If you think that scoring passive income via property management is as simple as buying a house and calling it day, you’ve got another thing coming.
Sure, the concept of passive income certainly is enticing. Meanwhile, those who find success as property investors can quickly expand their empire once they start gaining traction. Yet as is in the case of any investment, those new to the field need to tread lightly before getting in over their heads.
Whether you’re mulling over the idea of becoming a landlord or don’t know if you’re setting up your property investments for success, keep the following five questions in mind.
Who’s Going to Run the Show?
You need to decide from the word “go” whether or not you’re going to do all of the heavy lifting yourself or if you should hire a property management company to provide some extra help and relief. After all, there are so many moving pieces of being a landlord: from screening tenants to dealing with repairs, it never hurts to have a helping hand.
Ultimately, bringing on help boosts your earning potential as you’re able to get more done rather than potentially spread yourself thin. Even if you consider yourself a go-getter that’s good with juggling multiple roles, extra help might become a must-do if you plan on dealing with more than one property.
Where’s Your Property Located?
While it may make sense to purchase property in your own backyard, the fact remains that you may live in an area where the market is especially volatile. Sure, it’s obviously easier to deal with tenant concerns when you’re in close proximity of your property; however, you’ll need to measure risk versus reward in terms of your local market.
How Are You Going to Finance Your First Property?
Simply put, you’re going to need a large sum of capital to get started with property management in the first place. Don’t make the mistake of potentially putting yourself underwater by gambling on property or taking out a massive loan to get started. Ideally, you should pay in cash or find yourself in a situation where your property comes at a steep discount such as an “as is” home or inheritance.
Do You Realistically Have the Time?
Between nagging repairs and random emergencies, the fact remains that being a landlord can be incredibly time consuming and overwhelming for those new to the field. Likewise, going full-time is going to happen overnight as accruing steady investment income may take significant time (think: months or years).
Remember: time is money. In short, don’t expect sudden success and acknowledge that becoming a successful landlord represents a long-term commitment. This is especially true if you eventually want your property
Have You Done Your Homework?
Although you shouldn’t put yourself through analysis paralysis when it comes to getting started with a property investment, you should be wary of any get-rich-quick schemes. When in doubt, talk to someone who actually makes a full-time living via property to pick their brain. From understanding your local market to what unexpected tenant headaches to avoid, there’s nothing like speaking to someone who’s walked the walk.
Don’t assume that becoming a property tycoon is going to be a walk in the park. Instead, ask yourself these questions and understand exactly what it takes to make your passive income dreams a reality.