Entrar
Real estate investors using rentals for cash flow are switching to more passive strategies to make money while they sleep
HAKINMHAN/Getty Images
- Buying rental properties is a popular way to get into real estate investing, but it's not passive.
- Experienced real estate investors are shifting from rentals to more passive strategies.
- Two popular, more hands-off strategies are real estate syndications and private money lending.
A popular way to get started in real estate investing is by buying a rental property. After finding and closing on a deal, investors place a tenant and ideally collect more in rent than they owe each month on the mortgage and expenses. Whatever is left over is cash flow.
It can be a lucrative income stream, but real estate investors are upfront about one caveat: It's not passive. Owning rentals means dealing with tenant turnover, maintenance requests, vacancies, repairs, and, in some cases, evictions.
That's why some experienced investors are using rentals as a launching pad. Once they've built capital and experience, they're shifting to more passive strategies that allow them to keep exposure to real estate without taking on the day-to-day responsibilities of being a landlord.
Two such strategies have come up repeatedly in Business Insider's conversations with financially independent investors: real estate syndications and private money lending.
Real estate syndications
A syndication allows investors to put money into a larger real-estate deal — such as an apartment complex, student-housing development, or boutique hotel — without personally buying or operating the property. A sponsor or operator manages the deal, while investors typically receive cash-flow distributions and, if the property is eventually sold for a profit, a share of the proceeds.
Cody Berman, who started with a house hack and later bought rentals that generated enough cash flow for him to live on, said much of his real-estate exposure today comes through syndications.
"My return on effort in my main business, my digital-products business, is a lot higher than my return on effort in real estate," he said. "I still want the real-estate exposure, but I don't want to go out there and just buy a 20-unit apartment building myself and then have to get it tenanted and figure out how to set up all the maintenance stuff."
Courtesy of Cody Berman
In a syndication, Berman said, he might invest in a 100-unit apartment complex in another part of the country — a property he has never seen in person — because he trusts the operator running the deal.
"I will invest a chunk of money with them for some set period of time, usually somewhere from three to seven years," he said. "I'll make money every quarter on cash-flow distributions based on the rent the property is generating. And then if there is a sale event, which is usually the goal of a syndicator, then I'll get all my money back and some more in the form of a check."
He described it as "owning rental properties without actually having to own rental properties."
There are trade-offs. Investors in syndications generally do not have the same control or upside as the general partner running the deal. Their money is also typically locked up for years.
Choosing the right operator is crucial, added Berman, who relies on referrals, interviews, and research.
"Pretty much everyone that I've ever invested with has been through a word-of-mouth referral plus an interview, talking to the person, doing my research."
Private money lending
Another strategy experienced investors use to keep real estate in their portfolio without owning additional property is private money lending. Instead of buying or renovating properties themselves, they lend money to other investors who need capital for deals.
To get started in private lending, you need capital and, ideally, a presence within your local real estate community. Real estate is a relationships business, and typically, the broader your network, the more opportunities you'll encounter.
Carl and Mindy Jensen, who grew their net worth to more than $5 million and retired early, have tried a variety of investment strategies, including live-in flipping. They said that private lending is one of their favorite strategies.
"The private lending generates such a nice return that it's difficult to be like, 'No, we don't want to have the easy money. Let's go do another live-in flip,'" said Mindy. "But we're also in a much different financial position now than we were when we started live-in flipping, and I think that's important to note: You could still make money live-in flipping, and if you have more time than money, it can be a really great way to turn your home into an investment."
Josh and Ali Lupo, another financially independent couple, started lending to other real-estate investors in 2025, and it's resulted in double-digit returns.
"There are some industry standards," Josh said. "In the private money lending world, 10 to 12% interest is very common. That's the baseline."
The lender generally determines the terms of the loan, he added, and the rate can vary depending on the deal's length.
Private lending is not risk-free. One of the main risks is that the borrower fails to repay the loan, which makes vetting both the borrower and the deal essential. That due diligence takes time, but once the Lupos have completed their research and decided to fund a deal, the process itself is relatively hands-off, said Josh.
"It takes us 30 minutes driving to the bank, wiring the funds, and then the investor that is borrowing the money sends us updates, and that's the extent of it."
