A Brief Note on Passive Real Estate Investing and Its Types
One of the things that you can ask to the investors is that, what are the most trustworthy and smart methods of creating wealth. In addition, the maximum answer that you will get is that many of them would say investing in real estate and this answer will be there on their list. There are millions of people in the USA and all around the world, who are these days investing in the real estate to diversify their portfolio and to increase their wealth. Besides that, there are time constraints that people face these days. Most of their attention is grabbed by career, family life, social life and others, which leaves a less space for them to search for good real estate properties.
Passive Real Estate –
Other pivotal areas, which require the attention of the busy people investing in real estate is arranging the financing, manage maintenance request, lease tenants, and others. Passive real estate investing can build the ability for the individuals to invest in the real estate without much hassles or stress. There will also be not any kind of time constraint for operating the real estate property. One of the things that you should know is that there are two kinds of real estate investing.
Active & Passive Real Estate –
One is active real estate investing and other is passive real estate investing. Real estate investors are people, who own rental properties, collect rental income, manage tenants, manage maintenance request, and so on. This is the case of someone who is an active investor. However, the contradictory or ipso facto passive real estate investing is one such kind of investing where the investor do not work on their investments. For instance, when you purchase Apple stock, in that stocks are passive investment and you do not work for Apple. Therefore, active investing would mean that you are actively working on your investments. In addition, passive would mean that you give minimum capital or contribute it, and there is no work other than waiting for the right opportunity.
Real Estate Syndication –
These days investing passively are a very simple task and it is equal to joining the real estate syndication. Real estate syndication are a group of real estate investors and they together partner to make a pivotal real estate purchase, rather than working individually on it. For example, a 350 unit-building apartment may be of 100s of millions of dollars. It is possible that an individual buys it or a real estate syndicator can bring passive investors to buy it creating a syndicate. And, then each one of them will take a proportional percentage of profit.
Two Types of Partners in Real Estate Syndication –
There are two types of partners in syndication – general partner and limited partner. General partners are the one that will put together the deal and they are not passive investors. Limited partners are called passive investors. Limited partner invest capital upfront and they get regular payments on the investments, which they have made. When it comes to passive real estate investing, one of the things that you will notice is that you do not have to work anywhere; this is one of the benefits. In addition, next benefit is that you do not have to be an expert in real estate.