For example, if I were to buy a 1 bedroom, I would want to be in a downtown location where it is more common to have these types of units.Generally speaking, right now SFR is where tenants want to be.  

Investing in a syndication with 1031 funds is possible through a TIC (tenant-in-common) structure, which essentially is a partnership with the syndication.

It would still have to be segregated to get every advantage.I'm a partner with a boutique cost segregation firm this is a common misunderstanding.

This is very common in Birmingham and it is confusing! 

Seems like a larger percentage is what is more common.

That's what makes this probably not qualify.If by some odd chance the REIT let you invest as a tenant in common on the building then you do indeed own real estate at that point. 

It is common in California to convert garage to living space.

That's the most common culprit, as @Scott M. says.

Sometimes it's half (3% each side in this example would be fairly common), sometimes it's more than half, sometimes it's less than half, sometimes it's a percentage, sometimes it's a flat rate. 

Do you have any recommended property management companies to manage client turnover, cleaning, and stocking of common items?