Active vs Passive Real Estate Investments

In general, real estate investments can be considered either active or passive.

Active



An active real estate investor requires dedication of time, knowledge and expertise. Researching different markets and areas, locating and identifying the right investment, conducting due diligence on the property, putting in an offer and following up with the right tenant and renovation is a balance of timing and insight.



It is a full-time job. 



An example is owning a single-family rental or a triplex.  You must find the property, negotiate the purchase price, secure financing, close the deal, make repairs, advertise the rental, screen and place tenants, manage tenants, and make any repairs if they come up.  It can be a lot of work.



If you have the time, energy, knowledge and skills to effectively take care of all aspects of your real estate portfolio, Active Investing might be a god fit for you



Passive Investing



As a passive investor, you can leverage the knowledge and expertise of professional real estate investment firms.  Passive investors relay on the Manager’s experience and capabilities to create a deal-flow, manage the real estate and to perform great exit strategies for its business model, whether is an Apartment Complex, Self-Storage or a New Commercial Development. Passive Investors must perform a due-diligence of the Fund Manager’s and the Investment Firms.



Passive investments often provide high IRR, they are asset backed, tax efficient, and convenient. 



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