By now, most know that owning rental properties is a great way to create cash flow and build long-term wealth. However, there’s a massive gap between knowing rentals are a good vehicle for building wealth, deciding in your mind that you want to buy rentals, and of course the most difficult part, actually executing on that plan!
Truthfully, even if you’re able to execute your plan of purchasing rentals, it’s very possible that this is where the nightmare begins. Similar to having children, there’s a whole lot that “they” don’t tell you. Yeah, you know you’ll have to deal with dirty diapers, but there’s a lot more to the story that they fail to mention!
Don’t get me wrong. We’re advocates for owning rental properties and generating cash flowing assets.
So, let’s get some of the obvious out of the way…. Pros and Cons of Owning Rental Properties
Pros to Owning Rentals
- Cash Flow – If purchased ‘right’, your properties should be cash flow positive from day one.
- Long-Term Equity Growth – Every single month, your tenants are paying down your debt, which means your equity in the property is growing. This is your long-term wealth generation machine at work.
- Appreciation – We advise people to not ‘count’ on appreciation, but it’s a very real thing. Truthfully, some of the best markets to build rental portfolios in generally have relatively low price appreciation, but if you’re using leverage at all (which you should be!), even if you put 20% down… each 1% in price increase for you is equal to a 5% return.
We believe that every property you buy should cash flow. Debt reduction is powerful, and if there is meaningful appreciation, that’s the icing on the cake (but don’t buy on the assumption that appreciation will be there).
How to Find Rental Properties
You have an interest in owning rentals, and some direction on how to fund deals… but where the heck do you find deals?
If you’re new to this game, you may be thinking, “I’ll call a real estate agent”.
But – most Realtors do not really understand investors.
The biggest challenge with buying off the MLS (by the way… MLS = Multiple Listing Service, where Realtors ‘list’ properties) is that, especially in a market as hot as the one we’re in now, it’s nearly impossible to get a ‘deal’. Most houses are selling for top dollar, very quickly.
As active investors who are looking at deals every day, we buy direct. We have a large advertising budget to market direct to sellers, who call our office. We have a team to take calls, go on appointments, and make offers every day, etc. This doesn’t mean it’s right for YOU.
We’re set up as a wholesale buyer. We spend a lot of effort and resources to buy at deep prices. But consider that if I sell a property for $20,000 more than I paid for it… we had expenses to get that done. Advertising, staff, insurance, etc.
Unless you want to run a wholesale operation (which is harder to do these days!), you may be much better off buying from an investor or a turnkey provider.
However, even at this point… if you buy from a ‘wholesaler’ to keep as a rental, you’ll be responsible for rehabbing the property. Yes, another JOB! And, if the property isn’t in your market (or you don’t have time to oversee the rehab), it’ll soak up a ton of your time trying to manage from afar, and cause you a ton of grief.
But there’s a better way…
Despite buying hundreds of houses and building a rental portfolio the ‘hard way’, we’ve come to appreciate an easier way to buy and grow a rental portfolio: Turnkey Rentals.
What is ‘Turn-Key’?
There are various ‘flavors’, but generally, it means you’re buying rentals that are either “done for you” or someone is holding your hand to get it done much more efficiently.
Truthfully, rentals are often talked about as being ‘passive’, but we can assure you, if you’re finding the deals yourself, playing any role in the rehab process, or doing ANY management yourself… you’re FAR from passive.
Are Rentals “Passive” Investments?
Our guess is that 9 of 10 people reading this article have no interest in putting in a ton of work, or taking on a ton of risk to build your portfolio.
For this very reason, we created PassiveRental.com – a Turnkey solution that helps you buy rental properties, build your rental portfolio, and more. In fact – if you’re interested, we’re even willing to have a 15-minute phone consultation with you if you’re interested in learning more:
Passive Rental Phone Consultation – Schedule Here
We’re helping investors from all over the world buy rental properties in around a dozen of the best rental markets in America. We have partners in place in each of those markets that are experts – and very truthfully… you’ll never pay us a dime to help you, ever!
We’ll connect you with Property Managers, Lenders, Insurance Providers, and more…