Last week, I was talking with an investor who’s trying to figure out his next move in real estate. Should he jump in as an active investor…buying properties, managing renovations, dealing with tenants? Or should he invest passively in syndications?
We walked through the pros and cons of active investing. Then I explained what we do at Big Spring Capital, how passive investing works, and how it would allow him to participate in real estate without any of the operational headaches.
His response caught me off guard.
“Honestly,” he said, “investing passively kinda feels like cheating.”
Cheating.
I’ve thought about that word a lot since our conversation. And I’ve realized this mindset is probably more common among high achievers than I initially thought.
The Guilt of Getting Paid Without “Doing the Work”
There’s this almost visceral guilt some people feel about passive investing.
I’m not doing the work, but I’m reaping the rewards. Doesn’t that make me lazy?
I get this line of thinking. But I also think this perspective is missing something crucial: It’s not about taking a shortcut. It’s about specialization.
You see examples of this everywhere.
A doctor running a successful practice doesn’t feel guilty about hiring an accountant. Business owners don’t apologize for delegating tasks that fall outside their zone of genius.
So why should investing (and real estate specifically) be any different?
Investing passively isn’t laziness. It's strategic resource allocation.
What’s Your Highest and Best Use?
The question you need to ask yourself: where does your time create the most value?
Your time has a dollar value, whether you’re:
Building and scaling a business
Advancing a high-paying W-2 career
Spending quality time with your family
And there’s a real opportunity cost to becoming a landlord and managing everything yourself.
Let’s say you could get your active real estate fairly streamlined. Maybe you’re only spending 5-10 hours a week managing your properties. Not bad right?
But could those 5-10 hours create more value if you spent them growing your business? Advancing your career? Being present with your family?
Sure, there are legitimate reasons to go the active route. If that’s genuinely what you want to do, and you’re going into it eyes wide open knowing it’ll be a lot of work, great. I have zero problem with that.
But don’t do it out of guilt. Don’t do it because you feel like it’s “cheating” if you’re not doing everything yourself.
If anything is “cheating,” it's wasting your highest-value hours on work someone else can do better.
You’re Not Giving Anything Up
You can achieve almost everything you want from real estate by investing passively: cash flow, equity growth, tax benefits…all of it. And all without unclogging a single toilet.
This also isn’t a binary, forever choice.
One of the strategies I’ve counseled several people to pursue: start passive, especially if you’re interested in commercial properties or larger deals. Investing passively first is an incredible education. You’ll see the terms, the reports, the process. You’ll start to understand what matters and what doesn’t.
It's like getting an education with returns.
Another thing worth noting: many active investors, including myself, still invest passively in other people’s deals. Being active doesn’t preclude you from being passive. Most successful active investors I know do both.
So start passive. Learn the space. Decide later if going active makes sense for you. You’ll be way more prepared to make that decision with experience under your belt.
A Quick Reality Check
I don’t want to leave this conversation without acknowledging something important: passive investing isn’t without work.
You still need to thoroughly vet operators and deals. You can’t just hand your money to any yahoo with a pitch deck and a dream.
Being passive doesn’t mean being careless. But the work required to evaluate sponsors and opportunities is vastly different (and far less) than the work of being a landlord.
Permission to Take the “Easy” Path
If you’ve been avoiding passive investing because it feels like easy mode, consider this your permission slip.
Success doesn’t require suffering. Your goal is freedom and wealth, not complexity for complexity’s sake.
Don’t look at passive investing as a shortcut. Look at it as specialization, as letting the people who are great at operating real estate do exactly that, while you focus on what you’re great at.
That’s not cheating. That’s just smart.