You’re probably not surprised that I strongly believe that real estate is a great place to put your money. The convergence of the tax benefits, appreciation, capital preservation, and cash flow creates a very powerful strategy for wealth creation.
As an investor, your next step is to decide if you want to invest actively or passively.
It doesn’t have to be black or white. Why not do both? I know I do.
There are benefits to doing both active AND passive real estate investing.
Personally, I believe that passive real estate investing utilizes the most powerful tool of all for wealth building.
What is such a powerful tool for building wealth? One word….LEVERAGE
Leverage allows you to grow explosively, instead of linearly.
When you invest passively in real estate you are leveraging other people’s time, other people’s money, and other people’s expertise.
Other People’s Time
You’re busy. You’re busy with your family, your job, your side gigs, your life. Why make your most precious resource a limit to your wealth building?
Don’t have time to learn the business model of apartment investing? Don’t have time to hire maintenance personnel? Don’t have time to take tenants to eviction court? Don’t have time to explore a new market or underwrite a new property?
Why not work with people who do have the time? Leverage those people’s time. Remember, there are only 24 hours in the day. There are people already dedicating their time to these activities. Why not use their time to make your money grow for you?
Other People’s Money:
With passive real estate investing, you’re not relying just on yourself or your available funds to purchase a property. You can combine other people’s funds with your own to purchase a large property. Another component of leveraging other people’s money is using the bank’s money…using debt to purchase property.
Other People’s Expertise
It takes time and resources to become an expert in anything. But if you can rely on someone else’s expertise, then why do you have to spend the time or the funds to become the expert? It takes 12-16 years and hundreds of thousands of dollars to become a physician specialist. When we need specialized medical expertise, we leverage other people’s expertise. The same concept is applied in passive real estate investing.