In real estate, there are two basic concepts of investing – active and passive.
Passive investing is typically your buy-and-hold form of investing. Simply put, once you’ve purchased a solid income property, you sit back and let it appreciate over time and have your tenants literally pay down your mortgage each and every month.
This form of investing usually combines most, if not all, of the advantages of real estate; that is, appreciation, leverage, cash flow, tax advantages, tenant pay-down of your mortgage, a solid asset, and freedom.
Passive real estate investing is where true wealth creation comes from. The majority of wealth that comes from real estate investing is created from buying prudent income property and holding on to it. This is how real wealth is created.