Passive Real Estate Investing - How To Get Started (2026)
Trying to make the most of passive real estate investing? You are in the right place. Below we break it down in plain English, with practical tips you can actually use.
Key Takeaways
- Share with your friends!FacebookPinterestMessengerWhatsAppEmailShareFlipboardRedditSMSX Do you wish you could make money from real estate in...
- As a real estate investor for more than half my life, I’ve often wondered what life would be like without worrying about tenants, maintenanc...
- Wouldn’t it be nice to realize the benefits of real estate without phone calls at 1 am about problems you can’t fix at 1 am?
Do you wish you could make money from real estate investments without doing the work, risk, and headaches?
As a real estate investor for more than half my life, I’ve frequently wondered what life would be like without worrying about tenants, maintenance, or collecting rent. Wouldn’t it be nice to realize the benefits of real estate without phone calls at 1 am about problems you can’t fix at 1 am?
Passive real estate investing is a strategy that allows owners to hand over property management while still making money.
Table of Contents
- My Experience With Real Estate
- What Is Passive Real Estate Investing?
- What Is Active Real Estate Investing
- Why Consider Passive Real Estate Investing
- Other Options for Passive Real Estate Investing
- The Downsides of Passive Real Estate Investing
- Final Thoughts
- Next Up From ChaChingQueen
My Experience With Real Estate
Active real estate investing is what allowed my family to retire young. But before retiring at 42, my career was in Financial Services as a Chartered Financial Analyst.
In one of my roles, I recommended which passive real estate investment products could be bought or sold by Financial Advisors. I have expertise with both active and passive real estate investments.
What Is Passive Real Estate Investing?
Passive real estate investing is a strategy that allows investors to generate income from real estate holdings without actively managing them.
This type of investing typically involves giving money to someone else who will do all the work for you, such as a real estate investment trust (REIT) or a real estate crowdfunding platform.
Passive real estate investing can be done through indirect investments or directly. This type of investment typically requires minimal management or effort from the investor once the initial purchase is made. A professional team handles most of the work involved in managing the property.
Passive real estate investing is frequently attractive to those who do not want to become involved in a property’s day-to-day maintenance and operations.
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What Is Active Real Estate Investing
Active real estate investing involves overseeing the management of the building, including finding tenants, renting the units, and maintaining the structure.
Investors generally spend much time researching suitable real estate options to purchase a property. Then they must apply for a mortgage with a bank or another financial institution and pay a significant down payment up-front.
After acquiring the property, investors must deal with ongoing bill payments, maintenance costs, renovations, and property taxes. Owners who are renovating and eventually house flipping are typically very hands-on.
Active real estate investing requires a significant investment of time and energy. The upside to being an active investor is that you can control the business model and implement the Purchase, Rehab, Rent, Refinance, Repeat (BRRRR) strategy to force appreciation.
Why Consider Passive Real Estate Investing
Not all real estate investors have experience with renting properties, maintenance, the legalities with evicting tenants, etc., that comes with active investing. When you hire a property management company, you pay experts to take care of everything.
Another benefit of passive real estate investing is that you can own property remotely. Hiring a property management company to take care of real estate on your behalf means you don’t have to be in the property’s exact location.
Remotely owning a property allows investors to take advantage of purchasing properties in high-demand areas from a distance without an active management role.
Other Options for Passive Real Estate Investing
Other than hiring a team of experts at a property management company to take care of active real estate management, other passive real estate management options are available for investors.
1. Real Estate Investment Trusts (REITs)
A real estate investment trust is a company that owns, operates, or finances income-producing real estate. A real estate investment trust allows people to invest without buying or managing the property. A REIT owns a basket of assets, with pooled capital from several investors to purchase properties. Rather than rental income, investors or unitholders receive a distribution, typically monthly or quarterly, which is taxable.
REITs can own several commercial property types, such as office and apartment buildings, hospitals, shopping malls, warehouses, hotels, and commercial forests. Numerous different and more focused REITs are available for investors, such as healthcare REITs and industrial and retail REITs, to name a few.
REITs can trade publicly on major stock exchanges, like stocks and exchange-traded funds. They are also public non-listed REITs, and private REITs. But publicly traded REITs are the most common way people invest in real estate.
Although publicly traded REITs aren’t especially risky investments, the returns won’t be as h
Final Thoughts
The bottom line: a little research on passive real estate investing goes a long way. Compare your options, watch for seasonal offers, and never pay full price when a better deal is one click away.
Originally published at chachingqueen.com.
Greg Wilson, CFA
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