Owning a rental property is a great long-term investment. Many landlords choose to manage their rental on the side while working a full-time job. Juggling so many responsibilities can be a challenge, but the payoff is worth it. Once a homeowner starts acquiring more properties, being only a part-time landlord becomes difficult.
So, how can you smoothly transition from a part-time landlord to managing your rental full-time? Becoming your own boss comes with many perks. However, it can also take a significant toll on you financially. To make the transition smooth, you need to plan ahead and learn what makes a good landlord.
At Blue Door Realty, we know exactly what it takes to run a successful rental business. In this article, we’ll tell you everything you should know about becoming a full-time landlord.
Why Becoming a Full-Time Landlord Is a Good Idea
Managing your rental properties full-time can seem like a risky move. But the payoff is worth it. The main benefits of being a full-time landlord include:
Passive Income
Focusing on your business full-time can help you maximize cash flow from your properties. Once you get a hang of it, managing your rentals becomes a simple process. Meaning that you’ll earn a significant stream of passive income each month.
Lifestyle Flexibility
Being a full-time landlord means becoming your own boss. This allows you to adjust your work hours to fit your lifestyle better.
While you still have to put in hours to provide maintenance and services to your tenants, being a fulltime landlord does open up your schedule quite a bit.
Tax Advantages
Every expense for a rental property is a business expense and is tax-deductible. Additionally, as a full-time landlord, you can also enjoy several self-employment perks, such as a home office deduction.
Growing Your Wealth
In addition to a stable stream of income, owning one or several rental properties allows you to grow your wealth over time. The longer you own a property, the more equity you own.
Plus, keeping your rental in good condition will maximize the return on your investment significantly in the long run.
Smoothly Transition from Part-Time to Full-Time Landlord
Even if you own a successful rental property, contemplating leaving your job to become a full-time landlord can be intimidating. Rest assured that the payoff will be worth it. The secret to a smooth transition from a part-time to a full-time landlord is to plan ahead.
Here are some tips that can help you:
Set Some Cash Aside
Quitting your job to focus on your rental business can take a significant toll on your finances. That’s why it’s best to start stockpiling as much cash as possible beforehand.
The rule of thumb is to save an amount that covers at least six months of your regular bills and expenses while you are still working your regular full-time job. But the more money you save, the more secure you’ll be.
Having money set aside is a great cushion to have during the learning curve. Oftentimes, there are many costs that landlords don’t know they’re accruing which can be covered by that extra cash.
Create a Business Plan
When you transition to full-time property management, you become wholly dependent on your rental property income. This is why you need to come up with a business plan to ensure that your investment remains profitable all year round. Your business plan should include the following key elements:
- A company description
- Your objectives and the strategies you’ll apply to reach them
- How you’ll handle all the finances
Build a Real Estate Portfolio
There’s no point in becoming a full-time landlord if you own only a single rental unit. Your cash flow will be too small to sustain your lifestyle.
Plus, with more than one rental, you can be sure that being a full-time landlord is right for you. That’s why it’s best to make this decision once you’ve acquired at least two or three investment properties.
Consider important factors when investing in real estate in order to ensure you make the right choices.
If you realize that full-time property management is the right choice for you, you can then focus on expanding your real estate portfolio even further. This will maximize your wealth and keep your business profitable in the long run.
Become a Part of Your Community
It’s practically impossible to thrive in real estate without connections. If you want your business to thrive, you’ll need to join your community.
Additionally, you’ll want to seek out a mentor to help you solve common challenges and give you access to deals and opportunities that you otherwise wouldn’t be able to find on your own.
When you leave your job to become a full time landlord, it is important to keep the connections you have there. While you might not ever have any interest in returning to that company, you want to stay in good standing with them.
Work with Contractors
Even when you have the time and resources to manage your rental units full-time, you will still occasionally need help from other professionals. That’s why it’s highly recommended to work with a team of reliable contractors. Make sure to keep at least two dependable names for each contractor type on hand.
You’ll need electricians, plumbers, and contractors. Additionally, have the contact info for a real estate attorney in hand in case you ever need to proceed with evictions or other legal action.
Partner with a Property Manager
Becoming a full-time landlord doesn’t mean you have to do it all by yourself. Having no one to rely on can lead to burnout, which can severely affect your ability to care for your units.
Hiring a property management company to handle the day-to-day operations of your rentals will allow you to focus on other important aspects of your business, such as expanding your portfolio.
When it comes to managing rentals in New Mexico, there’s no one better than Blue Door Realty! We offer comprehensive property management services that help you with everything from property marketing and tenant screening to maintenance coordination.
Bottom Line
Transitioning from part-time to full-time property management can be an exciting but daunting adventure. Now that we’ve shared with you the best tips to make this transition smoother, you can start planning your next steps.
If you have more questions about becoming a full-time landlord, contact Blue Door Realty today! Our team of expert property managers is ready to help you turn your investment into a profitable business.