Differences between Active Investors and Passive Investors

The Financial Freedom Blueprint-(6/24/23)-Differences between Active Investors and Passive Investors

Hey everybody!

Welcome to another edition of “The Financial Freedom Blueprint” where we discuss the topics of real estate and financial freedom.

My goal is to help as many people as I can get started investing in real estate and eventually reach a goal of financial freedom where they can eventually create a life they don’t need a vacation from.

Today, I wanted to discuss the difference between between being an Active Investor vs. being a Passive Investor when it comes to real estate.

I discussed this topic a few months back, but feel it is very important to know the differences and what comes with each one so you can decide which option you prefer.

This is the big question you must ask yourself when you decide to enter the world of real estate investing.

Many people are excited to get started investing, but don’t understand what each role entails.

First, let’s start with the Active Investor.

This is typically somebody who enjoys the day-to-day responsibilities that come with real estate and enjoy being an entrepreneur.

I’ve also noticed they tend to be people who don’t like their career as much and get more enjoyment through real estate.

They usually start real estate as a hobby in their free time and eventually reach a point where they want to make it a full-time career.

On the other hand, a passive investor will typically not enjoy the responsibilities and headaches that come with investing in real estate.

They simply prefer that “mailbox money” and are fine just wiring funds into a deal and letting the operator handle it from there.

These are typically high-income earners who enjoy their careers and just don’t have enough time in the day to play an active role.

The magic happens when you pair an active investor with somebody who is passive.

When this happens, they are able to form a partnership where they bring complementary skillsets to the table.

The active investor brings time and experience to the table while the passive investor brings money to the deal.

This is common in joint venture agreements on smaller deals or syndications with larger apartments.

Working together is a great way to help the active investor close on deals and to help the passive investor earn a return on their money.

The key is to create a win-win scenario for all partners involved.

I hope this was helpful for you when it comes to determining whether you prefer being an active investor or passive investor.

Obviously, people change over time and may consider making the switch from active to passive or from passive to active.

However, it’s good to know the differences between the two so you don’t find yourself regretting choosing one over the other.

Have a great weekend everybody!

Active Investors

If you want to learn how to purchase your first investment property within 6 months, but don’t know what steps to take, please schedule a call with me using the link below to see if my coaching program can help.

The main strategy I teach is the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy.

I’ll help you minimize beginner mistakes and shorten the learning curve from years to months.

For Everybody

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Disclaimer: My newsletter should be viewed as educational content and should not be construed as actionable advice without consulting the proper professionals.