Robert Preston Welcome back to Inside the Climb. I'm Robert Preston, and we have Matt Schreiner Matt Schreiner. Robert Preston We are going to tackle a very interesting topic today. It is a topic that we've all heard and talked about all the time, and it's the idea of a passive investment. But today we kind of want to take a deeper look and see maybe where some areas that we've been lied to or maybe better put, is the myth of passive investment and what, what does that really mean and what are your real options when it comes to a passive investment? So I think to start with we talk about what maybe is not a passive investment, right? And so anything that's non-passive investment, in my opinion, we're specific to real estate, right? Would be like flipping houses. That is not passive. There's a very active component to that. That is a job. Can you systemize it and turn it into a business? Absolutely. But it's still very much a active investment. Running a business, starting a business that is an active investment. Any type of thing that's gonna require you to basically be putting a lot of input into, obviously that is an active investment. I would even argue like day trading, right? Day trading, Matt Schreiner 100%. Yeah. Super active Robert Preston By the definition of it, you are daily active. So, alright, so I think that's a fairly easy definition to define. I think immediately to step down from that, that most people think of a passive investment is rental property and therein lies where I think already we have lied to ourselves a little bit. So, rental property. Matt, you've been in real estate investing for a while. Talk about what, what do you think maybe the myth of rental property is like with the assumption of a single-family house and then what's probably reality? Matt Schreiner I mean, the term that comes to mind right off the bat with passive investing is mailbox money. So, you know, going to your mailbox once a month, getting a check and wondering how it got there and you having to do absolutely nothing, not lift a finger, even at the most basic level of real estate investing, buying a single family home and renting it. Even if you hire a property management company to do so, to run it for you, you still have to oversee the management company. You still have to be involved. Your name's still on the paperwork, your name's still on the mortgage, your name's still, you know, on all the leases. You're still the point of responsibility when it comes down to it. So, you know, if something breaks, the management company may handle it, but at the end of the day, you're still the bank. You still have to be involved in some of the day-to-day decisions. So it's, it's not really passive. You, you still have to be involved, right? And then you start getting 2, 3, 5, 10 single family homes. That's now a very large business in its in itself. It's, it's not hands off. Robert Preston You said something interesting, obviously we've learned this lesson here. Let's dive into a little bit. What, what does managing the property manager mean? What, what are some things that you, that we've learned, maybe you've learned that you've had to do with property management company that you did not expect is the best way to put it? Matt Schreiner I mean, it's, it's kind of assumed that the management company and or managers of whatever entity you're talking about here have your same interests in mind. Which, which we've learned time and time again. That is not the case. That's the whole reason we have our own property management company now is because every single third party property management company that was managing our assets wanted their fee. And that's what they worked for, right? They, they weren't working towards a common goal at the business plan that we had set forth, that that was not a part of their discussion when it came down to making the decisions on how the money's gonna be spent. Right? So that, that's probably the biggest, biggest one. Robert Preston Yeah, I mean, and going back in time, I, I remember when we had third party property management and you know, it was to the point where we were on, I was on a phone call with the property management company for an hour twice a week, and where they just basically gave us new excuses. But, you know, it was, it was a constant pushing of information, constant pulling of information, a constant like what's this mean? Why? And really no one was putting thought in there. So managing property manager is a, is a hard thing to do. So with a single family house, right? You got a property manager, it's there, you're rent it, you gotta check on the property manager. No, no, don't get me wrong. There's plenty of great companies out there that do this, but you still have some type of need or responsibility to, to check on the property to protect your asset, right? To protect your asset. Right? And that may be as simple as having to drive by it. We got we live in...
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