For a very long time, it has been widely thought that owning rental properties was a good way to earn passive income. Passive income is money you earn in a way that requires little daily effort. For landlords, this means earning money from rental properties. Although owning a rental property can bring in quite a bit of money, it isn’t always passive.
As a landlord, you might find yourself actively involved in various aspects of property management. You may be called in the middle of the night to deal with issues at the property. You may also need to be actively looking for tenants to avoid an empty property. In this article, we will go over several ways to make sure your rental property investment provides a passive income.
1 – Use a property management company
Property management services can help landlords a lot. They do many of the jobs that landlords usually have to do. These services find and check tenants, collect rent, fix things when they break, and talk to tenants when there are problems.
When landlords use services such as condominium property management companies in Etobicoke, they don’t have to do as much work. This is helpful for landlords who have other jobs or live far from their rental properties. The service takes care of the big jobs, so landlords don’t have to be ready all the time for emergencies or deal with difficult situations with tenants.
But, these services cost money. You’ll earn less by using these services, but you won’t have to worry about taking care of things if you don’t want to. How much they take depends on what they do for you and where your property is.
2 – Increase your rental portfolio
Putting all your money into one type of property or one area can be risky. To protect yourself, consider owning different kinds of properties in various places. This way, if one market goes down, you still have others to rely on. You can own properties in different cities or invest in both residential and commercial properties.
If you already own properties, you can use their value to buy more by leveraging equity. If your property is worth more now than when you bought it, you can borrow against that extra value to invest in more properties which brings in more money.
3 – Invest in real-estate stocks
Investing in real estate stocks is another way to earn money from the real estate market without owning physical property. The most common type of real estate stock is a Real Estate Investment Trust (REIT). REITs own or finance property and must pay out most of their profits as dividends to shareholders. This means if you own REITs, you can earn money regularly through these dividends.
Real estate stocks require no work unlike owning actual property. You don’t have to deal with tenants, repairs, or mortgages. You just buy the stock and own a small part of the company.