What is Passive Real Estate Investing? | How to Earn Passive Income Through Real Estate

What is a Passive Real Estate Real Estate Investing?

To fully understand what it means to be a passive real estate investor, let’s first explain the term passive. The term passive in relation to business is defined as ‘not actively participating’.

There are a few ways to become a passive real estate investor but specifically within multifamily real estate, a passive investor will provide a sum of money to their syndicator or deal sponsorship team. In turn, syndicators or ‘active investors‘ will work to manage the day to day activities of the multifamily investment property to ensure the properties financial success. That’s the difference between passive and active real estate investors.

How Do You Receive Passive Income as a Passive Real Estate Investor?

In multifamily real estate, passive investors will typically receive quarterly, monthly, or yearly distributions from their sponsorship team.

The frequency and timing of distributions will all depend upon the syndicator and the business plan they put into place for the investment property.

When the asset is sold, passive investors will receive a return on their investment. This return can vary depending on how long the property has been held, the multifamily asset class, the properties appreciation whether forced or natural, and the current conditions of the market!

In Summary

Passive real estate investing is ‘passive’ meaning its hands off! This allows for many individuals to receive strong passive income and generate wealth through real estate without all of the work or stress.

Sound easy? That’s the point!

So, What’s the Catch to Passive Real Estate Investing?

As a passive investor, it’s incredibly important that you do your homework before investing. This homework should be related to what deal you should invest in, and more importantly who you invest with!

Here are some tips for identifying good markets for your investment.

It’s important for you as a passive investor to build trust with your sponsorship team. That way you can rest at night knowing your investment is in good hands.

Please reach out to us here for any questions about passive real estate investing in multifamily!

Video Transcription

This is Jaymee!
Jaymee and her family have been investing in the new york stock exchange for the last 5 years! Over the course of their investing they have received both revenue and losses but their primarily gain is Stress!!!
Between work, their kids soccer practice, ballet lessons, spelling bees, and parent teacher meetings,
Worrying about the stock market going up and down and when to buy and sell their shares has become way too much of a burden!
….Not to mention the high risk of their families financial security riding upon their investments!
Jaymee and her husband want to pursue a new investment option that will create less stress, less risk, and a substantial reward.
Jaymee has done her research and has come across the idea of becoming a passive investor!
Jaymee has learned that passive Investing is when an individual contributes their money as an investment, and allows another firm, group, or company to manage the day to day activities of the investment.
Passive Investing allows investors like jaymee to receive continuous distributions from their investment, without much daily hassle!
When the asset is sold Jaymee will receive a substantial return on her investment that will accumulate the wealth and financial freedom for her family that she has always desired! Not to mention the reduction of her stress!
……This is what makes a passive investment PASSIVE – it’s hands off! Allowing Jaymee and her husband more time to enjoy life and the financial ability to send their kids to the college of their dreams!