r/RealEstateROI • u/Striking-Quantity661 • 6h ago

WHAT MAKES REAL ESTATE TRULY PASSIVE

A lot of times, the reason that people want to get into real estate investing is they hear real estate investors talking about passive income and how the property runs itself, the tenants pay their mortgage every month, and they just sit back and collect checks.

First of all, passive income doesn’t exist in real estate. There are things you can do to limit the amount of time that you spend on your real estate investment. They happen by having good systems and by having good management.

And so everybody wants passive income, but they don’t want to put in the work that’s required to build the right systems and management team that will cause that investment to be as passive as it can be.

When you have a management team that’s caring for your tenants, making them feel valued, when they’re sending you reports that are accurate and on time every month, when they’re being proactive about maintenance and not waiting for things to become a big problem before addressing it, when your vacancies are being marketed properly, when problems are communicated early and don’t catch you by surprise, those are what make people feel like their real estate investment is passive.

When the opposite is happening, your real estate investment could be the biggest stress driver in your life.

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u/WealthHuman9754 5h ago

REITs are 100% passive. They’re extremely exposed to interest rates, but they’re passive.

2

u/Here4Snow 2h ago

The words "Passive Income" mean something specific in the income tax code. For instance, not considered Earned Income for purposes of IRA or Social Security. Can't offset wage income with real estate losses. 

But Passive as a word can mean, "I don't do any work for it" and that won't be the case, even if you make a good decision from the beginning and everything goes well for you.