When starting with commercial real estate investments, the first decision to be made isn’t which property to invest in, but how to approach the investment. The two conventional approaches to commercial real estate investments are: active and passive. Here are the pros and cons of both to help you find what kind of investment is best for you.
Let’s start with Active investments. Active investments are a hands-on approach. It involves the buyer securing their financing, overseeing the purchase, and managing the property. This approach results in a more significant profit for the investor and more control over the direction of the property. However, there are some downsides. Active investments are inherently riskier, more time consuming, and require some expertise.
Now for passive investments. Passive investments are a more hands-off approach. These investments often take place within a 3rd party investment group or through crowdfunding. Passive investments come with lower risk and are less time consuming, but offer less control and lower profits to the investor.
Still unsure what’s best for you? Give us a call at 910-791-0400 or fill out the contact form. We’d love to talk with you about making your first commercial real estate investment.