In many ways, it is "lower risk".But the not as altruistic side is: most syndicators, even those with $2bn+ portfolios, don't have the track record length to attract institutional capital.  

Shortly after the crash my tenants learned that condo developers were renting out luxury apartments in the area for around the same rents I was charging so I was forced to lower rents. 1200/apt 2 1050/apt3. 

Rentals are extremely difficult to make pencil right now but would only personally consider higher end projects because the costs are far easier to absorb than trying to build in lower value neighborhoods.

This was my first deal, and house hacking made the most sense because it lowered the threshold for risk in my mind.

Would the IRS allow them to benefit from a 1031 Exchange if they would be "swapping" a million-dollar rental for one that is much lower in price?

that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

These markets are attractive because of their diverse, resilient economies, lower priced homes, and stable home price appreciation.

Outside of that, I am in a lower barrier to entry market of Cincinnati/Northern Ky.

They get a higher return since they are covering housing cost, have the $250k per spouse primary residence deduction in gains, is a savings account, higher leverage position, lower interest rate possible, will pay more premium for location, etc.House might be overpriced for REITs but not for home owners.  

Basically, there's no free lunch when it comes to taxes.Depreciating property lowers your tax basis.