Passive investing: Multifamily vs REIT

[Gabriel Craft]

If you had $25,000 - $100,000 to invest passively would you rather buy shares in a REIT or put money into a syndication as a limited partner (LP)? Pretend you are a busy professional with $200-400k income (like a mid-career dentist or successful small-business owner) but don't have time to become a general partner and take on the extra work. Open to other "options" from everyone that are even better than REIT or MF.

[Taylor L.]

Liquidity and depreciation are two of the biggest factors to consider here. 

Publicly traded REITs are highly liquid and syndications are highly illiquid. A syndication investment would not be suitable for someone who prioritizes liquidity. In my observation, the liquidity of REITs leads to significantly more volatility - just look at what happened to REIT values at the beginning of covid. They completely tanked because while liquidity is nice, it also enables panic selling. But what happened to the value of the underlying real estate?

Syndications are able to pass depreciation to investors (although not all do) and publicly traded REITs are not. If paper losses are a part of an investor's strategy, that is something to consider.

In Robert Kiyosaki's opinion, REITs are stocks, not real estate. I tend to agree.