Not All Passive Real Estate Investments Are Created Equal
By Natasha Phipps
CEO, WealthShare REIT
The idea of earning returns on your investment while someone else does the work is what draws many investors to passive real estate. But here’s what I know from years of experience: “passive real estate investment” isn’t just one thing. It’s a category, and it spans everything from unsecured promissory notes, private mortgages and securities to REIT units. Each one comes with its own level of risk, its own level of security, and its own level of transparency.
That gap between what an opportunity promises and what’s actually backing it is why I wrote A Guide to Passive Real Estate Investment for Canadian Investors. I’ve sat across the table from too many investors who were shown a return number and nothing else. No real explanation of what was backing that return, and no real conversation about whether the investment even fit their goals, their timeline, or their risk tolerance in the first place. I wanted to put something in writing that closes that gap.
Real Estate’s Biggest Edge Is Security, If You Actually Use It
If there’s one thing I want readers to walk away with, it’s this: real estate’s core advantage has always been security and reduced volatility. That’s the whole reason people are drawn to it in the first place.
But that edge only holds up if the investment itself is backed by something solid. A cash-flowing, long-term buy-and-hold asset carries a very different risk profile than raw land sitting and waiting on future development, even though both of those get labelled “real estate investments.” Knowing the difference between them and understanding your own risk tolerance are critical parts of building an investment strategy that aligns with your goals.
Start With Yourself, Not The Opportunity
Before I ever compare investment types for someone, I always want them to understand themselves as an investor first. These are the same five questions I walk through in the guide, and they’re the questions I believe every investor should ask themselves before they look at a single deal:
What are your financial goals? Are you investing for income now, or growth over time?
What’s your risk tolerance? How would you actually handle short-term volatility or an unexpected downturn?
What’s your timeline? Is this a short, medium, or long-term horizon, and how does that line up with how liquid the investment is?
What’s your experience? How hands-on, or hands-off, do you genuinely want to be?
Are you getting professional guidance? Are you talking things through with a financial advisor or an Exempt Market Dealer before you commit any capital?
Only once you understand what you’re trying to achieve and what fits your situation does it make sense to start comparing the options themselves.
The Three Types I See Most Often
To better understand the range of passive real estate investments available, I find it helpful to look at three broad categories.
Unsecured promissory notes, where an investor lends capital in exchange for a promise of repayment with interest, with no collateral behind it. The returns can be attractive, but so is the risk if the borrower can’t repay.
Secured promissory notes and private mortgages, which follow a similar structure but are backed by specific collateral, usually a property. These carry lower risk than an unsecured note and clearer legal recourse if something goes wrong, though they typically come with more due diligence and cost to properly secure.
REITs and funds, where investors pool their capital into a professionally managed portfolio spread across multiple properties, asset classes, and geographies. This structure trades some individual deal control for diversification and professional management, and more regulatory reporting and oversight than a single note typically offers.
None of these are universally “better” than the others. They simply serve different goals, timelines, and comfort levels, which is why the right choice depends on the individual investor and their strategy.
Why Investor Classification Matters
One of the most overlooked parts of passive investing is understanding whether you’re classified as an eligible investor or an accredited investor, and what that classification actually means for the opportunities available to you.
This isn’t simply a regulatory requirement. It exists to help ensure investors understand the opportunities available to them and whether those opportunities align with their financial situation. In the guide, I walk through both classifications and explain why matching suitability to opportunity protects investors, not just issuers.
The Questions Every Investor Should Be Asking
Beyond the numbers on any given deal, there are important questions every passive investor should feel comfortable asking before moving forward. When I evaluate an investment, I want to understand how it’s secured, who is behind the deal, what their track record looks like, how they’re compensated, and whether their interests are aligned with investors.
In the guide, I walk through a more complete checklist of questions I believe every investor should consider before committing capital.
Asking the right questions upfront is what helps separate an informed investor from someone simply hoping for the best.
If You Want To Go Deeper
In A Guide to Passive Real Estate Investment for Canadian Investors, I walk through these concepts in more depth, including the different investment types, key due diligence questions, and how investor classifications work in Canada. The goal is simple: to provide a clear, practical resource that helps investors better understand their options
before making decisions with their capital.
Because the best investment decisions don’t start with a deal. They start with understanding yourself, understanding the opportunity, and having the confidence to ask the right questions.
Get your copy of A Guide to Passive Real Estate Investment for Canadian Investors
This article is for informational purposes only and is not financial advice. Always consult a financial professional before making investment decisions.
About the author: Natasha Phipps is the CEO of WealthShare REIT, a Calgary-based multifamily private REIT focused on providing Alberta investors access to professionally managed, income-producing real estate.
Connect with WealthShare:
Website: Wealthshare.ca
Email: info@wealthshare.ca
LinkedIn: https://www.linkedin.com/company/wealthshare-real-estate-trust/
Facebook: https://www.facebook.com/wealthsharereit
Instagram: https://www.instagram.com/wealthsharereit/
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