As an investment, real estate is often associated with long-term income and growth. However, the amount of time and effort needed to manage a property and collect rent can be significant. To help investors avoid these responsibilities, passive real estate investing is becoming more popular. Passive real estate investing can take several forms, ranging from rental properties to income from REITs. While some investors may wish to be active investors and manage their own property, many prefer to outsource this responsibilities and simply invest capital in a property that is managed on their behalf.
The most common form of passive real estate investing involves investing in a private equity real estate fund, which will provide investors with the opportunity to participate in an institutional quality commercial property without the burden of direct ownership and management. The sponsor of a private equity real estate fund will have the resources, relationships, and expertise necessary to identify investment opportunities, analyze and underwrite commercial real estate investments, and secure financing. In return for their capital, passive investors receive fractional ownership of a high-quality asset and periodic distributions.
Another form of passive real estate investing is buying turnkey rental properties that are already fully-leased and occupied. Investors will typically purchase these properties from online platforms that will then perform the due diligence, acquire and finance the property, and then manage it on the owner’s behalf. This form of passive real estate investing is becoming more popular, and it can be a great way to create a steady stream of income that will allow you to retire earlier than you would otherwise.
One final type of passive real estate investing involves trust deeds, which are secured loans recorded on a piece of property. Investors will typically receive a stated interest rate of return and the right to recover their principal investment at maturity. This is a more active form of passive real estate investing, but it can be an excellent way to generate recurring monthly income and potentially build wealth.
When it comes to determining the best passive real estate investing strategy for an individual, there are a number of factors that should be considered. For example, some investors will want to have a greater degree of control in their investments, while others will be more willing to give up this level of involvement in exchange for higher returns. Additionally, the level of risk that an investor is comfortable taking will also be a deciding factor.
Despite what some might think after watching a few reality television shows, there are many different ways to invest in real estate. Some investors like to buy and renovate properties, while others prefer to rent them out for a steady source of income. Whatever your preference, there is a passive real estate investment that is right for you. For more information about how to get started in this exciting field, contact us today! We can provide you with more information about the different options available, and help you find a passive real estate investment that fits your needs.