Myths About Passive Investing

I assume you have already scrolled through blogs about passive investing in real estate managing companies and learned things that can seem too good to be true. Which is understandable, we have all been there - confused as to how can something that requires practically no work done or any of your involvement, can generate you so much income? There are many people like you, but some even just love to assume that everything about passive investment is just false, without actually checking and love to come up with myths on their own, that seem closer to the truth for them. That’s why I decided to go through some of the myths that are going around in the community and prove that they are false.

“Passive investing companies aren’t trustworthy.

One of the things that I have learned while being in the industry for so many years, is that before investing your capital in anything, you should first gain as much information as you can. Obviously, frauds can be found in any work area in the world, that’s why, you should keep in mind that a good company always provides all the information about who they are, how they work, what they need from you and what are they promising you on their website. You can also double-check by contacting their past customers or in this case investors and learn about their experience with the company. For example, Trident Multifamily is a company that manages multifamily properties and is looking for long-term passive investors, they have provided all the information such as their strategy, work process and about the company in general, including the founders. By scrolling through their website you will be able to learn more about them and even contact in person for future questions. And all this means that they are proud of their work and what can they provide for investors, are very experienced and for a fact, legit.

“Passive investing isn’t safe and can’t guarantee you a stable income.”

One of the first thoughts that newbie investors get when learning about passive investing is - “what if I will lose money?” or “is it a safe market to invest in?”

Let me tell you that everyone who is even slightly familiar with how real estate works, knows that passive investing is for a fact one of the safest types of investment in it. We can even compare it to some of the other, common types of investments:

1. Self-investing: where you own properties and are either selling or renting them to people. Here you are risking staying without income for months if you won’t be able to find tenants when the last one leaves, or won’t be able to sell the property when you need money the most.

2. Stock market - where you purchase a share of a company in hopes of its value grows over time so you can sell it for a much expensive price. But the value of your share can not only grow but go down completely, which can leave you in a loss.

When it comes to passive investing, you are putting your capital in the company that manages the property for you, it’s like you are paying a company so they can generate a stable income for you. Working with a professional company with experience and knowledge is definitely a safer option than diving into the market unexperienced or risking everything on stocks.

“Passive investing is for lazy people.”

One again - false. This one got me pretty confused since it doesn’t really make any sense - passive investing requires putting your capital in the company out of your pocket, which means that you should already have collected something in your bank account. Passive investing is a great opportunity for extra income, that doesn’t demand any of your time and energy, which means you can still proceed to work on your own business or etc while generating more money from investments. People also tend to invest in when they are planning their retirement or are finally taking time off from working non-stop for years since with passive investing you have plenty of time and money to spend it on yourself and your loved ones.