We’ve already established that there is no such thing as hands-off real estate investment. “Passive” real estate investment doesn’t usually mean sitting by while other people handle your investments for you as you enjoy a tasty piña colada on the beach of some tropical island (though if you've figured out the secret to this method, please share!).
What passive real estate investment should look like is an investor who is determined and plugged in to his or her properties and actively engaged with the property management team. You won’t be stuck with another full-time job, but you won’t be unaware of what’s going on, either.
Passive investing is the dream, but the dream needs to have a few healthy doses of reality thrown in. Investing in real estate does take time and effort — it’s a daily commitment that takes discipline.
For new investors, however, getting started in real estate investment can be a daunting task. There are many niches and varieties in real estate investment. How do you know what kind of real estate investor you want to be?
Real Estate Investors Can Change Over Time
If you started off investing in single-family homes, you don’t have to invest exclusively in single-family homes. Even if you’ve found yourself in a real estate investment niche, you aren’t stuck there. You always have the option to diversify your portfolio. Multi-family housing and commercial real estate is still ripe for the taking.
The trick is to find what kind of investing really gives you joy. The answer won’t be the same for everyone. There are more types of properties, perhaps, than you’ve thought about.
Some Varieties of Properties
Small and Large Apartments
Commercial Office Space
Mobile Homes and Parks
Motels & Hotels
There are more opportunities out there for passive investing than people realize. There are even opportunities to invest in notes held by real estate investors or short and long-term lending opportunities. Investing does not have to simply be buying and selling or buying and holding one property at a time. All investments require time, capital and a level of education and familiarity with the niche to be successful.
Narrowing Down Investment Options
Identify What You Want Out of Your Investments
Are you looking for fast cash? Reliable monthly cash flow? The appreciation of value over time? Consider your personal goals for real estate investment, and make an honest assessment of how much time and capital you can spare for your investments. Once you identify your goals (short and long term) as well as your limitations, you’ll have a better idea of what kind of investments are within your reach.
Research What You’re Interested In
If certain types of properties don’t spark your interest at all, look elsewhere. Pick a few areas of passive investing that excite you and do some research. Beyond the types of properties, there are multiple investment methods, too: fix and flip, buy and hold, wholesaling, turn-key investing...the list goes on!
Take the time to learn the ins and outs of property types and methods until you’re comfortable enough to make a plan of action. Talk to seasoned investors in their field and learn from their successes as much as their failures.
Make a Plan of Action
If you’re interested in multiple types of investments, start slow with one or two varieties. The last thing you want to do is bite off more than you can chew. Write out short and long-term goals...and get to make your investments a reality!
What type of investments do you get excited about? Share with us in the comments.