Are You Potentially a Big-Time Investor?

Updated July 2026

No, no quiz is necessary for this, but do you ever wonder if you have what it takes to be more big time?

Personally, I’ve always been a smaller investor. Big names like Trump or Buffet are from another planet (though I always want to know what they think).

But if you want to go big time, I recently came across a Bigger Pockets blog that has some advice you can consider.

First of all, I am almost certainly small time because I am very conservative about where my money goes. And I generally think of local investments I can see and keep track of.

That is wrong thinking if you want to fry bigger fish, says the blog.

According to the blog, the big boys all look beyond local offerings. They recognize the changing markets and take advantage of the best deals (which are always changing) wherever they may be.

What else do the big boys do? They don’t get their hands dirty.

They outsource all their work. They oversee teams who actually do the sweat work. They are often passive investors. They like to say things like they “don’t work for their money.” That means they have a horror at being hands-on.

A third element is that they leverage as much as possible. And they never pay cash for anything. They make it a point to use other people’s money. If they invested cash, they would risk the horrible fate of losing their own money.

Finally, the big-time investors know their full-time job is not what you might think: Finding deals. No, it’s finding money to make those deals.

Each and every deal makes the demand to find more investment money.

So the rule here is simple: use other people’s money. Find them and get it.

“If you can’t master finding other people’s money, or you insist on not leveraging for fear…you will never become a big-time investor,” says Ali Boone at the site.

He asks what kind of investor you are? Are you the type who insists on only buying locally and doing all the work yourself (managing all the headaches and risking your own money) or are you the type of who knows the “real definition of passive income?”

This is really a good question, and one you should be able to answer.

The only excuse I can muster up for not being a big time investor is that I am not comfortable with involving others. I would prefer taking my own risks and having my own control of any real estate projects I take on.

I don’t know about you but I remain comfortable in my own cocoon.

Why Most Americans Stay Small-Time Investors

Only 52% of U.S. adults owned stock in 2013, directly or indirectly through mutual funds or retirement accounts. That figure rose from 53% in 2012, but the majority still don’t participate in the stock market. This isn’t just about wealth. It’s about perception, access, and psychology.

For many, the idea of “big-time” investing feels like a foreign language. They associate it with Wall Street tycoons, not with someone saving through a 401(k) or investing in a low-cost index fund via Fidelity or Vanguard. But the reality is more nuanced.

Big-time investors don’t need to be billionaires. They just need different habits. They treat money like capital, not just savings. They don’t see risk as a threat, they see it as an opportunity to deploy leverage.

For example, a Experian report from 2013 showed that only 38% of Americans had a FICO Score above 750, meaning most lacked the credit profile needed to secure favorable loans. That limits access to the kind of leverage that fuels big-time investing.

Consider this: if 52% of Americans owned stock in 2013, that means 48% did not. The financial gap isn’t about access to information, it’s about the ability to act. A $1,000 down payment on a stock may seem small. But for someone earning $30,000 a year, that’s a full month’s income. That’s a real barrier.

How Big-Time Investors Think Differently

They don’t start by asking, “What’s the best deal?” They start with, “Where can I get the most capital?”

This shift in thinking separates the passive investor from the active capital allocator. The big players, funds managed by BlackRock, Morgan Stanley, or JPMorgan Chase, don’t buy homes with their own cash. They use credit lines, private equity, and institutional lending.

Take real estate. In 2013, the average mortgage loan amount in the U.S. was about $235,000, according to the Federal Reserve’s Z.1 report. That’s not pocket change. Most Americans can’t afford to pay cash for that. But investors who use leverage can control a $235,000 property with, say, $50,000 in equity and $185,000 in borrowed funds.

The key isn’t the size of the deal. It’s the ratio of capital to ownership. A FDIC study from 2013 found that 70% of homeowners with loans had a debt-to-income (DTI) ratio below 43%, the threshold most lenders use to avoid default risk. But big-time investors often push DTI ratios higher, sometimes into the 50–60% range, because they’re managing portfolios, not individual mortgages.

Here’s a real-world arithmetic example: if you buy a property with $50,000 equity and a $185,000 loan, your return on equity (ROE) depends on the income. If the property rents for $1,500/month, gross annual income is $18,000. After $1,200 in annual property taxes and $1,200 in insurance, you’re left with $15,600. After $18,000 in mortgage interest, your net cash flow is $-2,400. But if you had paid cash, you’d have no interest, your net would be $15,600. That’s a $18,000 swing. The leverage magnifies both risk and reward.

Using Other People’s Money: The Real Game Changer

“Use other people’s money” isn’t just a slogan. It’s a financial doctrine. The U.S. Securities and Exchange Commission has warned that over-leveraging can lead to catastrophic losses, especially when markets turn.

But when used wisely, OPM (other people’s money) is how real estate portfolios scale. Real estate investment trusts (REITs), like those listed on the Nasdaq or NYSE, operate almost entirely on OPM. They raise capital from investors, not their own cash.

Even small investors can do this. A 2013 CFPB report noted that peer-to-peer lending platforms like Prosper and Lending Club were gaining traction, offering average APRs of 12–15% to investors and allowing borrowers to fund projects without bank loans.

So how does this work in practice? Let’s say you want to buy a rental property in Phoenix. You don’t have $100,000 in cash. Instead, you secure a private lender through a platform like 360 Lending or use a hard money loan from a local investor. Your equity is $20,000, but you control a $200,000 asset.

The return on equity (ROE) jumps dramatically. If the property rents for $1,500/month, you’re earning $18,000/year on $20,000–90% annual return. That’s not typical, but it illustrates the power of leverage. It’s why firms like Greystar and Boston Properties grow so fast, they don’t rely on their own balance sheets.

But here’s the trade-off: leverage isn’t for everyone. If you can’t cover a $400 emergency, high-leverage strategies are impractical. The Federal Reserve reports that 40% of Americans couldn’t cover a $400 emergency, making large debt obligations risky. This path only works with a solid financial foundation.

The Hidden Cost of Being Hands-On

Big-time investors avoid day-to-day work. They don’t manage units, fix roofs, or chase late renters. They hire property managers, often through firms like Apartment List or Buildium.

Why? Because time is money. A Bureau of Labor Statistics report from 2013 showed the average American spent 36 hours a week at work. Adding property management to that load reduces returns. If you spend 10 hours a month managing a property, your time is worth $25/hour, $250/month in opportunity cost.

Passive income isn’t about doing less. It’s about doing the right things at scale. The Social Security Administration reports that retirees who rely on passive income, dividends, rent, interest, tend to have higher long-term satisfaction than those who depend on active income.

But here’s the trade-off: you lose control. If you hire a manager and they don’t respond to tenant complaints, you’re stuck. Or if the market drops, you might not act quickly. That’s why big-time investors don’t just outsource, they vet. They use credit reports from Equifax and TransUnion to screen tenants and managers.

Frequently Asked Questions

Can I become a big-time investor if I only have $5,000 to start?

Yes, but not by buying real estate outright. You can invest in REITs, private real estate funds, or use platforms like Lending Club or Prosper. These allow you to pool capital and earn returns without direct ownership.

Is leveraging safe for beginners?

No. Leverage magnifies both gains and losses. The Federal Reserve notes that high leverage was a key factor in the 2008 housing crash. Start with small, low-risk ventures, like peer-to-peer lending or index funds, before moving to real estate.

How do big-time investors find other people’s money?

They build relationships with private lenders, accredited investors, and institutional funds. Platforms like AngelList and WeFunder help small investors access venture capital pools.

Do I need a high FICO Score to get leverage?

Yes, generally. A Experian report from 2013 found that borrowers with scores above 750 were 40% more likely to qualify for loans than those below 650. Focus on building credit before seeking leverage.

Can I outsource property management with only one rental unit?

Yes. Companies like Apartment List and Buildium offer affordable management services even for single properties.

Is passive investing really passive?

Not entirely. You still need to monitor performance, rebalance portfolios, and understand tax implications. But you don’t need to fix toilets or collect rent. The IRS treats rental income as passive income, even if you hire a manager.

What’s the difference between a real estate investor and a landlord?

A landlord typically manages one or a few properties personally. A real estate investor scales through leverage, outsourcing, and multiple assets. The goal isn’t to be hands-on, it’s to build wealth through systems, not sweat equity.

How does the FDIC protect big-time investors?

The FDIC insures deposits in banks up to $250,000 per depositor, per insured bank. But it doesn’t cover investments like stocks, REITs, or private loans. Big-time investors diversify across asset classes to reduce risk.

Can I use my 401(k) to invest in real estate?

Yes, through a self-directed IRA or 401(k) plan. The IRS allows it, but with strict rules: you can’t live in the property, and transactions must be at arm’s length. Consult a tax advisor or a firm like Charles Schwab for guidance.

Why do most Americans avoid big-time investing?

Because of risk aversion, lack of financial education, and limited access to capital. Only 52% owned stock in 2013. The Federal Reserve reports that 40% of Americans couldn’t cover a $400 emergency, making high-leverage strategies impractical for many.