Active investments require a hands-on approach to real estate and will require continuous work to generate returns. Either by acting as a landlord or hiring a property manager, you would be involved in the day-to-day maintenance and upkeep of the property.
On the other hand, passive investments only require you to provide capital. This is a good option if you do not want to get your hands dirty and would like the flexibility of more liquidity than active investments. But note that passive investments usually offer lower returns.
House hacking is a term for investors who buy a duplex, triplex, or fourplex and then live in one unit while renting out the others. Property owners can apply for a Federal Housing Authority (FHA) loan and purchase an investment property for just 3.5% down.
Long-term rental investors typically own and manage several properties on their own. They are responsible for finding tenants, managing upkeep, and being on call in case of emergencies. These properties offer the potential for steady income through tenants' monthly rent payments.