entity that acquires land or properties, plans, finances, and oversees the construction or renovation, then sells the property they’ve just built or are in the process of building to a sponsor. More common is the scenario where the sponsor has the right of first refusal, meaning they have the option to purchase the property before it hits the open market.

A development deal through a private placement is when a developer partners with a sponsor, who then offers the investment opportunity to passive investors. Some firms will focus primarily on developing a portfolio of assets or investing in pre-existing assets. Diligent underwriting to identify key metrics and projected returns from the product will inform whether or not a single-asset development is an ideal project for you to partner in.

MARKET STRATEGY

When a sponsor acquires assets in a specific market, it may limit access to a larger investment pool. However, there are benefits to narrowing one’s focus to a target region, especially ones with market stability and improving fundamentals, such as the Midwest and Southeast regions.

Reflecting on REITs, these portfolios typically comprise a diverse mix of asset classes, property types, and debt service, among other factors. A private placement can offer products with more transparency and a concentrated resident base. As always, the choice here heavily depends on market sentiment and fundamentals. Remember, a well-defined target market strategy can enhance operational efficiencies, establish a competitive edge, and capitalize on economies of scale. Having a concentrated geographic focus is one strategy while widening your net is another. Either is okay, so long as the sponsor is transparent about which lane they’re in.

WORK WITH BAM CAPITAL FOR MULTIFAMILY PRIVATE PLACEMENT

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 assets targeted as having strong profitability potential 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.

Remember that no investment is risk-free. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

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. 

Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect BAM Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. BAM Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment.

© 2025 BAM Capital. All rights reserved.

SOURCES:

[1]: The New York Times. (2023). “What Is a Beige Flag? TikTok’s New Term for Weird Dating Habits.” https://www.nytimes.com/2023/06/07/style/beige-flag-tiktok-dating.html 

[2]: Pathways to Passive Wealth. (2025). “Topic 1.4 | Ways to Invest in Multifamily Real Estate.” https://learn.bamcapital.com/courses/multifamily-real-estate/lessons/topic-1-introduction-to-multifamily-real-estate/topics/part-4-ways-to-invest-in-multifamily-real-estate/ 

[3]: BAM Capital. “Frequently Asked Questions.” https://bamcapital.com/faq/ 

[4]: BAM Capital. (2025). “REIT vs. multifamily syndication: Real estate investing.” https://bamcapital.com/reit-vs-multifamily-syndication-real-estate-investing-2/ 

[5]: BAM Capital. (2025). “Understanding private equity in multifamily real estate.” https://bamcapital.com/understanding-private-equity-in-multifamily-real-estate/