August 8, 2025
Let your money hustle while you chill
Investing in real estate for passive income is a practical way to grow your wealth and expand your financial foundation, without it feeling like a part-time job. Whether you're stacking your first bricks or reinforcing what's already standing, passive real estate adds steady returns and long-term growth to your portfolio.
What Is Passive Income?
Passive income is money that shows up even when you're not clocking in. It doesn’t come from trading time for paychecks, it comes from putting your dollars to work.
In real estate, that could mean collecting rent without playing landlord thanks to a property management company you hire, earning a slice of group investment profits, or getting paid back with interest from short-term property loans. Some paths take more setup, like lining up financing for a managed rental, while others are as easy as picking a deal and clicking “invest.”
Why Passive Income Matters
Passive income is more than extra cash; it’s a financial safety net and potentially a lever for freedom. When one income stream slows down, it keeps producing. Over time, it provides you with more choices, fewer worries, and a stronger foundation for whatever comes next.
The long-term perks of building passive income are:
- Loosens your reliance on a single income stream
- Cushions you from job loss or market surprises
- Grows wealth through reinvestment and compounding
- Brings balance and variety to your financial mix
Active vs. Passive Real Estate Investing
Real estate investing falls into two broad categories: active and passive. Understanding the difference helps you decide which approach aligns with your lifestyle and risk tolerance.
Active Real Estate Investing
Being an active real estate investor in this context, is all about being in the driver's seat throughout the entire investment journey, from buying entire properties to managing tenants or overseeing new developments. It's a proactive and very hands-on approach for those who want complete control, are willing to get their hands dirty, and have the capital to back it up.
To recap, common active strategies include:
- Purchasing and managing rental properties
- Flipping homes for profit
- Renovating undervalued properties to increase income potential
- Overseeing the development of new properties
Passive Real Estate Investing
Passive real estate investing allows people just like you to contribute capital while someone else handles the day-to-day stuff, AKA the dirty work, like tenants, toilets, and timelines. It's a backseat approach perfect for busy people or anyone who wants real estate exposure without the stress of managing properties.
Common passive strategies include:
- Putting money in REITs
- Buying into fractional real estate
- Investing in LROs by Groundfloor
|
Feature |
Active Investing |
Passive Investing |
|
Time commitment |
High |
Low |
|
Hands-on |
Yes |
No |
|
Potential returns |
Higher, riskier |
Moderate, varies |
|
Experience |
Helpful |
Not necessary |
|
Common types |
Rentals, flips, builds |
LROs, REITs, fractional |
How to Get Started with Passive Real Estate Investing
Passive real estate isn’t a one-size-fits-all strategy. Some options allow you to cash out quickly, while others offer more control over where your money goes, and some promise higher returns over time. Understanding how each one works can help you find the best fit for your goals and risk tolerance. Here’s a quick breakdown.
Consider REITs
Real Estate Investment Trusts (REITs) let you invest in real estate without owning any property yourself. Since they’re traded on public exchanges, you can buy shares through most brokerage accounts, just like you would with stocks.
Don’t have a brokerage account? That’s where our Flywheel Portfolio comes in. It’s our unique alternative to REITs, automatically spreading your investment across 200 to 400 short-term real estate loans.
REIT highlights:
- Offers liquidity and access through a brokerage account
- Eliminates the need for direct property ownership
- Provides dividend income and portfolio diversification
LRO's by Groundfloor
Groundfloor turns you into the bank, but it is way less stuffy and more fun than it sounds. With just $10, you can start funding LROs which are short-term, property-backed loans for real estate projects run by seasoned flippers and builders. As they pay back the loan, you earn the interest.
If you have an inner control freak, it will appreciate the flexibility. You can browse available listings, review property details, and decide exactly where to put your money. Best of all, there's no need for a brokerage account to get started.
Here's a quick review of the benefits that come with LRO's:
- Choose individual deals to fund
- Earn consistent interest payments
- Start investing with as little as $10
Design Your Passive Income Game Plan
Building a plan that is best for you, is not about following a template, it’s about finding the mix that fits your mindset and your money.
Some options give you some control (hello LROs), others let you stay completely hands-off, like Groundfloor's Flywheel Portfolio.
Whatever your journey, when the strategy aligns with your goals, the payoff isn’t just financial. It’s the freedom to spend your time how you want while your money does the heavy lifting. Consider downloading the Groundfloor app to get rolling. It's available on Google Play and Apple Apps Store.