Private syndications vs. REITs vs. interval funds: where should a physician put real-asset money?

When physicians ask me how to get into real estate without becoming a landlord, the conversation usually lands on one of three doors. A private syndication, where you own a piece of a specific apartment community. A public REIT, which you can buy in a brokerage account this afternoon. Or one of the newer private-market "interval funds," such as the Cliffwater funds, which promise institutional returns with smaller minimums.

All three can belong in a portfolio. They are not interchangeable, and the differences that matter most (taxes, fees, how you get your money back, and how the value of your investment is determined) are rarely on page one of the marketing. This piece puts them side by side.

A disclosure before we start: I am a Director of The Laager Group, which sponsors private multifamily syndications. I have tried to be fair to the alternatives, but you should read this knowing where I sit.

1. Private multifamily syndications

A sponsor buys a specific property, usually with a bank loan, and raises the equity from a group of investors. You own a share of that property through an LLC, receive distributions (typically quarterly), and get your capital back, hopefully with a profit, when the property is sold or refinanced, usually in three to six years.

What it does well. The tax treatment is the main reason physicians use it. Depreciation, often accelerated with a cost segregation study, passes through to you on a K-1 and can shelter most or all of your distributions while you hold. Because nothing is withheld for tax, you can reinvest the whole distribution, where a REIT or fund investor can only reinvest what is left after paying tax on it. That is money in your pocket now and tax deferred until sale, when part of it is taxed as depreciation recapture at up to 25% and the rest as long-term capital gain. Depreciation beyond your distributions becomes a passive loss you can carry forward, or use against gains from other passive investments. Most syndications simply sell and distribute the proceeds rather than doing a 1031 exchange, and few practicing physicians qualify as Real Estate Professionals, so for most investors the benefit is deferral, not elimination. You also own something tangible, you can visit it, and a good sponsor has meaningful money of its own in the deal.

What to watch. Your money is locked up until the sponsor sells. Most offerings are limited to accredited investors, with minimums of $50,000 to $100,000. Fees are real: an acquisition fee of 1% to 3%, an asset management fee of 1% to 2% a year, and a share of the profits above a preferred return, typically 20% to 40%. Laager's share is set out in each deal's offering documents, and the returns we report to investors are after it; always ask any sponsor whether its track record is quoted before or after its profit share. Between appraisals, the value of your stake is the sponsor's estimate; the only true mark is the sale. And the outcome depends heavily on one sponsor, one property and one business plan, so diligence on the sponsor matters more than anything in the pitch deck.

2. Public apartment REITs

A REIT is a company that owns tens of thousands of apartments and trades on the stock exchange like any other stock. MAA and Camden own mostly in the Sun Belt; Essex on the West Coast; and in August 2026 AvalonBay and Equity Residential completed their merger into Vivmark Residential.

What it does well. You can buy or sell any trading day, there is no accreditation requirement and no minimum, and you can hold them in any IRA. Costs are low, governance is public, and the price is set by the market every second. REITs do benefit from depreciation, just not in a way that reaches your tax return as a loss: it lowers the REIT's taxable income, and part of the dividend is often paid as "return of capital," which is not taxed until you sell. The rest of the dividend is ordinary income, but a permanent 20% deduction under Section 199A brings the top federal rate on it to about 29.6%.

What to watch. Because they trade like stocks, they fall like stocks. In 2007 to 2009, MAA fell about 53% and Camden about 73%. And recent history has been weak: through August 2026, MAA returned 7.0% a year over ten years and Camden 6.0%, while the S&P 500 returned 15.4%. Over the past five years both have lost money, as a wave of new Sun Belt supply held down rents. Essex, in supply-constrained West Coast markets, has done better recently. None of them can pass losses through to you.

3. Private-market interval funds (the Cliffwater funds)

Interval funds and tender-offer funds are registered funds that hold private investments but let you in with modest minimums, usually through an adviser or brokerage platform, and offer to buy back a small slice of shares on a schedule. Cliffwater runs the largest platform, and its two private credit funds come up most often:

• CCLFX (Cliffwater Corporate Lending Fund): direct loans to middle-market companies, about $31 billion. It has returned 9.2% a year since its 2019 launch, 6.9% over the past year, and currently distributes 8.5%.
• CELFX (Cliffwater Enhanced Lending Fund): a higher-risk credit mix, mostly asset-backed lending, about $8 billion. It reports 12.0% a year since 2021 and distributes 9.5%.

Note that neither is real estate. They are private credit: loans, not buildings. They belong in this comparison because they are what many physicians are being offered as their "alternatives" allocation. Cliffwater also runs a private equity fund, CPEFX, with strong reported returns, but it only launched in 2022. Laager principals' multifamily record goes back to 2011; comparing that with a fund that has under five years of history, all in a rising market, would not be a fair comparison, so I have left it out.

The fees are high, and the headline number is not the whole story. CCLFX's total annual expenses are 3.20%, of which 1.68% is the cost of the money the fund borrows. CELFX's are 2.94%. Paying 3% a year means the fund has to earn 3% before you earn anything.

The managers value the holdings themselves. There is no market price for a private loan. Cliffwater states that it prices each loan in CCLFX daily using its own methodology, then incorporates quarterly valuations from its lending partners. This is standard for the industry and happens under board oversight, but it has two consequences. First, reported volatility looks low because the numbers are smoothed: in a downturn, the marks move later and less than market prices would. Second, the adviser's fee is a percentage of those net assets, so the party estimating the value is also paid on it. That is a structural conflict, not an accusation, and it exists at every fund built this way.

Getting out is limited. CCLFX and CELFX offer to repurchase at least 5% of shares each quarter. If more investors want out than that, everyone is paid pro rata, and you wait. The fund documents also note distributions may be paid from sources other than net investment income.

Taxes. Private credit income is ordinary income, taxed at your top rate plus the 3.8% net investment income tax. That makes these funds a better fit inside an IRA or Solo 401(k) than in a taxable account, though, like anything in a retirement account, they still have to earn their place on return after fees.

Run the comparison yourself

The calculator below takes the same starting amount through each vehicle and shows what you would keep if you sold in any given year, after all fees and taxes. Enter returns after each vehicle’s fees, the way funds report them; the table also estimates how much you paid in fees along the way. Switch between a taxable account and an IRA, set your bracket, and change every return assumption. It opens on each vehicle's published track record, including the 20.4% weighted realized IRR across seven realized “similar to past Laager” deals*, which is what investors received after the sponsor's profit share. Those deals were held about three years on average, so that view is locked at three years; projecting any of these rates over a longer period would not approximate what has actually happened. Switch to "Cautious" for deliberately modest, round-number assumptions for every vehicle, which also starts at three years so the two views line up, and where you can then change the number of years.

* Similar to past Laager deals is defined as (a) a past deal sponsored solely by The Laager Group; or (b) any past deal in which Andrew Tischer, Laager's founder and managing director, was also a managing partner of the deal. Other directors have changed from time to time, but the founder and managing director was involved in all historical deals on an ongoing basis. Current Laager directors reflect current management of current Laager deals. Past performance is not necessarily predictive of future results.

One thing that can look backwards at first: the syndication often shows the biggest tax bill in dollars. That is because it earns the most. Look at the tax as a share of profit instead, and the rates are similar; the real difference is timing. The REIT and the credit fund are taxed every year, which slows compounding, while the syndication's distributions are sheltered by depreciation, can be reinvested in full, and are taxed once, at sale, partly at the higher 25% recapture rate. You can't put distributions back into the same property, so the calculator reinvests them at a rate you choose: 5% by default, or higher if you roll them into another syndication. The calculator models the typical limited partner: no 1031 exchange at the end, no Real Estate Professional status, and no other passive income to soak up extra depreciation.

A few things usually jump out. In a taxable account, the syndication pulls well ahead of the REIT and the private credit fund even when their pre-tax returns are close, because you are not paying tax on the distributions every year. In an IRA or Solo 401(k), the tax differences mostly disappear, so the comparison comes down to return after fees: whichever you expect to earn the most wins, because more money now compounds into more money later, especially when it grows tax-deferred. A syndication can be held in a self-directed IRA or Solo 401(k) too, though the depreciation is not used there. If you invest through a retirement account, check with your sponsor and verify with your tax professional whether unrelated business taxable income (UBTI) would apply. Many, but not all, private syndication deals are structured to avoid UBTI. Private credit gains the most from the shelter, because its income would otherwise be taxed at your top rate every year.

How I think about it

These are not competitors so much as tools for different jobs. REITs are the liquid, low-cost way to own apartments, and the right starting point for someone who wants exposure without a lockup. Private credit funds can be a reasonable income sleeve inside retirement accounts if you accept the fees and the limited exits. And for a high-income physician investing taxable dollars for the long term, a well-run private syndication offers something the others cannot: real depreciation on your own tax return, a specific asset you can underwrite, and a sponsor whose money sits next to yours.

Whatever you choose, ask the same three questions: what am I paying in total, how do I get out, and how is the value of my investment determined?

Fund figures are from Cliffwater fact sheets as of August 31, 2026. REIT returns are total returns with dividends reinvested, through August 2026. Past performance does not predict future results. This is educational content, not a recommendation to buy any security; talk to your own adviser and CPA.

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Educational content only, not personalized financial, tax or investment advice. Figures cited are as of the date of writing and may have changed.