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Owning real estate assets that generate income — in other words, being a landlord — is always a good idea if you can make it work in your favor. The downside that keeps some people from investing in rental properties is the expense of upkeep. For example, taxes, mortgage interest, repairs, maintenance, and emergency calls at 3 a.m. are unavoidable. Add the possibility that a tenant might destroy the property and you’re looking at a full-time job.
Although becoming a landlord can be a full-time job, it doesn’t have to be that way. Here’s how to generate income as a landlord without having to deal with the daily grind.
To Be a Successful Hands-Off Landlord Hire a Property Management Company
You’ll need to own multiple properties to turn a profit as a landlord. Moreover, successful landlords outsource the majority of their tasks to a reputable property management company. This is because it’s too much for one person to handle.
A property management company like Green Residential is the secret to making your investments profitable. In short, they can help you turn your rental income into passive income. Without a property management company working on your behalf, your income will be limited by your personal time and effort. You might as well work 60-hour weeks at a desk job.
An article on Forbes.com estimates that to earn a $50,000 per year as a landlord, you’ll need to earn more than $4,000 per month in profits. This salary will require owning either commercial property or multiple residential properties. However, no matter how you do it, you’ll burn out attempting to do everything yourself.
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While it’s possible to find individual property managers with low rates, there’s an advantage to having a full management team. First, property management teams carry a wide variety of experience with all types of properties and tenant situations. What’s more, property management teams often get fantastic rates from the best local contractors. This will save you a ton of cash on repairs and maintenance.
Property Management Companies Are Reliable
Property management companies also tend to be more reliable than individuals who do management and contracting work on the side. For a property management company, taking care of tenants and landlords is a full-time job. It gets all of their attention. Further, when you find a company that’s been in business for many years, you’re hiring a well-oiled machine.
A Property Management Company Will Do the “Dirty Work”
Nobody really wants to deal with finding contractors for yard work, plumbing, construction, dealing with upset tenants, chasing late rent, running credit checks, reviewing applications, or handling evictions. A property management company will handle all of these tasks for you in a professional and legal manner. Perhaps you could save money by doing it yourself. However, your time is better spent looking for more property to turn into income.
Educate Yourself Before Buying Any Properties and Becoming a Landlord
Whether you’ve already purchased property or you’re still looking, education is the strongest foundation for turning a profit as a hands-off landlord.
In a real estate buying guide published by Money Under 30, the first suggestion is to talk to other investors who have accomplished the goals you’re trying to reach. On the other hand, don’t seek advice from friends and family members.
The other suggestions are:
- Read a variety of material from successful real estate authors. You can find plenty of articles online or at your local bookstore.
- Buy some real estate courses. There are legitimate real estate courses on the market. However, be careful not to buy into Internet marketing schemes that don’t provide any true value.
- Evaluate a neighborhood before buying a property. An ideal neighborhood has a 35/65 percent ratio of renters to homeowners. Don’t buy property in run-down neighborhoods with high crime rates. You’ll end up with broken windows, vandalism, and potentially worse scenarios.
Also, be sure to read the guide linked above for more tips on buying income-generating properties.
Be Willing to Work Hard Initially as a Landlord
In the beginning, you’ll need to put in hard work to set yourself up for earning passive income. Don’t be afraid to get your hands dirty, dive in, make mistakes, and learn. The more you know and understand about being a landlord, the easier it will be to handle tough situations.
You can certainly pass everything off to a property management company immediately if you prefer not to get involved in the daily grind of being a landlord. Just be sure to source a reputable company with a local, physical presence in your area so you know your properties are in good hands.