Syndication vs. REIT vs. Owning an Apartment Building

A syndication gives you a share of one specific building with no management work, usually with a larger minimum and a long lock-up. A REIT gives you small, often liquid slices of many properties. Owning a building yourself gives you control and all of the responsibility. The right choice depends on your capital, your time, your tolerance for being locked up and how much you want to know about what you own.

New to this? Start with our guide to how to invest in apartment buildings as a beginner.

Comparison

The three routes differ in money needed, effort, control, liquidity and taxes.

Topic	Syndication	REIT	Own a building yourself
What you own	An LLC interest in one property	Shares of a company holding many properties	The property
Typical money needed	Often $25,000 or more	The price of a share	Down payment, closing costs, reserves
Who can invest	Usually accredited investors	Often anyone	Anyone who can finance it
Your work	Low after vetting	None	High
Control	None	None	Full
Liquidity	Usually none until a sale	Listed REITs trade daily	Slow to sell
Diversification	One property per deal	Many properties	One property
Fees	Acquisition, asset management, disposition, profit share	Fund or management fees built in	Property management, repairs, financing costs
Taxes	K-1; depreciation and passive loss rules	Often 1099-DIV	Your own return

When a syndication fits

You want a specific apartment building, can invest tens of thousands of dollars you won't need for years, are accredited and are willing to vet a sponsor. See how syndication works.

When a REIT fits

You want to start small, want liquidity and don't want to pick a property or sponsor. You accept that your return moves with markets and that you don't decide what the company buys.

When owning directly fits

You want control, have time, can finance a building and are ready to manage or hire management. A small building is a different job from a large apartment community.

Combining approaches

Many investors use more than one: a REIT or fund for liquidity and a syndication for a direct stake. Don't let any single deal be more than you can afford to lose.

Questions to ask for any option

Ask the same five questions of each option.

What fees will I pay, in dollars?
How can I get my money out?
Who controls my money before and after the deal?
What's the worst realistic case?
What taxes will I owe, and when?

Who this isn't for

A syndication isn't for investors who want daily liquidity, and owning a building yourself isn't for investors who don't want to manage anything. A REIT gives up control and a direct stake in one building.

How DoorRaise helps

DoorRaise is for accredited investors who want a direct stake in an apartment building with verified facts, a standard fee card and escrow until closing.

DoorRaise is for apartment buildings with 5 or more units. See how investing works or see pricing.

These guides cover the next questions most readers have.

FAQ

Is a syndication better than a REIT?

Neither is better for everyone. A syndication is more concentrated and illiquid, and a REIT is more diversified and often liquid.

Is owning a building yourself riskier?

It concentrates the risk in one asset you also manage. Syndications also concentrate risk, but a sponsor runs the property.

Which is best for taxes?

It depends on your situation. Talk to a CPA.

Can I do all three?

Yes, within what you can afford to lose and lock up.

Sources

This post is general information, not legal, tax or investment advice. Private real estate investments are illiquid and risky, and you can lose all of your money. DoorRaise is not a broker-dealer, investment adviser or funding portal.