Once a lesser-known investment vehicle in the real estate industry, private placements differ distinctly from publicly marketed real estate securities.
A multifamily private placement deal is when multiple investors pool their capital to purchase a single property or portfolio. Owners can accomplish this with almost any type of real estate property, but when done with a multifamily property, this is called multifamily private placement. [1][2]
Here, we will review private placements, including what they are and how they’re structured, and common passive ways to invest in multifamily real estate.
PASSIVE INVESTING
Two common ways to passively invest in multifamily real estate are through REITs and private placements. REITs and private placements have a few differences, some of the most notable being the number of properties available, ownership, accessibility, minimum investment amount, liquidity, tax benefits, and returns. [3]
A real estate investment trust (REIT) is a corporation, trust, or association that directly invests in income-producing real estate. It offers a more accessible entry point, often with lower minimums, appealing to those with limited capital. By purchasing shares in a REIT, investors can gain exposure to the real estate market without directly buying, managing, or financing a property themselves. [3][4] REITs also differ from private real estate funds in that they typically distribute dividends regularly. While some funds offer distributions, many primarily provide value through appreciation.
Multifamily properties can be expensive, making them more complicated for lone investors to obtain. [5] This fact, combined with eligibility requirements, can limit the pool of potential investors in private placements. Private placements are usually only available to accredited investors, but non-accredited investors may be able to invest in select REITs or crowdfunding endeavors.
Remember, the period during a real estate lifecycle when a sponsor owns or “holds” a property before selling it is called the hold period. Since these investments are illiquid, investors should expect their capital in a private placement deal to be tied up for several years as the sponsor holds assets to generate returns through forced and natural appreciation.
Multifamily private placements are designed to solve the problem of direct ownership by giving investors all the benefits of multifamily investment properties without the burden or physical labor of managing these multifamily homes or communities directly. This structure provides access to institutional-quality real estate while the sponsor handles all the work. It can be a strategic approach if you want to invest in real estate but also want a passive role. In a private placement deal, depending on the deal structure, passive investors may earn income throughout the hold period or realize equity growth once the deal is done and the property is resold.
In a private placement, many rules, regulations, disclosures, and contracts facilitate the relationship between a fund and its investors, or general partners (GPs) and limited partners (LPs). These include SEC filings, private placement memorandums (PPMs), and limited partnership agreements (LPAs).
REGULATION D (REG D)
Regulation D, or Reg D, is a set of rules issued by the U.S. Securities and Exchange Commission (SEC) on raising capital for private offerings, stating general partners can secure funding from accredited investors, limit public solicitation, retain flexibility in offering structure, and reduce their regulatory burden while remaining compliant. [6]
Offerings under Reg D are exempt from standard SEC registration requirements, allowing companies to raise acquisition capital without going through the entire public registration process. It’s important to note that Reg D offerings are still subject to federal securities laws, including anti-fraud provisions and rules governing disclosures. [7]
While private placements don’t require SEC registration, sponsors must still file a Form D notice with the SEC and adhere to specific conditions based on the exemption they’re relying on (such as Rule 506(b) or 506(c)). The core idea behind Regulation D is that it allows companies to raise capital privately without registering the investment product with the SEC, so long as they follow the rules outlined in the regulation. [7]
PRIVATE PLACEMENT MEMORANDUM (PPM)
A private placement memorandum, or PPM, is a legal document for prospective investors in a private offering. It details the investment opportunity, associated risks, the sponsor’s investment strategy and criteria, and all parties’ obligations.
It’s essential to understand that the PPM protects limited partners (passive investors) and general partners (sponsors) in a private multifamily investment deal. The PPM typically includes the offering structure, including equity split, distributions, and promote structures, as well as a summary of all anticipated uses of proceeds, risk factors to consider, and offering terms. [8]
In short, the PPM is a disclosure document that outlines the investment opportunity, associated risks, and key terms to help investors make informed decisions about participating in a private placement offering.
LIMITED PARTNERSHIP AGREEMENT (LPA)
A limited partnership agreement (LPA) outlines partners’ rights, responsibilities, and obligations in a limited partnership, including how profits and losses are shared, decisions are made, disputes are resolved, and under what conditions the partnership can be dissolved. [9]
The LPA in multifamily real estate investing is used for real estate limited partnerships (RELPs). Multifamily private placement is a type of RELP that utilizes an LPA to identify key responsibilities and define the relationship between GPs and LPs. It protects investors on both sides and clarifies the management structure of assets within a fund. In contrast to a PPM, an LPA is a binding legal document that governs the relationship between the GP and LPs, detailing how the partnership will operate.
CONNECT WITH AN INSTITUTIONAL REAL ESTATE OWNER/OPERATOR
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.
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.
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SOURCES:
[1]: The Motley Fool. (2024). “How to Start Investing in Real Estate: The Basics.” https://www.fool.com/investing/stock-market/market-sectors/real-estate-investing/basics/
[2]: BAM Capital. (2025). “Purchasing and running an apartment complex.” https://bamcapital.com/purchasing-running-an-apartment-complex/
[3]: BAM Capital. (2024). “How to invest in a rental property for beginners.” https://capital.thebamcompanies.com/start-investing-real-estate-get-passive-income/
[4]: SmartAsset. (2023). “How to Buy an Investment Property With No Money Down.” https://smartasset.com/investing/how-to-buy-an-investment-property-with-no-money-down
[5]: Goodegg Investments. (2024). “Multifamily Syndication In 2024 And Beyond.” https://goodegginvestments.com/blog/multifamily-syndication-2024/
[6]: HelloData. (n.d.). “What is Regulation D and how is it used in real estate?” https://www.hellodata.ai/help-articles/what-is-regulation-d-and-how-is-it-used-in-real-estate#:~:text=Regulation%20D%20is%20frequently%20used,typically%20required%20for%20public%20offerings.
[7]: Investopedia. (2024). “SEC Regulation D (Reg D): Definition, Requirements, Advantages.” https://www.investopedia.com/terms/r/regulationd.asp#:~:text=Even%20if%20the%20Reg%20D,provisions%20of%20federal%20securities%20laws.
[8]: Viking Capital. (2024). “PPM 101: A Guide For Multifamily Real Estate Investors.” https://vikingcapllc.com/ppm-101/
[9]: Google Generative AI. (2025). “What is a limited partnership agreement?” https://www.google.com/search?q=what+is+a+limited+partnership+agreement
