Advertiser Disclosure

advertising disclaimer
Skip to main content
looking at construction

The Best Passive Real Estate Investment May Surprise You

Find the best way to invest in passive real estate for you.


[Updated: Jun 11, 2021 ] Jan 21, 2020 by Liz Brumer
Get our 43-Page Guide to Real Estate Investing Today!

Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.

*By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Pros Cons
• They can provide competitive dividend returns (3% to 12% range, depending on the company).

• Investing in a company that owns real estate (and typically holds a diversified real estate portfolio).

• No active involvement after investing; the portfolio is managed by the REIT.

• Low upfront investment. Investors can buy shares for just a few hundred dollars.

• Available to anyone.

• Your investment is typically tied to the stock market, which fluctuates from time to time and may put you at risk of market swings.
Pros Cons

• It can provide large returns (10% to 30% range, depending on the investment).

• You can access larger investment opportunities that you might not be able to buy or invest in on your own (like a large apartment building, hospital, or other commercial property).

• No active involvement after funding; the real estate investment is managed by a third-party sponsor.

• Only available to accredited investors.Long-term investment, where your funds are illiquid.

• Is considered risky, as the success of the investment and return is up to the sponsor and varies for each investment.

Pros Cons
• It's possible to earn passive income, particularly if the property is managed by a property management company.

• It can provide competitive returns (8% to 20% range, depending on the investment).

• Potential to gain tax benefits and appreciation in addition to passive income.

• Available to anyone.

• Liability.

• Income isn't always passive -- especially if it's self-managed.

• Unexpected expenses or long vacancies can diminish cash flow.

• Long-term investment, where your funds are illiquid.

• Higher upfront investment, around 10% to 20% of the property purchase price.

Pros Cons
• Truly passive as long as the borrower continues to pay.

•It can provide competitive returns (10% to 20% range, depending on the investment).

• Low upfront investment.

• Investors can buy shares for just a few hundred dollars.

• Available to anyone.

• May have to foreclose if the borrower stops paying, which can be costly and lengthy.Long-term investment, where your funds are illiquid.

• Higher upfront investment -- normally tens to hundreds of thousands of dollars.

Pros Cons
• Truly passive after acquiring the tax lien.

• It can provide competitive returns (4% to 18% range, depending on the jurisdiction and winning bid amount).

• Not a passive upfront investment, requiring active participation during due diligence and auction participation. 

• Funds are illiquid while the lien is in place.