Hi this is Tanya with Envy Property Management. Being the owner of real estate can be a profitable source of passive income. But the real question you have to ask is, “How can I earn passive income from rental properties.” It’s not always easy to get started, especially in this extremely competitive real estate market. But if you are diligent and educate yourself on the details of a good deal and good investment property, you can most definitely be on your way to earning that beloved passive income we hear so much about. While it’s true that rental properties can be a good source of passive income, they also carry a lot of risks and require a level of operational and financial know-how that a lot of people simply don’t have. So today I’m going to talk about 4 tips to think about when finding your perfect investment property and on your way to earning that beautiful passive income.
1. Decide if Real Estate Investing is a Good Fit For You
The very first thing you want to figure out BEFORE you begin investing in real estate is to decide if it is a good fit for you and your circumstances. Anyone can invest in real estate, but that doesn’t mean you’re going to enjoy it, or even be good at it. You might find real estate investing is too stressful for you or you might figure out a different way to earn passive income that better fits your personality.
Decide if you have what it takes to be a landlord, being a landlord is so much more than just collecting a rent check every month. There are tenant/landlord laws, fair housing, eviction procedures, security deposits, maintenance, and emergencies just to name a few. There’s a lot to consider and to stay on top of.
If you see the value in the statement: “Time is Money” – You may want to take some time to explore what a professional property management company can do for you. Consider hiring a property management company like Envy Property Management. We take all the stress of being a landlord so you can sit back, relax and enjoy that monthly passive income with no added stressors.
2. Have a Game Plan
When diving into the world of real estate investing, you want to first begin with the end in mind. Seth Williams, founder of REtipster says, “Having a game plan is key, “Begin with the end in mind. Understand what your long-term goals are and how each investment property fits into your roadmap. Even the best investment properties won’t make sense for every investor. Figure out where you’re trying to go and stick to the plan.”
Williams also pointed out that having a game plan helps you set a hard limit on how much you’re willing to pay for an investment property, in a market where bidding wars are more common. “Rental properties are a business decision, not an emotional decision,” he wrote. “If the deal won’t have positive cash flow with your offer price, move on to another property.”
3. Think About Maintenance Costs in Time and Money
Most people who’ve owned a home know how much time it takes to maintain it, this exact same concept applies to rental properties too! You can’t just allow tenants to live in un-maintained homes, you must keep up on maintenance. And maintenance will cost you time and money 100% of the time. However, to keep that passive income flowing, you must keep your property looking good and tenants happy. You would never expect to drive your car without ever needing to change the oil. Decide if you have the expertise to take on maintenance yourself or if you have a list of vendors you can easily rely on to do it for you.
Of course, when you hire a professional property management company like Envy Property Management, all maintenance is handled for you. Taking out one of the biggest stressors of owning rental properties.
4. Run the Numbers
So, you’ve found the perfect property to purchase and the price is right….now what? Before you sign on the dotted line, there’s so much more to consider besides the listing price, monthly payment, and rental price you’ll set. These aren’t the only numbers to crunch, don’t forget about taxes, insurance, maintenance costs, management fees, HOA dues, and vacancies just to mention a few. All these things must be factored into determining if your property will cash flow in the long run. Sit down and figure out these numbers, they are important. Don’t be in too big of a hurry to purchase the first good deal to come along, there will always be deals out there.
In the end, it’s crucial to be smart when choosing to purchase a rental property to make money. For what is considered “passive income,” investment properties are a lot of work, and it can take years before they start paying off, so make sure you are fully aware of what you are getting into before you make your purchase. If all of this seems too stressful but you really want to become a real estate investor, consider hiring a qualified and knowledgeable property management company. It’s the best way to limit risk, avoid hassles and enjoy a healthier bottom line. Contact us at Envy Property Management. We are a wealth of information when it comes to professional property management of your investment property. You can always ask us for some valuable tips and extra resources to make the choice simple and painless. Give us a call today, 801-337-4337 or visit our website at envypm.com where you can easily view our three-tiered pricing plan, so you can choose the package that best fits you and your needs.