Individual Deals vs. Funds: Which Is Right for You?
There are two main ways to invest passively in multifamily real estate: investing in an individual deal, or investing in a fund. Both can provide cash flow, equity growth, and tax advantages. The difference is in how your capital is spread, how much control you have, and what you can expect along the way.
What Is an Individual Deal?
In an individual deal, you invest in one specific property alongside an operator. Before you invest, you can review the property, its location, the business plan, the financing, and the projected returns.
Advantages
- Full visibility. You know exactly which property you own a share of.
- Choice. You decide which opportunities fit your goals, one at a time.
- Simplicity. One property and one business plan to follow.
Considerations
- Concentration. Your capital depends on the performance of a single property, market, and operator.
- More decisions. Building a diversified portfolio means evaluating and investing in several deals over time.
- Separate paperwork. Each deal has its own documents and its own K-1 each tax year.
What Is a Fund?
A fund pools investor capital and spreads it across multiple properties. Depending on the fund, that can mean multiple operators, markets, or property types. Some funds identify their properties in advance, while others select them after raising capital.
Advantages
- Diversification. One investment spreads your capital across several properties, which reduces your reliance on any single one.
- One decision. You evaluate the fund manager and strategy once, rather than evaluating each property.
- Consolidated reporting. Typically, one set of reports and one K-1 per fund.
Considerations
- Less property-level control. You’re investing in the manager’s strategy, not choosing each property.
- Fee structure. Funds that invest in other operators’ deals may carry an additional layer of fees. Review the fee structure in each fund’s offering documents.
- K-1 timing. A fund’s K-1 may arrive later, since it depends on receiving K-1s from the underlying investments.
Side by Side
| Individual Deal | Fund | |
| Diversification | One property | Multiple properties |
| Your choices | Each property | The fund and its strategy |
| Visibility | Specific property and plan | Strategy and portfolio |
| Paperwork | Documents and K-1 per deal | Typically one set per fund |
| Fees | One sponsor’s fees | May include fund-level fees |
Which One Fits You?
An individual deal may fit if you want to see exactly what you’re investing in, prefer to evaluate each opportunity yourself, or are building a portfolio one property at a time.
A fund may fit if you want diversification with a single investment, prefer to rely on a manager’s selection, or have limited time to evaluate individual deals.
Many investors use both: a fund for a diversified foundation, and individual deals when a specific opportunity fits their goals.
How We Help
Whether you invest in an individual deal or a fund, we vet the operators and review the underwriting before any opportunity reaches you, and we stay your point of contact from first conversation to exit.
This article is for general educational purposes and isn’t investment, legal, or tax advice. Review each offering’s documents with your advisors before investing.