Is real estate really passive investing?

people working on a heavy machinery in the road

In short, “No.” Similar to driving, you have to steer, accelerate, brake when necessary and so on, but do you really need to lay the asphalt or paint the lane markers? Both are involved and interacting with the road, but from very different roles.

Ultimately you have to decide how much work you are going to put in to find markets and properties that make financial sense based on your investment criteria (you have a criteria right?) and decide what type of assets to invest in. You decide to lay the asphalt or simply drive the road others have paved. You will have to consider all the options and educate yourself, be it short-term or long-term rentals, single family or multifamily properties, storage units, notes, billboards, etc. Then you must determine your level of participation. Will you actively manage and take all the calls, screen tenants, run background checks, draft lease agreements, fix toilets yourself, etc. or will you manage a property management company that will do all of that for you or will you do a mix of the two by hiring out specific services while performing some on your own?

Some asset classes require less “active” roles for beginning or strategically more passive investors than others. Consider the activities needed to run a single family as a short-term rental vs a long-term rental. Consider the activities required to lease a billboard or a storage unit facility vs a single-family home. How about managing your own rental portfolio vs managing your property manager? Or fixing your own properties vs subbing out the work? What about choosing a keen operator of multi-family syndications where you are simply a limited partner investor? (More on this in a future post.) What if you owned a commercial building with a triple-net lease and a corporate tenant? You decide the level of passivity in your investments, by choosing the asset class you invest in. But, you still have to determine your destination and then calculate your best route to arrive at that destination. How many pot holes and pit stops you are willing to endure and so on.

I have spoken to many that have just stumbled into being an investor rather than planning for it and now they need to educate, focus and maybe shift directions because they were unprepared for the road they have been on. Every road leads to a different location. If your road is dirty, bumpy, long, and or slow surface streets and you want to be on an interstate or smooth freeway, then you can exit the road you are on and take a different road to achieve your financial freedom goals. You are not a victim. You are the master of your destiny.

Don’t give up on investing because you bought a rent house without calculating market rates, job growth and vacancy rates, failed to properly screen tenants, or simply misunderstood thinking that money was supposed to simply flood into your bank account after failing to do your due diligence. Educate yourself, level up, free your mind from the 5 for 2 exchange and change your stars.

Find your trusted real estate resource and develop a plan for prosperity and perpetually “passive” income.

Published by Wesley Fikes

Wes Fikes is the owner of North Forty Realty, North Forty Property Management and North Forty Construction located in Bentonville, Arkansas. Mr. Fikes is a well-diversified real estate Broker, and cash flow investor with a portfolio of single and multi-family properties and Limited Partner interests in 1,200+ doors located in Arkansas, North Carolina, South Carolina, and Texas. Prior to his real estate career, Mr. Fikes spent 10 years with Pepsi-Cola Company in small and large format sales. Mr. Fikes was first licensed as a realtor in 1999 in California and acquired his first rental property in the same year. Mr. Fikes holds a Bachelor of Science: Business Administration degree - Magna Cum Laude from Liberty University and is a Certified Retail Analyst. Over the past 20+ years in the real estate industry, Mr. Fikes has personally participated in 1031 like-kind exchanges and assisted fellow investors with selling and locating real estate investment opportunities, as well as traditional home sales.

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