Manny Khoshbin explains that real estate investing offers a wide range of opportunities tailored to different levels of experience, time commitment, and risk tolerance. Whether you're someone looking for a hands-off way to earn income or you're ready to roll up your sleeves and manage properties directly, there's a strategy that can align with your goals. 

Advertisment

Passive investing appeals to those wanting exposure to real estate without daily responsibilities, while active investing suits those who prefer more control and potentially quicker returns. Understanding the differences between these approaches, along with your own resources and preferences, can guide you toward more confident and informed decisions.

What Real Estate Investing Involves


Real estate investing encompasses a wide range of activities, from owning rental homes to participating in large-scale property developments. Many individuals turn to real estate to build wealth, protect against inflation, or diversify their investment portfolio.

Some choose this path for steady rental income, while others aim to benefit from rising property values over time. Whether through direct property ownership or more hands-off approaches, real estate offers different strategies to match a wide range of financial goals. As markets grow, some investors even shift between strategies to adjust to changing economic conditions.

Advertisment

Passive Real Estate Investing


Passive real estate investing enables individuals to invest in real estate ventures without assuming the day-to-day responsibilities of property management. This often involves platforms such as real estate investment trusts (REITs), crowdfunding portals, or syndication deals, where investors pool their funds to back larger projects.

Many prefer this route because it offers a way to earn income or appreciate value without the commitment of being a landlord. A person might invest in a professionally managed apartment complex through a real estate fund and collect periodic returns while someone else handles the details. While it offers convenience and diversification, this also comes with trade-offs, such as reduced control and higher management fees that can impact overall returns. Investors should also consider the reputation and experience of fund managers when choosing passive alternatives.

Active Real Estate Investing


Manny Khoshbin says that active investing involves taking a hands-on approach to buying, managing, or enhancing real estate assets. This could mean purchasing a single-family home to rent out, managing a portfolio of short-term vacation properties, or renovating distressed homes to resell at a profit. Renovation-focused investors often seek undervalued properties in emerging neighborhoods to maximize returns.

Advertisment

Unlike passive strategies, active investors are responsible for tenant relations, property maintenance, and financial decisions. The rewards can be substantial, and some investors rapidly grow their wealth by flipping homes in high-demand areas. However, this also requires time, expertise, and a willingness to handle unexpected challenges, such as repairs or market shifts. Building strong contractor relationships and staying informed about local ordinances can help mitigate some of these challenges.

Comparing Passive and Active Strategies


Passive and active real estate investing differ significantly in terms of control, time involvement, and risk tolerance. Active investors often take full responsibility for decisions such as tenant selection, renovations, and pricing strategies. Passive participants, on the other hand, typically rely on experienced managers or sponsors to make those calls.

Time commitment plays a significant role in determining which approach is most suitable for an individual. Someone with a full-time job may struggle to manage properties, making passive investing a more realistic option. On the flip side, those with flexible schedules or real estate experience may find fulfillment in the hands-on nature of active investing.

Advertisment

Capital requirements also vary. A person might enter a REIT with a few hundred dollars, whereas purchasing and renovating a duplex could require tens of thousands of dollars upfront. Liquidity is another consideration. Shares in a publicly traded REIT can often be sold quickly, whereas selling a physical property may take months, depending on market conditions. Tax implications and depreciation benefits also differ, which may weigh into the decision for some investors.

Choosing the Right Fit Based on Your Situation


Deciding between passive and active investing comes down to personal circumstances. Someone with limited time or a low appetite for risk may lean toward passive vehicles that require less involvement and offer more predictable outcomes.

Your financial goals and timeline also shape the best approach. If you're aiming for long-term growth and have the patience, being a silent partner in a real estate fund could be a good fit. On the other hand, those seeking faster gains or more control over their investments might find active strategies more rewarding.

Advertisment

Manny Khoshbin notes that some investors blend both styles, using passive income to support their active projects or vice versa. The key is understanding your own limitations, strengths, and long-term vision before making a commitment. Tools like financial planning software or consulting with a real estate advisor can help clarify the best mix.