Active Real Estate Investing

August 2, 2021

What is Active Investing anyways?

In Real Estate, Active Investing is hands-on and occurs when an investor uses their money to acquire an individual property to reap appreciation and income benefits. Commonly, Real Estate investors fix run-down properties and flip them for a higher price or rent properties out to obtain income. Active Investing can take a large amount of time to manage but often yields attractive returns.

Some ways an investor can actively invest include:

  • Purchasing a turnkey property. This means that there is already a Tenant living on the property and Investors would usually be inheriting the previous Property Owner's lease agreement.
  • Fix N Flip properties are typically distressed properties that require minor or major renovations to bring it back to market standard. After fixing up the property, the Investor would typically sell the property at a premium.
  • Rehab and Rent is when a Property Owner makes necessary fixes to the property so that it becomes habitable. Once it is, the Property Owner will begin renting it out to Tenants while ensuring that all regular maintenance issues are taken care of.

What is Passive Investing?

Passive Investing is fairly hands-off and occurs when an investor puts their money into a managed fund or entity and receives dividends or share appreciation as a result of the investment. Passive Investors typically don't have significant input into the operating decisions of the fund and expect that the managers will act in accordance to their fiduciary duty and the business plan.

Most passive investors can use crowdfunding services:

What are some benefits for Active and Passive Investing?

Pros for Active Investing

Active investment in real estate properties yield some extraordinary benefits:

  • Tax - Investing in Real Estate allows Property Owners to take deductions such as Mortgage Interest and Property Tax. Additionally, a major benefit is depreciating assets since depreciation isn't an expense that comes out of a checking account. Instead, depreciation is a calculation of expected loss over time, whether or not the loss is actually incurred.
  • Control - By investing in a real estate property, Owners have the ability to make all the decisions. Want to sell? Go ahead. Want to renovate the property? Do you. The flexibilities and control afforded to Real Estate Investors are attractive propositions.

Pros for Passive Investing

Passive investing also has its benefits:

  • Time - Passive investing is fairly hands off and doesn't require a significant time commitment. After Investors have put their money into a fund or entity, they can expect to get a target income amount.
  • Risk - Passive investing is usually lower risk because the fund managers are (hopefully) more experienced. Additionally, given the popularity of fractional ownership, passive investing can enable an Investor to reap returns even on a small amount of money.

What should I do?

Everyone's situation is different so there is no one size fits all right answer regarding whether or not passive investing or active investing is better. Investing in real estate is usually a smart idea because real estate has been a strong performing asset class and is one of the most consistent ways to build wealth.

At Nophin, our vision is to help Property Investors reap the rewards and benefits of active investing while doing the work a passive investor has to do (hint: very little). We're real estate investors and technologists and want to help you have your cake and eat it too.

Nophin provides Property Investors with their rental money upfront allowing you to focus on growing and maintaining your business. We're excited to make a huge dent in this industry and deliver a great, fair, and consistent experience to Property Owners and their Tenants.

Please note: Nothing above should be construed as legal, investment, tax, nor financial advice. This content is for informational purposes only. Consult a lawyer and/or an accountant if the above is right for your personal situation.
Active investing vs. passive investing, Rental property owner, Pros and cons of investing in rental properties

Let's stay in touch.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.