Active and passive investing: Understanding the difference between the two can help you determine the best approach for your investment goals.
Active investing or otherwise called hands on investing, involves actively managing properties, such as locating, evaluating and purchasing properties. Then the heavy lifting starts renovating, and managing properties to generate income and profits. Active investors typically have a more hands-on approach and are involved in every aspect of the investment process.
Then we have passive investing which involves finding a qualified sponsor, evaluating the team and property. Investing in your capital in the real estate assets without active involvement in managing properties. Passive investors can invest in real estate investment trusts (public REITs), or private syndications providing exposure to the real estate market.
Passive investing or arm chair investing. Offers a more hands-off approach and can provide investors with a diversified portfolio of real estate assets without the need for active management. Additionally, passive investors can benefit from the economies of scale that come with investing in larger commercial properties, resulting in potentially higher returns.
Active investing requires more time, effort, and expertise but can also offer higher potential returns. Active investors can capitalize on market inefficiencies and generate profits through smart purchasing decisions, value-add strategies, and effective management.
In conclusion, the choice between active and passive investing and receiving mailbox money in real estate depends on individual investment goals, risk tolerance, and available resources. Both strategies can be profitable, and the right approach will depend on the investor’s unique circumstances.
If you’re looking for guidance on your real estate investment strategy, our team can help. Contact us today to learn more about how we can help you achieve your investment goals.