Who doesn't like the idea of financial freedom?
For some, the concept of freedom may involve relaxing on a beach in the Caribbean. But for most of us, our financial goals are a lot closer to home. Maybe you're tired of stressing about the lack of funds in the bank account at the end of the month. Or perhaps you'd like to finally start earning a decent income, or have enough funds for retirement.
No matter what your financial goals look like -most investors and wealth advisors will tell you that creating passive streams of income is one of the best ways to increase your wealth -and gain financial freedom. And one especially good way to start creating passive income is through none other than income properties -or, Rent Estate(tm).
While "fix it and flip it" used to be the hot way to get rich, owning rental properties offers a number of significant advantages over buying and selling. How so? Firstly, it's important to realize that flipping houses is not passive income -it's a business. It's trading time for money, and it's a lot of hard work. Not to mention that it carries a lot of risk -and your success is dependent upon carefully timing the market. Plus, when you sell, it's back to square one.
Rent Estate(tm), though, is a solid and more long-term investment -and it's one that can provide both immediate and future rewards. Thanks to both passive income in the form of cash flow every month, as well as the chance to build equity -with long-term appreciation and as you, or your tenants, pay the mortgage down.
While Rent Estate involves a lot of hard work in the beginning while you're getting set up -once you've established your investments you'll be able to sit back and collect the rent each month, especially if you structure your investments in a way that includes outsourcing much of the day-to-day work that's involved with property management.
If you've always liked the idea of real estate investing -but felt that it was something that's unrealistic or out of reach -you should know that this is no longer the case. Currently, we're experiencing a Rent Estate Revolution -and more and more people and everyday investors are getting started with Rent Estate; putting their money into rentals, and experiencing all of the rewards that income property has to offer.
If you'd like to see if Rent Estate investing is for you, here's a look at how you can turn your dream of passive income -into a reality!
Become an Expert in Your Niche
First of all, don't just take our word for it -read up on income properties yourself, and learn everything that you can about rental investments. Whether you're interested in owning multi-unit properties, duplexes, or single-family rentals; be sure to brush up on your knowledge of the subject. Visit websites like Bigger Pockets and Invest Four More and learn from the experts. Get your hands on some good books like The Four Hour Work Week, First Time Landlord, Landlording on Autopilot, and Rent Estate Revolution. Learn about investment strategies, financing options, locating great deals, and your legal obligations as a landlord and property owner. Becoming an expert in your niche -and educating yourself on the ins and outs of real estate investing -will help you to avoid many of the common pitfalls along the way, and will get you off to an excellent start.
Set Your Financial Goals
Next, you'll want to set your goals and create a plan for financial freedom. Start by determining how much you'll need to generate each month in passive income. Would you like to replace your current salary? Earn $5,000 per month? Set a figure and then work backward from there, calculating how many properties you'll need to reach your goals, and how much each property will need to produce in terms of cash flow in order to fit your criteria. Determine for yourself what type of returns you'll be happy with -at least $200 per property? This will help you to make smart investment decisions and ensure that you'll only spend your money -and time on deals that are worth pursuing.
Find an Investment Partner
This isn't necessary -but as a first-time investor, it may be a good idea to team up with an investment partner when you're first starting out. Brandon Turner of Bigger Pockets fame often uses this method to finance his rental properties. The partner supplies the down payment and will get the loan on their credit, while you agree to take on every aspect of managing the property -or outsourcing it yourself. Both parties would own the house jointly, and all profits could be split 50/50, or however you choose to structure the deal. Learn more about investment partners.
Don't Be Afraid to Start Small
Don't feel like you have to start out with multi-million dollar complexes! The great thing about Rent Estate is that it allows you to get your foot on the ladder -for a relatively low initial investment and start earning income right away. This is in contrast to traditional real estate -which often involves tying up a significant amount of capital and waiting years for it to appreciate. Starting small with a single-family rental property, a duplex, or triplex, is a great way to begin your investment journey -and will also give you experience owning investment properties, before you move on to bigger properties.
Secure a Great Deal
Finding a great deal is essential when it comes to Rent Estate investing! You're going to want to secure a property that will appreciate in value -as well as provide a steady source of cash flow, so make sure you buy a property that's below market value. Use websites like Trulia and Zillow, or check with a local investor-friendly Realtor -they'll be able to set you up with an MLS search, which will alert you when properties that meet your criteria become available. Once you have your sights on a property, don't be afraid to negotiate to try to get the price that you're after. Look out for properties that are in need of a few repairs, or ones that have been on the market for a while, the sellers may be more willing to negotiate with you.
Ensure Profitability
The secret to being able to generate income, is finding cash-flow-positive properties. Once you have a potential property in mind, take the time to find out whether it will produce a decent rate of return. Tally up the projected expenses associated with the property -and subtract them from the estimated annual rental income to find out what your cash flow will be. Then, take things a step farther and calculate your cash on cash returns to get a better idea about the financial performance of your investment. Make sure you only invest in properties that will be worth your time; ones that will give you the returns that are in line with your financial goals.
Find a Great Tenant
Don't underestimate the importance of finding great tenants. A good tenant will pay the rent on time, and treat your property well, while a bad tenant will cost you significantly in terms of damage and lost rent, not to mention eviction costs and vacancy time. Fortunately, finding a qualified tenant isn't a matter of luck -having a solid screening policy in place will significantly increase your chances of securing good renters. Conducting thorough credit and background checks -and following through with reference checks will help to ensure that only qualified applicants gain access to your rental. Or, you could outsource the work to a reputable property management company that will have policies and procedures in place for screening applicants.
Don't Sell Out
Finally, it may be tempting to list your property during a booming housing market -but keep in mind that if you sell -you'll be killing off your valuable source of passive income. The secret to building wealth is creating as many streams of income as possible, and owning multiple rental properties is one of the best ways to reach this goal. Be sure to keep your long-term strategy in mind when making any financial decisions.
Despite ups and downs in the market, real estate continues to be one of the top choices for investors who are after long-term rewards. Investing in Rent Estate is a great way to get your hands on an asset that, not only is likely to appreciate over the long-term, but will also provide a regular source of income for the here and now. When done correctly -you can set your properties up to run without any direct involvement from yourself -allowing you to invest in even more rentals, or even take advantage of out-of-state housing markets.
Rent Estate isn't a get-rich-quick scheme -but it can be a great way for smart investors to earn income for the long-term. You too can take advantage of the benefits of Rent Estate, begin growing your wealth, and start your journey toward financial freedom -now is a great time to be a Rent Estate investor!
For more information on Rent Estate and earning passive income through rental properties -have a look at our FREE Insider's Guide to Rent Estate. Or, get in touch with a Renters Warehouse Rent Estate Advisor today -and begin your investment journey!
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