Banks DO invest in passive real estate investments. If someone needs a place to call home, they locate a residential property and ask a bank or other lending institution to give them money - investment principle - which they will repay over a period of time, plus they will pay the bank interest - profit - in addition to the original sum requested to purchase the home.
The financial institution doesn't do any work on the house or manage the property in any way; the bank just takes in their profits in the form of interest. The financial institution does, however, hold the first mortgage to the real estate. The financial institution also is named as the entity to be paid first by insurance if there is a loss due to fire or disaster.
In other words, the lending institutions are doing the same thing that passive real estate investors do! However, because financial institutions borrow funds, earn funds from other functions and services they perform, the money is considered to be 'soft money'. In other words, it is not necessarily cash or liquefied assets.
Passive real estate investments are 'hard money' because the person investing in the passive real estate actually removes money from a stock fund, mutual fund, savings account, checking account, or other asset and uses the very real money to make their investment into the passive real estate market.
Why should banks and other financial institutions get all the benefits of passive real estate investments? Why shouldn't you earn some of the profits available from these safe, secure investments?
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