Rental property investing comes with several advantages which you can experience as a part-time landlord. You can enjoy consistent rental income, appreciation in value, and tax advantages. You now understand the benefits of investing in real estate compared to other assets in the market. Now that you have gotten an idea of what it takes to own a rental business, it may be time to commit to it full-time.
Being a full-time landlord means leaving your regular 9 to 5 job and taking on all the responsibilities of rental property ownership. But before you do so, you might need to make some adjustments here and there. With several years of practical property management experience under our belt, we at Home Choice Property Management offer several insights that might prove crucial while making to move from a part-time to a full-time landlord.
Benefits of Being a Full-time Landlord
Several benefits make being a full-time landlord lucrative:
The first and most attractive benefit of being a full-time landlord is flexibility. Taking on this role means you are not bound by a 9 to 5 job. With standard working hours, you cannot leave to tend to your other personal issues or duties and must be at your desk for at least 40 hours every week. By being your own boss, you can decide on the hours that you want to work.
With more time to focus on being a landlord, you can dedicate more of your resources and entrepreneurial skills to the business. You can think of ways to improve the business and grow it to meet your financial goals.
An investment property provides a particular advantage over other types of assets. The IRS allows you to make several kinds of tax deductions reducing the taxable income at the end of the day.
Things to Consider Before Becoming a Full-time Landlord
Consider the following tips before you have that final talk with the boss.
Put Aside Cash for a Rainy Day
Your property’s expenses can fluctuate throughout the year. They might come in the form of property maintenance expenses, eviction costs, or long vacancy periods. And being the landlord, you will be the one required to foot the bill. What’s more, becoming a full-time landlord means that you have no other financial backup.
But how much do you realistically need to have saved up? It’s advised that you can calculate your personal and business-related expenses and income for one year. This includes rent, transportation, food, utilities, insurance, and healthcare. With this taken into consideration, you should have a better idea of how much you need to be making and saving to ensure your needs are met.
From our experience, you should look to save up enough money to cover expenses for at least 18 months. This amount of cash generally allows you to meet your personal and business-related financial obligations.
Build an Investment Portfolio
The property market is known to be a stable investment. Investors want to enjoy consistent rental income and the appreciation of property values over time. However, like any other type of investment, the real estate market can be quite volatile. As a result, you might need to diversify your portfolio to protect yourself.
It’s best to have several rental properties in your investment portfolio before you choose to make the transition to becoming a full-time landlord. Spread your investment across several property sub-classes like residential homes, student accommodation, and commercial units.
What’s more, focus on adding one or two properties in a fiscal year. Even with a mortgage, you should be able to pay it off in due time provided the properties are in a good location and you have quality tenants locked in. This helps better protect you against market fluctuation.
This is an important element that most property owners forget about. Property is a technical asset class where those with experience and wide networks thrive. Being new to the real estate and rental industry, you will need the help of your mentors to help protect you from making costly mistakes.
Where will you find a mentor? Attend conferences and community events hosted by real estate investors. Here, you will meet local property owners as they discuss various issues about the neighborhood and community. Befriend them and present your case to them. With them by your side and offering you small tidbits, you will get access to opportunities and information that can prove vital down the line.
Built a Network
Real estate is capital-intensive and also relies on a lot of references. You want to build a network of people in your local community. This can consist of real estate agents, maintenance workers, accountants, and lawyers. Having a team of people you can turn to for help and industry advice will save you a lot of time, money, and stress.
Just because you’re choosing to become a full-time landlord, doesn’t mean you need to do everything yourself. Managing properties is a big undertaking so it pays to develop local connections with industry professionals.
Being a full-time landlord means taking on a lot of extra responsibilities. Apart from selecting the ideal properties, you will need to comply with legal statutes, regularly inspect the property, collect the rent, and tend to any repairs on the property.
Should you need someone to help you manage your rentals, rely on the leading service provider in the Southern California area, Home Choice Property Management. We manage a wide range of properties in Long Beach, Riverside County, Bernardino, and Orange County.
With our years of experience, we can handle all your property management needs. Contact us today to learn more!