Passive Real Estate Investing in WA State: Everything You Need to Know

December 18, 2019
Last updated:
May 16, 2023
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Are you looking for a way to invest your money to build wealth? Have you considered real estate in Washington? What if there was a way for you to invest in real estate without having to spend full-time hours on it while still making money?

This article will outline what passive real estate investing is to help you decide if it’s a sound investment vehicle for you.

What is Passive Real Estate Investing in WA?

Passive real estate investing is a type of real estate investing in Washington whereby you park your capital into a venture that you won’t have to directly manage yourself. While there is some work involved, most of the heavy-lifting is being done for you, hence the term “passive.” There are several ways to passively invest in real estate, which we’ll go over.

When you are looking to purchase a home, you might be looking for a place for you and your family to live. It might surprise you to learn that not everyone who is looking for a house is necessarily in search of a place to live.

Real estate is also a great way for someone to grow wealth. Furthermore, real estate is actually one of the most common ways that people become millionaires. Many investors buy properties in Washington that they rent out and collect rent checks every month, while others buy properties, fix them up, and “flip” them for a profit in the near future for a quicker income.

These are considered “active” ways to invest in real estate, and while they’re definitely profitable, they’re not necessarily for everyone. If you’re looking for a way to make money in real estate without flipping houses or looking for tenants, passive real estate investing might be the answer.

An Overview Of Passive Real Estate Investing

While “passive” is the opposite of “active” in this scenario, passive real estate investing in Seattle, Kirkland, or Bellevue does not mean that you won’t have to do anything. There is still work to be done. When you invest in a passive manner, this means that you aren’t playing an active role in the growth of the asset, which is property in this example.

One example of passive investing is the stock market. Investing in real estate-related businesses that are publicly-traded on the stock market simply means banking on a particular stock or company in hopes that the price of the stock will increase much higher than the price you paid for it. That’s how stock investors make their money.

But you need to make sure that you do your homework before you start throwing money at the real estate market. There are a lot of things that you have to look into, such as a company’s fundamentals and the state of the industry at the moment and where it’s forecasted to be in the future. This takes time and some knowledge in order to make a sound decision about where to invest your money with the stock market.

There is a serious time commitment that comes with passive real estate investing. You will also need to monitor the property values to make sure your investment is generating a solid return.

Ways To Get Involved In Passive Real Estate Investing

There are a few common ways that you can start investing in real estate in Washington, in a passive manner.

First, one of the most common ways is through the stock market, as just mentioned. There are businesses that make their money by investing in the real estate market for you. You can buy shares of these companies who then invest your money in real estate. This way, you don’t have to spend as much time looking into each individual company that you decide to invest with, as the real estate investment company is doing all that work for you.

Alternatively, you can also set up a partnership with an active investor. You might own the properties and then pay the active investor to rent them out to someone else.

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You can also invest in a Real Estate Investment Trust (REIT), which is a company that pools investor capital and uses it to invest in big real estate deals. REITs are great for those who want to take advantage of larger deals but don’t have the capital to do it on their own. It’s also great for those who appreciate working with a company that does all the homework for them as far as where to invest.

Finally, there is also real estate crowdfunding that has come on the scene. Those looking to invest smaller amounts of money might be interested in this method which pools smaller investments together to invest in much larger real estate projects. This method allows investors to make direct investments in real estate deals by pooling their capital with other investors while still benefiting from all of the benefits of passive real estate investing.

With crowdfunding, you can find deals that can pay you a monthly payment or dividend over a certain time frame and find investment opportunities that let you benefit from an equity stake in the deal. In this way, you can take advantage of potential rewards when the income is split up among all investors.

It’s important to talk with your trusted local real estate and mortgage professionals to get the best information for your personal situation.

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Have questions?

Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region that includes Idaho, Colorado, and Oregon. We have been offering a wide variety of mortgage programs and products with flexible qualification criteria since 1992. Please contact us if you have mortgage-related questions.

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