Don't become passive investors

[Carlos Ptriawan]

If there's one thing I learnt from the massive crash of CRE in 2023(and 2024) is that "Do not become passive investors". WHen you are passive investor, you become the dumb money , your money is being misused or mismanaged by more experienced sponsor/operator. Why ? because when you are passive and you do have money, you tend not to understand the risk. When market changes, even the most sophisticated sponsor could collapse.

At the end of the day, it's better to become "active investors" where you know every single bit of your investment, your market, your realtor, your contractor, what's the actual repair cost, actual rent, appreciation and so on and so on. Real estate is very tricky, if one can be successful it's because investor can see the hidden pitfalls and trap, and have ability to dance with the unexpected. So understand every bit of risk is important. Don't just blindly follow "oh this is so passive and return is guaranteed", it's never work like that.

[Chris Seveney]

I agree on the point of your investment is not guaranteed and never fall in love with the sticker price of the offering (ie returns), you really need to look under the hood on these deals

But active investing is not for everyone and if you do not have the time to manage your active investments, it’s not like the stock market where you have as good a chance to return on your portfolio doing nothing than hiring a manager - if you do not have the time nor ability it typically will not end well. Also is it the best use of your time or money?

Time to me is 1000x more valuable than money at this stage of my life and if I would much rather take the money I earned and diversify my portfolio into passive investments because I am too busy in my active life.

Yes I made all my money being active in real estate but it’s not a one size fits all