• Hana Dinanie

How Passive Do You Want Your Real Estate Investment to Be?

Deciding how passive you want your real estate investing to be is an important consideration. It can come down to how much time you have to dedicate to your real estate investments and is a factor of your personal preference. For some real estate investors, it’s about a passion for all things real estate and they want to get knee-deep in the mud. For others, it’s about a desire to build a diversified and profitable investment portfolio of which real estate is just a part.

Whichever way you look at it, managing real estate is not passive and the process of acquiring and managing real estate investment properties involves a lot of work and skill. As a real estate investor, you can decide whether you want to be an active investor and manage your properties yourself or if you want to be more passive and outsource the work to a property management company or an investment management company.

The Active Investor

At one end of the spectrum is the smaller investor starting with one or two single-family dwellings. It may be manageable at first to find suitable investment properties and to manage those properties. It’s OK when you only have a couple of tenants who call or email from time to time about minor maintenance issues. However, as your real estate investment portfolio grows, these tasks take up more and more time. This investor then has the choice to limit the number of investment properties to the amount of time they are willing to invest.

The Outsourcing Investor

For the growth-focused investor, as the number of investment properties grows or the investments become larger, the choice will then become whether to outsource some or all of the work to a property management company. Property management companies provide a wide range of services ranging from sourcing tenants, managing rental contracts, and accounting to maintenance and repairs of properties. Another variation is a real estate investor who sets up their own company with employees to take on the day-to-day management of the real estate portfolio.

The Passive Investor

The passive investor is someone who chooses to outsource the work of real estate investing to an investment management company. This investor realizes the value of real estate in their investment portfolio and wants to use investment in real estate to increase their net worth and to generate a passive income without necessarily being involved in the specialized tasks of acquiring investment properties or managing those properties.

Investing in Property Syndications for the Passive Investor

Property syndication is a partnership between several investors who combine their skills, resources, and capital to purchase and manage a property they otherwise couldn’t afford individually. In our own example, By Starlight LLC offers investors our expertise in acquiring investment properties and in managing those properties to maximize income. Our investors contribute capital and receive passive income from the income generated by the properties they have invested in. Once a property is sold, investors will also share in the sales profit. In effect, the value of a property appreciates between the time it is acquired and the time it is sold and investors share in this appreciation. You can learn more about this type of investing on the By Starlight, LLC website and also request more information about available investment opportunities.

Whichever kind of real estate investor you want to be, we truly believe in the value proposition of real estate investing and wish you success on your investing journey!

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