Passive Investing in Build-to-Rent Real Estate: The Pros and Cons

There is a new type of real estate investor in town, and they are called “passive investors.” Passive investors are people who invest in build-to-rent properties, but don’t have any involvement in the day-to-day operations of the property. Instead, they rely on professional property managers to take care of everything for them. So, what are the pros and cons of passive investing in build-to-rent real estate? Let’s take a look!

The first pro of passive investing in build-to-rent real estate is that it can be a very lucrative investment. Build-to-rent properties tend to appreciate in value at a faster rate than other types of investment properties, which means that your return on investment (ROI) can be quite high. Additionally, because you are not actively involved in the management of the property, your expenses will be lower than if you were an active investor.

The second pro of passive investing in build-to-rent real estate is that it is a relatively low risk investment. When you invest in a build-to-rent property, you are essentially diversifying your portfolio and spreading out your risk. This is because you are not putting all of your eggs in one basket (i.e., you are not relying on just one tenant to pay your mortgage).

The third pro of passive investing in build-to-rent real estate is that it can provide you with a steady stream of income. Unlike other types of investments, such as stocks and bonds, build-to-rent properties tend to be very stable. This is because there is always a demand for rental properties, no matter what the economic conditions are like. Additionally, because you are not actively involved in the management of the property, your income will be less volatile than if you were an active investor.

The fourth and final pro of passive investing in build-to-rent real estate is that it offers a great deal of flexibility. For example, if you ever decide that you want to sell your property, you can do so without any penalty. Additionally, if you ever need to move, you can easily rent out your property to someone else.

So those are the four pros of passive investing in build-to-rent real estate. But what about the cons? Well, there are a few potential drawbacks that you should be aware of before making your decision.

The first con of passive investing in build-to-rent real estate is that it can take a long time to see a return on your investment. Build-to-rent properties tend to appreciate at a slower rate than other types of investment properties, which means that your ROI will be lower than if you were an active investor. Additionally, because you are not actively involved in the management of the property, your expenses will be higher than if you were an active investor.

The second con of passive investing in build-to-rent real estate is that it can be difficult to find a good property manager. While there are many qualified property managers out there, they can be hard to find. This is because most property managers tend to work with active investors, rather than passive investors. As such, it can take some time and effort to find a good property manager who is willing to work with you.

The third and final con of passive investing in build-to-rent real estate is that it is a relatively illiquid investment. This means that it can be difficult to sell your property if you need to raise cash in a hurry. Additionally, because you are not actively involved in the management of the property, it can be difficult to find a buyer who is willing to pay what you are asking for your property.

So those are the three potential drawbacks of passive investing in build-to-rent real estate. As you can see, there are pros and cons to this type of investment. Ultimately, the decision of whether or not to invest in a build-to-rent property is up to you. If you think that the pros outweigh the cons, then passive investing in build-to-rent real estate may be right for you.