What is your definition of active and passive investing?

[Alex Breshears]

I often speak to active real estate investors or even aspiring investors looking for their first deal. One thing I caution new investors about is working themselves into another job. While it sounds amazing to have 20 doors rented out, you also have 20 different families to contend with, potentially several property managers, the tax returns and monitoring the cash flow and expenses, plus overhead of physically owning the real estate (mortgage, repairs etc).

I wanted to have time and geographical freedom, which is something I feel most investors want - but it often gets covered up with "financial freedom". Depending on what your why is, it may not be a financial goal at all, but really a goal that has more to do with who and what dictates your time.

My definition of active and passive income reflects this viewpoint, and I'm curious to hear what others think.

Passive income/investing means that I can be involved when I want, how I want - and things keep humming along pretty well.  I am not getting random phone calls that derail my entire day, so I'm not married to a phone 24/7 worried about the next "thing" that is going to happen.

Active income/investor means that I do have to be involved to keep the momentum going. If I am not getting up to a job site to check on the reno work, the time table for the fix and flip gets blown up. If I am constantly getting emails or phone calls to fix whatever solution right in that moment, to me that is a job not an income stream.

Yes, you can put a lot of systems in place on the active side to minimize your time involved - but that generally happens after you hit some level of scale to cover the cost of those additional services.

So what do you consider "active" and "passive" investing? Do they reflect your goals you are trying to achieve?