Most people assume the only way to invest in real estate is to buy a rental property or a home you list on Airbnb. Those are popular ways to do it, but they’re not the only ways. We did both of these before landing on private money lending, and what we found is that they turn you into a customer service business. You’re on call, you’re managing communication, maintenance, repairs, reviews, guest experiences, turnovers – and that’s before you even get to rising insurance costs or the reality of what happens if a tenant doesn’t pay.
Some people love that world, but it’s not for everyone. If you don’t want to deal with tenants and toilets, you don’t have to.
You can invest in real estate without ever owning property, because ‘investing in real estate’ and ‘running real estate’ are two very different things. We’ll talk about the alternative most people overlook, but first, you need to understand what kind of investor you want to be.
Before you invest in real estate, you need to pick a role
Most people think their first real estate decision is rental or Airbnb. It isn’t. The real first decision is whether you want to be an active operator or a passive investor.
There are a lot of ways to invest in real estate, and you have to know which strategy actually fits your goals. That’s why we always ask people what their buy box is – what fits your goals, your personality, your time, and your tolerance for hands-on involvement.
If you buy a long-term rental, flip a house, or run a short-term Airbnb rental, you’re stepping into an active operator role. That can be a great fit if you want that role, but most people we talk to don’t. They already have successful careers, or they’re getting close to retirement. They just want to build wealth or diversify their portfolio.
We own both long-term rentals and short-term rentals, so we’re not speaking in theory. Here’s what each path really requires before you decide it’s the route you want.
Buying a long-term rental property
Long-term rentals can work, but they’re not passive by default. You either manage the day-to-day, or you pay someone to. Before you buy your first rental, make sure you’re prepared to account for managing the asset. That means planning for the operating side, not just the acquisition.
You have to take into account:
- Maintenance and repairs (and the surprise timing of both)
- Insurance increases each year
- Having a way to cover the mortgage during vacancies or late payments
- Property management costs if you want to buy back your time
- Being able to time the market if you want to offload the asset
Rentals are usually a long game. Depending on the market, you’ll trade cash flow for appreciation (or vice versa), and most of the upside shows up over time. If you want to own assets and you enjoy that style of investing, rentals can be a great lane. But if you’re choosing it because you think it’s the only legitimate way to invest in real estate, it’s not.
Airbnb and short-term rentals are a full-time business
Short-term rentals are the most demanding type of real estate investing. If you want a short-term rental to perform well, you’re not just buying a property – you’re building an experience. That’s time-consuming and expensive, especially if you’re aiming for a high-end stay that earns good reviews and repeat bookings. Or worse, you’re in a tourist area where you’re competing against those expensive luxury Airbnbs, so you have to keep up with the Jones’. It’s not just “set it and forget it.”
You’re dealing with:
- Furnishing the home immediately after the purchase (and often upgrading it beyond what you’d do for yourself)
- Curating a vibe that makes people want to book
- Cleaning coordination and turnover
- Guest communication, check-in/check-out issues, and last-minute changes
- Paying for damages, replacements, and ongoing wear that you can’t always pass on to the guests (e.g., linens, sheets, furniture, supplies)
- The logistics of managing it if you’re not 10–15 minutes away
- The decision to self-manage or outsource
Some investors go all-in on short-term rentals and love it. They love being the forever host. However, most people who say “I want to invest in real estate” don’t actually mean “I want to run a hotel.”
The other option: private money lending
If you’re interested in a more passive investing strategy, that’s where private money lending comes in. It’s passive because you’re not buying the asset or running the operations. Private lending is when you lend your money directly to a real estate operator and get paid back, with interest, based on agreed terms. You are stepping into the role a bank would normally play. Most investors see returns between 8-12% annually, with some, like ours, averaging 15-25% within 12-36 months.
It’s not talked about much online. There are no fun “let’s turn over our Airbnb for the next guest” videos to film for private money lending. It’s not a visual topic. There are no courses needed on how to get into it for yourself. We found out because we come from the real estate industry. But even then, we didn’t try it for years.
The three aspects that eventually drew us to private money lending were:
- As the investor, you don’t need to buy the asset or take on the day-to-day management
- You see higher returns within 12-36 months or less. Then, you can take the money or invest it into another project
- You can use cash that’s sitting in a retirement account, like a 401k, solo IRA, or a military TSP account
Plus, you still get to be a more active investor in the sense that you can choose which companies and projects to go into, but there’s no running around. You’re not stuck waiting for years for the payoff. You’re not stuck with an asset that comes with to-do lists. You can choose to stop after any deal or continue building your return up until you’re ready to retire.
There are a lot of options within private money lending, too. There are private money lending companies for residential and commercial projects. We did residential before starting Blueprint. Ultimately, we chose to focus on commercial real estate properties with short exit plans and a higher demand, so we can provide higher returns and shorter timelines for our investors. If you’re interested, check out our article that deep dives into how money lending works or set up an initial investor call to see how to get involved.
Why we focus on the commercial sector instead of residential real estate investing
Most real estate conversations focus on residential real estate investing. That’s what we see the most content on. But in our market (Northeast Florida), one of the biggest issues isn’t “do we have enough homes” or “we need more vacation rentals,” it’s whether we have enough commercial spaces to support Florida’s rapidly growing communities.
You see it everywhere now. Neighborhoods go up fast, but getting businesses in those areas can take years. Infrastructure and commercial spaces are undersupplied. That supply imbalance creates a demand and an opportunity to support a community and build wealth.
Never considered industrial or commercial real estate investing? See what we’re building to get an idea of a few of the many types of real estate you can get involved in. The opportunities out there are amazing.
Final thoughts on rentals vs Airbnbs vs private money lending
We love it when people start taking an active role in investing to build wealth, because we’ve seen the returns and the value. We simply want to make sure you pick the lane that matches your goals and your life.
If you genuinely want to be a landlord or a short-term rental host because you enjoy being hands-on, we encourage you to. Our advice is to go into it like a business, because that’s what it is. Find areas that have a history of good market value, and if possible, that are within an hour of your home.
If you don’t want to manage tenants or run an Airbnb – don’t. You don’t have to in order to invest in real estate. If you want real estate investing exposure without taking on the customer service role, private money lending may be a better fit for you.
If you want real estate returns through private money lending, we’d love to help you get started. Check out our active and upcoming projects and schedule a no-obligation investor call with us.
