rental portfolio

Rental properties are an excellent source of passive, long-term income… if done right.

With the rent from tenants paying down the mortgage each month, property management in place, and cash flow in your pocket, it seems like the go-to strategy for building long-term wealth.

Except, what about when there are vacancies or damage to the property?

You see, if you had 10 or more properties, having 1 vacancy won’t affect you too much. You would still have 9 properties with positive cash flow and it would lessen the impact.

If you have 1 or 2 properties, having a property that isn’t bringing in any money is actually costing you money, the impact on your business can be huge.

Vacancies are going to happen.

We can try our best to limit how often they occur by placing reliable tenants and offering options like longer lengths of lease and leases with the option to purchase.

But in the end, vacancies are a part of having rental properties and you need to be prepared for them.

Every time there’s a change in tenant, you’ll need to assess the property to see what needs to be done to make it “rent ready” again. This could just be a good cleaning or it could mean repainting walls and repairing various items around the house.

Again, this downtime between tenants wouldn’t be felt as much if you had more rental properties because the others help soften the blow.

In addition, many investors who have just 1 or 2 rental properties end up managing them on their own because their rental business isn’t large enough to bring in a property management company.

 

Being a landlord has drastically different roles compared to a real estate investor. They’re essentially on-call 24/7 to deal with the “tenants, termites, and toilets”.

Most likely, that isn’t what you signed up for.

Building up a rental portfolio takes time but it’s important to consider your end goal with your rental portfolio.

Are you keeping them, paying them off, and using the cash flow for retirement?

Are you planning on keeping them for 5 or 10 years and then selling them off after they’ve built up equity and appreciation?

Plan for the long-term with rental properties.

If you want to invest in “done-for-you rentals” that already have a tenant in place, be sure to check out PassiveRental.com.

I'm the content manager here at FlipNerd.com and have a passion for real estate investing and have a background in writing and business. I focus on providing content that is aimed for newer real estate investors and those who have the drive to become a full-time real estate investor. With so many strategies to utilize within the real estate investing industry, I aim to break down any barriers and showcase that real estate investing is obtainable and can truly bring financial freedom.

Latest posts by Hannah Alley (see all)