There are a lot of misconceptions about what passive real estate investing really means. Over the years people have referred to what I do – the buy-and-hold method -as passive, and that’s not totally accurate. While I certainly don’t have to deal with every property every day, there is still a lot of work involved.
If you’re looking for something that’s truly passive, meaning you can invest your money and sit back while someone else does the heavy lifting, consider one of these methods.
Buying shares of a REIT
A REIT is a corporation, trust, or association that invests directly in income producing real estate assets. When you invest in a REIT you’re investing in real estate assets through the stock market. In simple terms, a REIT is a portfolio of properties, and the group that invests in them gets to share in the cashflow as well as a portion of the equity. The monthly income, equity, plus some advantageous tax benefits make investing in REITS appealing to people who want all the benefits of owning real estate without the hassles.
A real estate investment fund
These are mutual funds that invest in real estate, and they offer benefits that may appeal to passive investors such as greater diversification and therefore reduced risk and a higher potential for returns. In simple terms, investing in a real estate fund is like investing in a basket of REITs. It’s far more diversified than investing in a single REIT, but ultimately has the same benefits and characteristics.
Real estate crowd funding
Crowdfunding happens when an experienced real estate investor or developer identifies an attractive investment opportunity, negotiates the property’s purchase, deals with lenders, and arranges for all necessary work. However, if the developer doesn’t have the necessary capital to complete the project, he or she may raise the rest from individual investors in exchange for financial interests in the project. The key here is that it’s usually done online. In some cases you will never even have to speak to another human in order to invest – if that isn’t passive investing, what is? Real estate crowdfunding is very much the next generation opportunity, as younger people tend to be more comfortable creating and building trustworthy relationships online.
Partner with an active investor
This can be a win-win situation, as it allows you to put your money to work in residential properties without having to do all of the work, and the active investor has extra capital to pursue properties with. These types of deals often come about through joint venture agreements.
The Scott McGillivray Real Estate Fund
Interested in passive real estate investing? The Scott McGillivray Real Estate Fund is the first time I’ve been able to give people an exclusive opportunity to invest passively alongside me in a portfolio of residential development projects in key growth areas in Ontario. Each project and portfolio investment is strategically selected by me and a qualified team of real estate professionals to offer investors an attractive return.
Want to learn more? Sign up here and someone from my team will be in touch.