When it comes to passive real estate investing, you’ve probably heard about both REITs and real estate syndications-but which one truly delivers better returns and benefits?
While REITs offer easy access and liquidity by trading like stocks, real estate syndications provide investors with direct ownership in specific properties, often unlocking higher potential returns, greater tax advantages, and more control over their investments.
Especially for those seeking to build meaningful wealth through focused, hands-on projects like ground-up multifamily development, syndications often outperform REITs by aligning investor interests closely with experienced sponsors and targeting value-creation opportunities that REITs simply can’t match.
Let’s explore why syndications frequently come out ahead in the race for passive real estate success.
With real estate syndications, you invest directly in a specific property or portfolio, typically through an LLC or partnership. This means you have an actual ownership stake in that property, giving you clearer insight and more control over what you’re investing in.
In contrast, REIT investors buy shares of a company that owns many properties, so you don’t own any individual asset. This indirect ownership dilutes your control and understanding of the underlying real estate.
Because syndications focus on individual properties, often value-add or ground-up developments, they can generate higher returns-typically in the range of 12-18% IRR or more-compared to REITs, which historically average around 10-13% annual returns.
This is due to syndications’ ability to actively improve properties, optimize operations, and strategically time exits, whereas REITs operate more like mutual funds with broader, more diversified portfolios and less upside per asset.
Real estate syndications pass through depreciation and other tax benefits directly to investors, which can offset ordinary income and reduce tax liability. REIT dividends, on the other hand, are generally taxed as ordinary income, which can lead to higher tax bills.
This tax efficiency can significantly improve your net returns from syndications compared to REITs.
Syndication sponsors typically invest their own capital alongside investors, aligning interests closely. Investors can also perform due diligence on the sponsor, the specific property, and the deal terms before committing.
REIT investors have little to no control or insight into specific properties or management decisions, relying instead on corporate governance and public disclosures.
Syndications usually have a fixed investment period of 5-7 years, during which sponsors actively manage and improve the property to increase value before selling or refinancing. This hands-on approach can create significant equity growth.
REITs offer liquidity through public markets but often sacrifice the potential for outsized gains that come from hands-on property management and development.
| Feature | Real Estate Syndications | REITs |
|---|---|---|
| Ownership | Direct ownership of specific properties | Shares in a company owning many properties |
| Returns | Higher potential (12-18% IRR typical) | Moderate (10-13% average annual returns) |
| Tax Benefits | Pass-through depreciation and deductions | Dividends taxed as ordinary income |
| Liquidity | Low (5-7 year lockup) | High (traded on stock exchanges) |
| Control & Transparency | Greater due diligence and sponsor alignment | Limited control, less transparency |
| Minimum Investment | Higher (often $25k+) | Low (can buy single shares) |
If you’re a passive investor seeking higher returns, tax advantages, and the ability to vet your investment closely, real estate syndications often provide a better fit-especially if you can commit for the medium term and tolerate lower liquidity.
REITs may be better if you need liquidity or want to start with a small investment, but syndications offer a more direct path to building wealth through real estate ownership.
Goodin Development specializes in real estate syndications focused exclusively on ground-up multifamily development projects. We identify promising sites, navigate the complex predevelopment process-including securing permits and approvals-and arrange financing to bring high-quality apartment communities to life.
Our approach allows busy professionals to pool their capital and invest passively, without the headaches of managing construction or tenants. From breaking ground to lease-up and stabilization, Goodin Development manages every step of the project, providing investors with regular updates and quarterly distributions once the property is operational.
By focusing on thoughtfully designed, market-driven developments primarily in Indiana, we create opportunities for investors to participate in substantial real estate growth with transparency, discipline, and a proven track record of delivering attractive returns.
