What is REIT, and how is it different from Real Estate Syndication?

August 9, 2022

Real Estate Investment Trust is referred to as REIT. A REIT is a business entity that invests simultaneously in real estate by purchasing homes or mortgages. It might be a company, corporation, trust, or association. Shares issued by REITs can be bought and sold on a stock exchange just like regular stocks.

View here to learn more about Real Estate Investment Trusts.

Why did REITs get started?

When President Eisenhower extended the cigar excise tax in 1960, REITs were created in the U.S. They were designed to provide regular investors with a cost-effective opportunity to invest in alternative investments of real estate that generate income. Share-based ownership makes it comparable to a mutual fund that pools several diverse investments in one location and distributes shares.

REITs are distinctive in many respects and must adhere to a particular set of operational standards to be recognized by the law. The requirement that REITs receive at least 75% of the gross income through real estate-related sources plus continue investing 75% of their asset value in real estate sets them apart from other investment vehicles. Additionally, REITs must legally share at least 90% of the profits from the real estate holdings with investors. 

How have REITs done historically?

Compared to the stock market, securities, and other resources over the past 45 years, REITs have consistently delivered investors with appealing total return performance thanks to their history of consistent and growing dividend payments and long-term capital growth through value increases.

Listed REITs are publicly listed, expertly managed corporations that operate intending to increase shareholder value. This includes setting up their real estate to appeal to potential tenants and generate rental income, managing their property portfolios, and purchasing and disposing of assets to increase value throughout protracted real estate cycles.

How to buy REITs?

Like any other publicly traded company, shares in a REIT that are listed on significant stock exchanges may be purchased by an individual. Shares of a REIT-managed or exchange-traded fund are also available to investors (ETF).

An investor’s economic objectives can be analyzed, and suitable REIT assets can be suggested by a broker, financial adviser, or wealth manager.

Additionally, investors can purchase both private and publicly traded non-listed REITs.

How are REITs different from Real Estate Syndications?

Real estate syndications and REITs differ primarily, wherein real estate syndications are marginally superior. Real estate syndication gives you access to a live person equally invested in the asset as you are. It might help for network purposes or if you have any inquiries regarding the property.

On the other side, dealing with REITs can be a little more challenging. Since they are publicly listed businesses, their primary objective is to raise the value of their shares rather than necessarily concentrating on real estate transactions. It implies that working with a REIT may not necessarily result in the most exemplary customer service.


It’s critical to comprehend the differences between real estate syndication and REITs. Real estate syndication can be a better option if you’re seeking a more reasonable opportunity with strong liquidity without needing to be a landlord. Most REITs trade on significant stock exchanges and provide investors with several advantages. Get in touch with an investment club if you need further guidance. 

What is REIT, and how is it different from Real Estate Syndication? was last modified: by

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