5 Strategies For Trading Your Active Investments For Passive Ones
We are at a pivotal time in the real estate market when significant percentages of small and individual investors are selling off their rental properties, while others are scooping up a large share of the housing stock in America.
A new record amount of ‘mom and pop’ rental property owners are selling. While BatchData reports that almost 30% of homes bought in the first three months of 2025 were purchased by investors.
Many solo landlords and small investors are finding that actively investing and managing their own properties is just too time intensive, stressful, and financially draining to continue alone. Yet, others see this as a wise time to expand their alternative investment holdings, including in physical, income producing real estate.
Here are five ways you too can exit investment properties that have become too much work, and invest in truly passive real estate investments instead.
1. Wholesale Your Homes
If it’s time to sell, and you don’t want to plow a lot more capital into properties that have aged and have deferred maintenance, then it’s often best just to sell as-is as fast as possible. Just get out while the market is working for you. The same can apply if you have trouble tenants, or other expensive issues. Some may even take a loss compared to what’s been put in so far. Yet, holding on too long may mean deeper losses. Get out while you can, and invest in something better. There are plenty of cash buyers and wholesalers who will buy no matter the condition or situation.
2. Bulk Portfolio Sales
If you already have a small to medium sized property portfolio it’s often swiftest and easiest to just sell it all together. There are other investors and funds looking to make bulk buys.
3. Trade Them
Taxes and transactional costs can eat into the gains you hope to reinvest. Some small investors may be willing to trade properties all or in part. Or you may utilize vehicles like 1031 exchanges to preserve gains, minimize taxes, and streamline the restructuring of your investment portfolio.
4. Take The Cash Out
If you’d really rather not get rid of your assets or you are having a hard time finding a buyer fast enough, you may just choose to extract your capital as a form of exit. You may be able to get out the cash you put in, and still retain ownership to some extent.
This can be done by refinance to free up capital to invest in other assets. Or by bringing in a capital partner who will take over the active duties, while putting cash in your hand you can use to diversify into other passive investments.
5. Sell Your Company
Perhaps you’ve built a small real estate company. One that not only holds some property, but has brand, data, and talent assets as well. Selling your company, or the bulk of your shares, even with some seller financing can relive your burden of daily management, while enabling you to invest in assets that better fit your long-term financial goals, and current lifestyle wants.
