How to Succeed as a New Landlord
Earning passive income is probably the closest thing to a concrete definition of the American Dream that the world will ever have. Indeed, in the world of business, few things generate cash like owning and renting out property. However, you want to avoid falling into the trap of thinking that managing property is a way to earn income without doing anything.
Passive income is just that. It is passive—not inactive—income. In other words, doing nothing will gain you nothing. The point of business is to make a profit, and to earn a profit, you have to provide products or services either better than or as good as your competition, and at a comparable rate. In other words, there are things that you can and should do to get a leg up on your competition.
Be an opportunist, not just a landlord
One of the biggest keys to being successful as a landlord, or even as an entrepreneur in general, is not to box yourself in to one thing. The best way to ensure that you turn a profit on your property is to look for opportunities to earn revenue beyond collecting rent from your tenants. In other words, you need to diversify your business portfolio to tap into other possible revenue streams for your property.
If you have a large piece of property with a lot of acreage to it, then there is a pretty good chance that you are not maximizing your land to its full potential. If your city doesn’t have any ordinances against a certain number of cars being parked in your yard, and you’re a car enthusiast or mechanic, then you could turn the extra land into a small car dealership.
This venture is not as expensive as it may sound. You won’t ever need to show more than a few cars at a time, so you don’t have to worry about your property becoming an eyesore. Also, auto auctions provide the opportunity for you to get used cars at the same price that dealerships pay for them. Frequent car auctions so you can by at wholesale prices and profit by selling at retail value. There is no need to put up towering billboards. You can post your cars in local papers and online classifieds websites. Most people look for cars online before ever going to the dealership.
Other property based opportunities
There are other ways to maximize every inch of your sizeable property. Even if you don’t have any ideas about what you can do with the extra land, maybe someone else does. The best thing about renting out tracts of your land is that other people make your land profitable for themselves and you. Now, that’s passive income.
You could let a professional arborist grow Christmas trees on your extra land. You could also allow a fork-to-farm style restaurant to turn your excess land into a hub for fresh fruits and vegetables. Nothing is out of bounds. You could even rent out space to a beekeeper so that they can harvest honey. All of these ideas could make your extra land work for you as well as allow you to claim agricultural tax exemptions.
The most important thing for landlords to remember is…
Even if it is not your goal to become a property management mogul, you still have to handle your duties as a landlord with the utmost sense of urgency. It is up to you to make sure that the house is up to code, attractive, and functioning on every front before showing it to prospective tenants. There are also the matters of finding qualified renters and handling property taxes.
While navigating all of the paperwork and regulations associated with being a landlord can be like tiptoeing through a virtual minefield, the right technology can help you with much of this. There is software available for landlords that allows you to get a rent application or tenant screening report free of charge. It can also help you determine what you will have to pay in property taxes as well as what the taxes will be on the income from your rental property. In other words, the right software can save you money by preventing you from having to hire people to manage your property for you.
Being a landlord can be both rewarding and lucrative. However, don’t get locked in to being just a landlord. You will be sorry if you do not take advantage of other opportunities to make your land profitable.