The main difference between a REIT and syndicated real estate is that a REIT consists of several income-producing properties bundled together like a mutual fund.
Real Estate Syndication Vs. Real Estate Investment Trust (REIT)
The real estate syndication structure defines who is involved. Ensure an experienced real estate lawyer creates the contract and is fair to all parties.
Investors act as Limited Partners (LP) in the syndication and play a passive investor’s role. They invest with the syndicator and own a percentage of the real estate based on each investor’s amount.
Since they are passive investors and not involved in the acquisition or day to day operation or disposal of the investment property, they pay the sponsor fees.
The Joint Venture (“JV”)/Equity partner is a third party present in some transactions. They assist the syndicator with reporting, communications, and even tax documentation.