Using a property manager: Some investors purchase rental properties directly while hiring a property manager to handle day-to-day oversight and operations. The owner enjoys hands- off rental income with little involvement beyond higher-level decision making. However, the investor takes on more risk and responsibility than other passive structures. Turnkey properties are sold to an investor as a fully managed solution, typically with tenants already in place and management handled by a third party.6 • Pros : Direct ownership but without direct oversight • Cons : Less portfolio diversification than REITs, crowdfunding, or syndications unless an investor owns several rental properties. Management costs can be high. Fractional Ownership You need not purchase an entire property to get started. Investors can own a fraction of a professionally managed property, sharing the costs and profits with other investors through tenancies in common, joint tenancy, syndicates, and, more indirectly, crowdfunding and REITs.1
Pros and Cons of Passive Real Estate Investing Pros • Generate passive income • Diversification • Potential tax benefits • Long-term wealth accumulation • Inflation hedge • Options for lower capital outlay • Professional management Cons • Market fluctuations • Property management issues • Liquidity concerns • Interest rate risk 83
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