Passive Real Estate Investing
Passive real estate investing refers to the practice of investing in real estate assets without assuming hands-on management of physical assets, and typically with little or no voting rights. Passive real estate investors are typically taking on LP interest in the investment, as opposed to the “active” GP investor – the Sponsor or developer.
In short, passive real estate investors can expect to share in the upside of high-performing equity real estate investments, but the GP (active) investor will typically stand to earn proportionally more profit in order to compensate for the additional liability and effort that the active investor must assume.
Passive real estate investors typically enjoy many of the same tax benefits as GP investors, as delineated in this article.