CRE (Commercial Real Estate) is a great investment opportunity. But what type of investor are you? Do you want to be an active or passive investor? The difference between these two types is the amount of work they put in after initializing their investment. If you’re interested in investing in CRE, read on for more information about each type and how it impacts your return on investment!
When you buy a property with the intention of selling it for a profit or renting it out, this is known as active real estate investing. This could be a single-family home, a duplex, or a bigger multi-family dwelling. As a hands-on investor, you’re involved in every aspect of the transaction, from choosing a property to arranging finance. Because an active investor physically guarantees the loan and controls the investment, the risk is higher.
Passive investing is the act of investing in assets with little or no additional effort. In a passive investment, investors seek to maximize returns while minimizing their own engagement. As a result, passive income investment has taken on a purchase and hold mentality. So they can reduce their personal engagement by limiting their portfolio’s purchase and sell activity. Because most passive income investments are long-term, investors often use them as a retirement vehicle, as retirees are less inclined to work.
The following are some of the most significant distinctions between active and passive investing strategies:
You understand that investing in commercial real estate can provide a bright future for you but aren’t sure whether to invest actively or passively. Each investing strategy has benefits and drawbacks that an investor should carefully weigh before committing. Contact a trusted decision partner to help you choose the investor path you want to become.