passive real estate investing

What is passive investing? Who is considered a passive investor? Exploring opportunities for passive real estate investments.

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What is passive real estate investing?

Passive real estate investing is a long-term wealth-building strategy that involves purchasing a passive real estate investment and holding it for an extended period. In this investment arrangement, you do not actively participate in property management. Instead, that responsibility belongs to a professional management company that uses the capital you and other investors provide to acquire, maintain, and sell the property.

Passive real estate investing offers many benefits, such as the potential for passive income, portfolio diversification, and hands-off investing.
However, passive real estate investing comes with potentially serious risks, such as an incompetent/dishonest management company or a dip in property values. A passive real estate investment requires intensive comparative research before making a decision.

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Learn more about real estate investing in Paperfree Real Estate Investor Magazine.

Who is a passive real estate investor?

A passive real estate investor is a person who seeks or owns real estate that doesn’t require active participation in the property's management or day-to-day operations. A passive investor commits capital to an investment pool to purchase, manage, and sell property as part of a silent-partner relationship with a real estate company or investment group.

The real estate company or the investment group handles all the managerial, operational, and marketing tasks. From this investment, the passive investor can receive steady income. However, passive investment arrangements don’t allow investors to provide input on the property or managerial decisions. You may be interested in becoming a passive investor if you want to access returns from a property you couldn't afford or if you want a real estate investment that won’t demand your time, effort, or mental energy.

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