In an ideal world, tenants would always pay landlords on time for renting the properties that they inhibit. But that doesn’t always happen in reality. Often there are financial problems, late payments, and sometimes, no money at all.
In this situation, landlords often find themselves getting personally involved. Running a property takes up a considerable amount of their time. And so far, we’ve only discussed the problem of getting tenants to pay. What about ensuring that they keep the property in good order? How about all the maintenance issues that inevitably appear too? Landlords have to solve all of those issues too.
On the face of it, it seems like being a real estate investor is a full-time gig – something you need to stay on top of to make it profitable. But it turns out that that’s not the case. In fact, many of the most successful real estate investors don’t manage their properties at all. Instead, they find ways to get other people to do it.
No property investment is ever totally hands-off. You’ll often have to do research, for instance. But there are many ways you can reduce the burden in a way that pays off substantially.
So what are your options?
Invest in Financial Instruments Linked to Property
It turns out that you don’t actually have to buy a property outright to invest in the real estate market. You can also purchase financial instruments linked to a portfolio of real estate investments, like rental and retail units. The money you collect relates to the return on the capital. In other words, you get a share of the rents, minus the fees, in accordance with how much of the property you own.
You’ll often see securities like these called REITs, which stands for real estate investment trusts. You can buy as many or as few as you like, meaning that you don’t have to save up a vast amount of capital to invest.
Get Somebody Else to Manage Your Property
The whole reason landlords go into the real estate industry is so that they can make more passive income. Unfortunately, they usually discover that they’re spending a huge amount of their time serving tenants and sorting out their properties. It is a never-ending job.
The solution to this problem is proactive property managers. Instead of managing your properties yourself, you hire an external agency to do it for you. Usually, they are much better at it than you are, and can do it at a lower cost, freeing up your time for whatever it is that you want to do.
While some bad tenants will always slip through the net, tenant screening can help you to reduce hassles associated with your real estate investments. If you know renters have stable jobs and a good credit record, you can be pretty sure they’ll pay you on time and complete their tenancy as agreed. Effective tenant screening massively reduces your workload and frees up your time, giving you a genuinely passive income.