One aspect that draws the attention of many South Shore rental property owners to the single-family rental industry is the opportunity to earn passive income. It’s an excellent idea: rather than earning a certain number of dollars per hour worked, your cash flow is based on investments that require little to none of your time. Nonetheless, not all rental property investments are actually passive. Depending on how you establish your business and ongoing management, there may be a continuing need to be actively involved in your rental properties. The key to passive rental income, then, is to prepare your rental properties so that they need less work to maintain.
There is much advice out there on how to go about setting up your rental properties to achieve passive income. However, maybe one of the best places to start is to have a clear understanding of what “passive” real estate investing exactly means. Technically speaking, passive income is money you make from an investment you are not actively involved in regularly. However, owning a rental property isn’t like buying stock or being a silent partner in a business. A better definition of passive income for rental real estate investing is more like an investment that may demand some effort at first to set up but that you can then manage with the least effort.
To create passive income with a rental property, you will first need to put in the time. The portion of your investment that will probably demand a lot of work will be finding and purchasing your investment property. Even though there are excellent ways to streamline this process, it is by no means fully automatic. Finding the right deal takes time. Financing a property takes time. Your property might take some repairs or other work to get it ready for your tenants. Trying to rush through this process or cut corners is a horrible idea and will likely lead to mistakes and financial problems along the way.
However, once you have your property totally prepared, you can then step back from your investment’s day-to-day management by giving it over to a property manager. This is the key to creating passive income with rental properties. Typically, property owners try to save money by completing all of the property maintenance and management tasks themselves.
After completing all the activities, you can save a few dollars here and there; you will also be actively involved in that property all day, every day. That is not passive income; quite the opposite. To create a truly passive income, you must trust professionals to handle the most challenging and mundane parts of owning investment properties for you. In this way, you can focus your time and energy on maintaining profitability and growing your investment portfolio.
As an investor, it’s necessary to value your time appropriately and spend it on tasks that will help you multiply your wealth. This is probably the best reason to select rental real estate as an investment strategy. By purchasing properties, you make instant net worth and the potential for real wealth in the future. You are also doing so without the daily struggle of making income for one hour at a time. Investing in single-family properties is one of the best ways to get your money working for you – and not the other way around.
Are you looking for the right property management professionals to help you create passive income from rental properties? Real Property Management Associates has your solution. Contact us online or give us a call at 508-509-4485.
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