Passive Investment

Too often we see the phrase “passive investment” in a sales pitch for investment real estate. And every time we are reminded that the agent concerned is doing a dis-service to his/her potential clients. Whilst at the same time being disingenuous.
Because real estate as an investment is never passive. Even a piece of bare land needs the grass mowed, or grazed, and the rates paid. And buildings need managing. They need repairs from time to time and upgrading of facilities at regular intervals.
A passive investment is putting money in a bank account, or buying bonds.
But real estate  as an investment is a business. And trying to dress it up as similar to a bank deposit, except paying a better interest rate, is doing a dis-service to the industry.
 
As a business, real estate investment needs attention. It may be different in nature as a business from a dentist’s business. Or a jewellery business. Or a plumber’s business. But it is still a business. Bills need to be paid. Invoices need to be created. And assets and clients need looking after.
 
Having recently purchased a number of properties where the investment  in real estate had not  been treated as a business has again emphasised to us how bad for the industry it is when owners do not treat investment buildings as a business.
Not only are the buildings themselves neglected, but landlords, as a class, get a bad reputation. And then someone has to come along and train the tenant all over again that a building owner is running a business – just as they are.
 
I recognise that there are many agents who just want to turn up , eat their lunch, and take home the odd commission. But where we see ourselves as being a part of an industry , then taking from that industry surely deserves giving a little back.
 
And one way to give a little back is to acknowledge to potential clients (particularly those new to the industry) that commercial and industrial real estate is actually a business. Running a business does take some attention – and skill, and resources. Even those who think it is akin to the proverbial money tree would have to acknowledge that to thrive trees need fertiliser and pruning.
 
Agents are in a unique position in that they form a link between the various sectors and parties in the industry, and particularly as an interface with new entrants. With that position comes a responsibility. We feel that debt to the industry is not being well served in many instances.
Many agents (and the agencies backing them) could do better in educating potential newcomers to the industry.