How can you create rental passive income without the daily efforts as a landlord?The most lucrative and popular way to create rental passive income is still being a landlord. In today's day, investing in multiple properties and collecting rent, and keeping up with maintenance can quickly change this passive income to feeling like a full-time job. Take the right steps in your investment journey to lead to a great return on investment, and create rental passive income that has the potential to last a lifetime. The beautiful thing about real estate is that it can continue to create rental passive income even after you're long gone. This investment can take care of your kids, grandkids, great-grandkids, etc... You get the picture.
Moving ForwardOnce you have a great property and become a landlord, its time to think about your management options. While many landlords are highly successful at self-managing their properties, new landlords, and landlords who have many listings can highly benefit from a full-service property management team. As an ambitious individual, you owe it to your legacy, family, and estate to create rental passive income through real estate investing. The best days, months, and years of investing in cashflow rental properties are in front of us, not behind us. Here are the 6 steps to create rental passive income.
- The Different Types of Real Estate Investments
- How to get started in Real Estate Investing
- What to Expect as a Landlord
- Your First Deal
- Where to Find Deals
- Your Management Options
Flipping or Wholesaling
This type of investment refers to an investor purchasing a single-family home that needs to be fixed up with the intent to improve the home to sell for a profit.
Single-Family Rental HomeThe most common category of real estate investing is single-family homes. The single-family rental home is a single unit property investment. Many successful property investors start their real estate investment journey with single-family homes.
Multi-Family Rental Homes (Duplexes & Fourplexes)A Mult-Family Property contains more than one housing unit but no more than four. Some of the benefits of investing in multifamily properties generate higher monthly rental income with lower total maintenance costs.
Commercial Property (5 units and more)Commercial real estate (CRE) is categorized into four classes, depending on function: office, industrial, multifamily, and retail. Apartment buildings are often considered commercial, even though they are used for residential purposes. That's because they are owned to produce income.
2)How to Get Started in Real Estate Investing
Property InvestmentFinding the right property to invest in is the first step to being a successful real estate investor. Be sure to go through all the appraisal and inspection processes. This is done to be aware of any issues that will cause further financial burden to you before turning a profit. One of the most important factors is the location and the surrounding home's property values. These two factors play a big role when determining the value of your property investment.
Accidental LandlordSometimes you don't get the option of choosing a property investment but instead, end up inheriting the home of a relative. This can be an amazing opportunity to turn the home into a source of passive income. While dealing with a home you never expected to gain ownership of can be stressful for a grieving family, it can provide a great source of passive income if properly managed. If it is a family home that you don't want to sell, renting the home out for a few years can help secure a nest-egg until another family member can move into it.
3)What to Expect as a LandlordLandlords wear many hats, and can often be overworked from all their responsibilities of the homes they rent out. This includes having to be a repairman, a collector, and an eviction agent at times. The endless duties can become daunting.
- Keep up with safety codes
- Provide property repairs
- Maintain the home in good condition
- Pay the mortgage on the home
- Maintain homeowner's insurance
- Keep up with legal standards on background checks
Providing a Clean, Safe Home for TenantsWhen you begin renting out your home, you will need to provide a clean, safe, and fully habitable home that suits their needs. Clean out the home thoroughly after providing any repairs or maintenance, and test that everything is in proper working order. This step is crucial for marketing your rental property. You want to make sure the property is presentable and everything is functioning as should be. Finally, doing so will make for great pictures for your listed property.
4)Your First Deal
Investing in the Right Rental HomeThe best way to become a real estate investor is to start small. First, start looking for a good beginning property in your local area. You will already have the advantage of knowing the pros and cons of your city, so why not start where you know. Do your research when investing in a rental home for passive income. Check out the school district and surrounding area property values in addition to the home itself. Ask yourself, is this a good marketplace where tenants will want to live? A bad location can turn what seems like a wonderful home investment sour. Look into the ratings of schools in the vicinity, as well as nearby attractions. This can factor in for the main selling point of the rental property.
5)Where to Find Deals
Driving around NeighborhoodsYou'd be surprised with the properties you see that need work just by driving around town. Start by getting in your car and driving around neighborhoods you want to invest in, looking for deals. Once you find a potential property, you simply try to buy it. What you're looking for are properties that look vacant or distressed. While driving around, you'll encounter dozens of potential properties. Make a list of each property address, and make notes of the condition as well as a photo. Next, dig into the public records to find the owner of the property. Finally, contact the owner and make an offer for the property.
Eviction RecordsThis method includes targeting landlords who are in the midst of an eviction. The reason why is because they have a problem, and it's likely they are motivated to get rid of the property and the responsibilities. So, how can you target landlords who are in the process of an eviction? Public records. It's as simple as taking a trip down to your local administration office and requesting to see a list of current evictions taking place. The last step, make some phone calls with an offer in mind.
Real Estate Market PlacesThere are a number of websites and communities for real estate investors such as BiggerPockets Marketplace. There are dozens of listings posted on a daily basis. You can also post an ad for something you want or something you have. It's as simple as making a post. This is a great way to get involved in your local real estate investors community. In conclusion, you never know who's looking to sell you a deal in your area.
CraigslistCraigslist is an online classified section that is free to post and browse, making it a great resource to find real estate deals. There are three ways you can use Craigslist.
- Search for Sellers: Simply search for real estate postings in your area. The only problem with this strategy is that there are a lot of investors already doing this.
- Post an Ad: You don't have to wait for the deals to come to you. Instead, get on the offense and post an ad that says you're actively searching for properties to buy. The marketer in you needs to make the ad flash to get people's attention.
- Search for Landlords: Craigslist is a great resource to find landlords who are posting. Managing properties is not easy, and many landlords are looking to get out of the business. Therefore, you can use Craigslist to search for rental listings that are placed by DIY landlords. More often than not, their contact info is listed in the post... just call them up. Explain that you're not interested in renting and that you're an investor. Maybe you get the deal, or you grow your network with a local investor.