Retiring on Rental Property Income – Passive Income Dreams Come True?
The topic of passive income and passive income strategies for retirement are hot ones today. The truth is, there are plenty of ways to make excellent income without a lot of work, or at least a manageable amount of work (active investment).
Hundreds of thousands of smart passive income investors are doing it, and maybe you’ll be next?
Passive income strategies are popular because many of us are speeding toward a retirement crisis where we have little or no pension to keep us for 20 to 30 years. And there are more than a few who are passionate about passive income opportunities.
Passive Income From Real Estate
Visit biggerpockets.com later and you’ll see how involved they are in passive income via real estate. You could make more here than you could at your job.
A post on businessinsider highlights a typical storyline of how people make money and build a business with rental property portfolios. An entrepreneur started small and now travels with world with his family while managing properties remotely:
“For his part, Carson was able to take the money he earned from house-hacking and flipping and use it for down payments on rental properties and to build up his nest egg. Now after several years of hustling, Carson lives entirely off rental income from his properties. With help from his business partner and bookkeeper back home, Carson spends just three to five hours in a typical week — the occasional “high weeks” are more like 15 to 20 hours — managing his rental portfolio, he said. — Business Insider.
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Consider that investors routinely pay property management companies 20% of rent or more each month just to take care of properties and you get a hint of the potential yields from owning a rental property which we’ll discuss in detail in this post.
Passive Income via Real Estate
Passive income entrepreneurs are seeing opportunities 2 ways: buying and selling real estate, or buying and renting properties. Over the last 6 years, buying and selling, including flipping was popular and incredibly lucrative. Investors were enjoying once in a lifetime winfalls.
Opportunity in buying real estate or shared investment schemes abounds today. Some are scams yet some are real and easily achievable with a little work. Since the housing market is reaching peak levels in many cities (certainly not all), everyone is looking with more interest at rental income strategies.
Big property management companies too have discovered a bonanza in profit when they manage their portfolios well.
How much can you earn monthly? That all depends on your choice of city, neighborhood, and type of property you invest in. Consider 5% to 12% returns normal. If you’re a superstar manager with an eye for good properties and situations, you could generate some excellent rental yields.
Spread the Word, Until it Hits Home
Our family, friends and coworkers should nag us about finding sustained income sources other than a job. A job isn’t secure anymore. Just ask any Millennial. Passive rental property income could give you a higher quality of life, with vacations, financial confidence, and at the end of it, a big cash payout when you sell property.
Millions have bought and rented and achieved a steady monthly cash flow, what they used to call mailbox money. They manage their properties with simple property management software and maintain their freedom and free time.
Here’s how college grad Chad Carson launched his income property business:
“I bought a house, a quadruplex that had four units. I lived in one unit, and then I rented the other three units out. And so I was basically living for positive $100 a month by getting $400 in rent for my three tenants. So that’s $1,200 coming in. And my mortgage, taxes, and insurance were about $1,100,” — from Business Insider.
Let Everyone Know on Linkedin or Facebook!
Investing in rental income properties is almost sport now. It’s a smart way to build your financial future.
Your Future is Coming Faster Than you Think
If you know your pension is nil and your employment situation always precarious, then you need to get started. Real estate is what creates great wealth. Rental property is the new gold rush.
“At any point in time, people around the world get wealthy, or their currency fluctuates, and they look to buy foreign property. They buy in Miami, Los Angeles, Sydney, Toronto and Vancouver. Winfalls can happen at any time through the years ahead. That one big moment can change your life too.”
Alex Szepietowski talks about how to Design Your Dream Life Through Passive Income | TEDxUniversityofYork
Why is Rental Income Property Investing the Best Passive Income Strategy?
We’ve talked a lot about rental income properties and the best cities to buy these properties for maximum capital gains and ongoing cash flow managed through simple property management software.
However, do you actually have to own a house to leverage real estate? There are plenty of creative ways to make money without owning. And a few smart people partner with friends and family to buy properties, fix them up, and rent them out.
No one ever talks about the successes of the “Bank of Mom and Dad” but the truth is, many Millennials have made fortunes using their parent’s money. And more successes are coming.
Slow And Steady is Lasting
Don’t look for quick returns though. The time frame for making money is longer than imagined, but it will happen if you persist and believe. Even in a pre-recession economy, you can hedge your risks to ensure success. You may need a property manager or a property investment advisor to ensure you’ve got your bases covered.
You should speak with an experience Realtor who has worked with owners of income generating properties. You’ll likely be buying your property(s) via a Realtor. It’s big money and big risk, so proper caution. Buying a bad property could be disastrous.
Hiring Real Estate Passive Income Experts
There are companies that will do the whole buying to management process for you from sourcing properties, buying, renovating, finding tenants and landlording. You can also manage properties yourself if you have 15 or less.
You can work with airbnb type rentals, student rentals, houses, multifamily units in lower priced markets. Buying in Los Angeles, San Jose, San Francisco or New York sounds interesting but you won’t be buying too many properties at those prices.
If a recession is coming, which is unlikely soon, you’ll need to sell what you can to prepare for the loss in rental income that might happen. If the market does crash, you’ll likely be able to renegotiate your mortgage at a lower rate. That might be why a few people wish for a recession!
If you’re serious about pursuing passive income through real estate, check out Phil Pustejovsky, who owns freedomentor.com. Phil talks about the positives/negatives, opportunities/dangers and helps you avoid the pitfalls. You can get a copy of Phil’s book on Amazon for almost nothing.
We’re not recommending anyone’s training or consulting services or educational materials and advice. However, to learn more, you can check it out.
Bigger Pockets owned by Joshua Dorkin is a forum/educational site dedicated to real estate income generation. It has a huge following and a great forum for property buying and renting discussions.
How Much Can You Earn?
It was only a few years ago that property investors were making 30% to 40% ROI. With home prices and rental rates continuing their 5% growth, investors are building equity.
Where Are the Best Cities to Buy for Passive Income Yields
As we covered in the best cities to buy investment properties post, some cities have a better price to rent yield. Put another way, is rent to price ratio shown here in this chart. The point is to find cities or zip codes where price are low and potential and future rent will be high. Your rental yields will be highly affected by that ratio, and other things such as mortgage rates, property taxes, and property management fees. Check out the best cities in California.
Rent to Price Ratio – Higher is Better
|City||Rent to Price|
|Home Price||Average Rent Price|
|New York, New York||1.30%||$307,800||$4,079|
|Buffalo, New York||1.20%||$81,500||$1,016|
|Corpus Christi, Texas||0.80%||$121,848||$970|
|Kansas City, Missouri||0.70%||$127,400||$943|
Here’s some tips from Investor Kevin Woods and the guys from Bigger Pockets on investing in rental income properties.
Top Books on Real Estate Investing
Long Distance Real Estate Investing audio book by David Greene
The Book on Investing In Real Estate with No (and Low) Money Down by Brandon Turner of Bigger Pockets
Investing in Rental Properties by Steve Berges
Rental Property Investing: How to Invest in Rental Properties – The Keys to Success by Calvin K North
Rental Property Investing: Creating Income by Eliminating the Noise of a Loud Industry by Cole Graham
HOLD: How to Find, Buy, and Rent Houses for Wealth by By Steve Chader, Jennice Doty, and Jim McKissack.
Passive Income Investing And Side-Gig Mastery! by Steve Balinger and Udemy Training Academy.
Additional Housing and Property Management Topics:
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