Whenever you hear somebody discuss passive income, real estate investment tends to enter the conversation. Specifically, people talk about buying rental properties and developing a recurring stream of revenue from rent payments.
But for the most part, the people who call real estate investing “passive” are individuals on the outside looking in … because if you’ve ever owned a rental property, you know that it’s not necessarily a hands-off proposition.
If you’re doing everything on your own and taking a reactive approach to landlord, you’ll find yourself putting out fires on a regular basis. There will be midnight maintenance calls, late rent excuses, tenant turnover, and everything else that goes along with managing a piece of real estate.
In these moments, it feels like anything but passive income. However, fear not. You can make a rental property more passive if you devise a plan for taking back your time and being more efficient with how you manage your units.
Five Ways to Reclaim Your Time
Time is a precious commodity. We can always make more money, but we can’t create more time. You’re confined to the same 24 hours in a day that everyone else has to abide by.
Thus, if you want your business to be more passive and hands-off, you have to protect your time with firm intention. Here are some strategies for doing that.
- Hire a Property Management Company
There are a lot of landlords who attempt to do everything on their own so they can hold onto every last penny of cash that flows in from their rental properties. While there’s nothing wrong with being hands-on, you might want to ask yourself what the real cost of being a DIY landlord could be.
Yes, you can technically keep your expenses low, but how much time are you spending on unnecessary tasks that could easily be handed off to someone else? For example, let’s say you spend an average of 10 hours per month responding to tenant calls, chasing down late rent, and fixing small maintenance issues.
If your time is worth $100 an hour, that means you’re really spending $1,000 per month on your “DIY” approach, practically speaking. Make sure you run this kind of cost analysis into the equation when you calculate whether or not to hire a property manager. If you’re honest with yourself, getting help usually makes more sense than continuing without it.
- Write Better Property Listings
If you’re a landlord, fielding phone calls for a vacant property can be one of the biggest time-sucks you suffer. You could reclaim a lot of your week by being more intentional with your property listings.
The majority of people who will call you about your property aren’t qualified or truly interested. They may think they are, but they don’t have all the details.
You’ll notice them asking questions that should have been covered in the listing. By developing more thorough property listings, you can cut your phone “traffic” by as much as half.
- Invest in Better Appliances
Most rental property maintenance issues originate with appliances. Ovens, washers, microwaves, and water heaters break down over time. Though some deterioration is going to be inevitable, you can save time by investing in better-quality appliances at the front end. Durability and reliability are two key factors to study.
- Automate Rent Collection
Rent collection is a matter of serious frustration for most landlords. You can do your best to screen good tenants, but even the “good” ones will sometimes miss a payment or forget to send the check.
Save time on rent collection by automating as much of it as possible. An online rental payment portal is a great idea. If you can convince your tenants to set up automatic withdrawals, that’s even better.
- Use the Cloud
It’s no longer efficient to store files on a desktop computer or in a filing cabinet. There’s nothing wrong with keeping lease agreements and forms in such locations, you should also have copies in the cloud. This will empower you to consult them from any device and any location.
Adding it All Up
It’s your time – protect it! By implementing some of these smart tips and changing the way you approach various facets of your business, you can waste less energy managing your properties and more of it doing the things you enjoy (like being with your family, pursuing a hobby, or relaxing at home). Which tips will you put into play this week?