While many investors want to invest in real estate and enjoy the benefits of passive income, not everyone is interested in becoming a landlord. Owning and managing rental properties involves handling residents, maintenance, and unexpected situations, which isn’t for everyone. 

Fortunately, there are options for those who want to invest in real estate but don’t want the responsibilities of being a landlord. REITs and multifamily syndication immediately come to mind. Both are standard options for real estate investors who want to benefit from real estate without the hands-on demands of property management. 

However, understanding the differences between REITs and multifamily syndication is essential when deciding which is right for you. 

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. [1]

These companies may specialize in property types such as office buildings, shopping malls, or multifamily apartment communities. [2]

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. 

DEFINING MULTIFAMILY PRIVATE PLACEMENT (SYNDICATION)

In real estate, private placement (syndication) refers to a group of investors interested in investing in a portfolio of properties or a large property, typically ones they could not purchase individually.

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. Investors supply a portion of the capital required in exchange for equity, depending on the deal structure. [3]

THE DIFFERENCES BETWEEN A REIT AND PRIVATE PLACEMENT/SYNDICATION

REITs and multifamily syndication have several differences, and some of the most notable ones are as follows: portfolio composition, ownership structure, accessibility, minimum investment requirements, liquidity, tax benefits, and potential returns. [1]

When considering a new investment opportunity, it’s always a good idea to consult your trusted CPA, RIA, tax advisor, and/or attorney.

• NUMBER OF PROPERTIES INVOLVED

REITs typically own a widely diverse portfolio involving many more properties across multiple markets and asset types. Before investing, investors may have limited information on the types of assets being purchased and their locations.

In real estate syndication, you have a few options. Depending on the sponsor, you may invest only in a single or multiple assets. For example, since some of BAM Capital’s products follow a fund model, investors become limited partners (LPs) in the fund.

While REITs generally have a more significant number of assets, in syndications, you typically specify the asset type, markets, and investment strategy upfront. [1] 

• 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). They are responsible for locating the investment property, underwriting, completing due diligence, securing financing, and developing and executing a business plan. They partner with investors seeking to participate in the syndication. [5] 

Conversely, investing in REITs means buying shares in a company that owns and manages the assets. 

• EASE OF ACCESS

REITs can be more accessible, as many appear on major marketable securities exchanges. Because they are publicly accessible, it is potentially easier to invest in REITs.

On the other hand, real estate syndications are often private investment opportunities that may or may not be publicly advertised. Additionally, many real estate syndications are only open to accredited investors, meaning investors must meet income or net worth requirements to participate. [1]

• 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 attractive to those new to real estate investing. [1]

In contrast, multifamily syndication deals usually have higher minimum investments. While the minimum investment is higher, syndications can offer the potential for higher returns. 

• LIQUIDITY

One of the biggest advantages of a REIT is liquidity. Investors can usually buy or sell shares at any given time, making it easy to adjust their portfolios as needed.

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 and those for investors more interested in growth.

TAX BENEFITS: SYNDICATIONS VS. REITS

When investing in real estate through multifamily syndication, you may benefit from various tax deductions, including depreciation. These benefits can be substantial in some cases, such as accelerated depreciation. Many investors see these tax benefits and savings as key reasons to invest. [1]

Conversely, the tax benefits you get from investing in REITs are typically less significant for individual investors. While REITs also benefit from depreciation, they are accounted for at the company level before dividends are paid to investors. Real estate syndication generally offers more tax benefits for individual real estate investors. Consult with a financial advisor or tax professional for more tailored guidance on tax benefits and to develop a comprehensive financial plan that aligns with your investment goals and risk tolerance.

RETURNS

The returns for each investment can vary wildly depending on many factors, such as the property, the manager, market conditions, and timing. Historically, multifamily syndications have targeted a higher average return, often 15-20% or more IRR. REITs, on the other hand, typically target returns of 8-12% per year. A publicly traded REIT trades on the stock exchange, meaning prices can fluctuate over short periods of time. [1]

Multifamily syndication may provide more stability, as it is tied to tangible real estate rather than stock market sentiment, as with public REITs. However, long-term investments still carry risks, including illiquidity and reliance on the sponsor’s ability to execute the business plan. REITs generally target lower returns but are attractive to investors who prioritize liquidity and broad diversification.

WANT TO EXPLORE SYNDICATION INVESTMENTS? WORK WITH BAM CAPITAL

Investing in real estate can provide a positive cash flow, whether you opt for a REIT or a real estate syndication. BAM Capital specializes in acquiring and managing income-producing properties, primarily multifamily apartment communities. Trusted by accredited investors, BAM Capital has a low-risk business model to potentially maximize benefits.

BAM Capital partners with accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement (syndication). As the private equity arm of The BAM Companies, 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. [4]

Remember that no investment is without risk. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

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]: Goodegg Investments. (n.d.). “REIT Vs. Syndication: The Biggest Differences Between REITs And Real Estate Syndications.” https://goodegginvestments.com/blog/reit-vs-syndication/

[2]: First National Realty Partners. (n.d.). “REITs vs. Real Estate Syndication: A Comparison Guide by FNRP.” https://fnrpusa.com/blog/reits-vs-syndication/

[3]: The Motley Fool. (2024). “How to Start Investing in Real Estate: The Basics.” https://www.millionacres.com/real-estate-basics/real-estate-terms/investing-multifamily-syndication/

[4]: BAM Capital. (n.d.). “Current Portfolio.” https://capital.thebamcompanies.com/

[5]: BAM Capital. (2023). “Who Owns the Property in a Syndication?” https://bamcapital.com/who-owns-the-property-in-a-syndication/