REIT vs. Real Estate Syndication: 7 Key Differences You Need to Know

When it comes to investing in real estate, there are many options to choose from, including real estate investment trusts (REITs) and real estate syndications. While both offer exposure to the real estate market, there are some significant differences between the two that can impact your investment returns and overall experience.

Today, we’ll explore the 7 biggest differences between a REIT and a real estate syndication to help you make an informed decision.

1. Size of investment: REITs are typically publicly traded and offer shares of ownership to individual investors, which means you can invest in a REIT with as little as a few hundred dollars. Real estate syndications, on the other hand, often require a much larger investment, usually in the tens of thousands of dollars or more.

2. Control over investment: When you invest in a REIT, you are essentially pooling your money with other investors to purchase and manage a portfolio of properties. As a result, you have limited control over the investment decisions and management of the properties. With a real estate syndication, however, you have a greater degree of control over the investment, including the ability to choose the specific property and select the best investment for your personalized strategy.

3. Transparency: REITs are required by law to provide regular updates and financial reports to shareholders, which can provide greater transparency into the performance of the investment. Real estate syndications are not subject to the same level of reporting requirements, which can make it more difficult to track the performance of the investment. Although regular communication is not required, our team fully believes this is the best way to partner with our investors and stay committed to regular communication about investment performance.

4. Diversification: REITs typically invest in a portfolio of properties across different markets and property types, which can provide greater diversification and reduce risk. Real estate syndications, on the other hand, often focus on a single property or a small group of properties, which can increase risk.

5. Fees: REITs often charge management fees and other expenses, which can impact your overall returns. Real estate syndications also have fees, but they are typically lower and more transparent, which can help you make more informed investment decisions.

6. Investment timeline: REITs are designed for long-term investing and may not be suitable for those who want to realize returns quickly. Real estate syndications, on the other hand, often have a shorter investment timeline, with the potential for quicker returns.

7. Potential returns: Both REITs and real estate syndications have the potential to provide high returns, but the specific returns can vary widely depending on the investment strategy, market conditions, and other factors. Real estate syndications, however, often have the potential for higher returns than REITs, due to the greater control over the investment and the ability to use leverage to purchase properties.

In conclusion, while both REITs and real estate syndications offer exposure to the real estate market, there are significant differences between the two that can impact your investment returns and overall experience. When considering which option is right for you, be sure to weigh the pros and cons of each and work with a reputable real estate professional who can help you make an informed decision.

For more passive real estate investing information take my free passive investor course at www.senateeskridge.com/course