Financial freedom is the dream of almost every real estate investor out there, but in order to do that, a landlord must first find a way to generate passive income. Since a rental property requires supervision to run smoothly, there are steps that need to be taken first.
Covering property management aspects like marketing, rent collection, tenant screening, maintenance, accounting, and eviction is the first step to earning rental property passive income, so how might one achieve that?
Covered below are ways you can reduce or completely free yourself of any landlord responsibility, all while still profiting from your rental property investment.
Key Highlights:
- Becoming a hands-free landlord starts with reducing daily involvement, especially in marketing, rent collection, maintenance, and tenant management.
- Property management automation tools can streamline routine tasks like rent collection, maintenance coordination, accounting, tenant screening, and lease renewals.
- Hiring individual third-party services offers flexibility, allowing landlords to outsource specific tasks such as marketing, tax planning, screening, and maintenance.
- Professional property management companies provide the most complete solution, handling all operational responsibilities with minimal landlord effort.
- A hands-free approach creates true passive income, giving Fort Mitchell landlords more time, lower stress, and better long-term investment performance.
Adopting Automation
The rental industry has benefited from many of the technological advancements in the last decade, with landlords being able to streamline their operations with the help of property management software and tools. Automation has been adopted by many rental property owners, seeing as many aspects of property management are simply routine and uncomplicated.
Through certain tools, you can automate processes in your rental property, such as:
- Rent Collection: Your tenants will be sent reminders for rent due, and they can make rent payments online using tenant portals, cash apps, bank apps, and other online payment channels. Some tools offer features that also allow you to collect rent automatically.
- Maintenance Coordination: Maintenance requests can be sorted based on urgency and importance, allowing you to prioritize major issues. In some tools, vendors are also automatically contacted to begin repairs immediately.
- Accounting: Your cash flow will be calculated, which lets you track the performance of your rental property. Some property management companies provide access to an owner portal, which you can view at any time and day.
- Tenant Screening: All you need to do is provide the criteria to assess applicants, and the tool will do the rest. You can set standards, such as minimum credit scores, and only review the ones that meet your base standards to rent to quality tenants.
- Lease Management: You may also automate the lease renewal process, where tenants can sign digitally to expedite the process and reduce your property management duties. However, it is not advisable to use tools to draft lease agreements. It's always better to create them yourself to tailor your rental business's needs.
Hiring Individual Third-Party Services
Rental property owners turn to professionals in the field to help with their rental property management duties. You can hire certain experts depending on your needs, instead of a property manager who could handle every job a rental business requires.
Keep in mind that for total rental property passive income, you may need to hire several professionals or constantly require consultations to make informed decisions. Here's a list of services that can help you maximize your real estate investment.
- Marketing Services: The first step to generating rental income is finding tenants for your rental property. With knowledge of the rental market and marketing practices that increase your listing's visibility, marketing services can streamline the leasing process.
- Tax Professionals: The role of a tax advisor serves a more indirect purpose, since they can advise you about property tax deductions. By taking advantage of tax benefits, you can increase your passive rental income.
- Tenant Screening Services: While tenant screening can be automated, hiring professional services allows you to be more comprehensive. They can go beyond credit history when screening tenants by also calling previous landlords to identify potential issues. If you have a multi-family property, it makes more sense to delegate the task to lighten your workload.
- Property Maintenance Services: Your steady cash flow can easily be disrupted by major repair needs, which can be avoided by conducting regular maintenance and inspections. Hiring someone to take care of your property maintenance needs can prevent missed inspections, which can lead to costly repairs.
Employing a Professional Property Management Company
To truly earn rental property passive income, the best thing you can do is hire a professional property management company to oversee everything. Whether you have one rental property or several in your portfolio, a property manager allows you to be a completely hands-free landlord and earn passive income.
Your investment property will benefit from a complete service, which typically includes:
- Marketing
- Tenant Screening
- Rent Collection
- Maintenance
- Accounting
- Eviction
As you might notice, all these areas of rental property management have already been mentioned before. The difference is that your rental property will have human oversight, which is crucial in significantly boosting tenant satisfaction. You are also required to put in minimal effort when you hire individual third-party services, whereas hiring a property manager covers both passive and active management.
Property managers are not just the solution to rental property passive income. They also offer insights that let you assess risk factors for vacancy rates, tax advantages you might be missing, as well as identify patterns in property prices, rental rates, and occupancy rates. Ultimately, management fees will be a small price to pay so you can feel confident with your investment.
Rental Property Passive Income FAQs
Is it possible to be a completely hands-free landlord?
- Yes. You can hire professionals for every aspect of property management, but the easiest way is to hire a property manager who can take over daily operations for you, allowing you to earn passive income without lifting a finger.
What are the benefits of earning rental property passive income?
- Other than being stress-free, you will have the time to focus on other investment opportunities, such as expanding your rental portfolio. Even the smallest help can make a big difference.
When should I hire professionals to help with property management?
- While most landlords do so when they start struggling, especially when they handle multiple units, it's also advisable to hire help even when you can handle your landlord duties. Professionals in the field can put experience and expertise on the table, which is beneficial to both you and your tenants.
Let Us Help You Generate Passive Income
If you've considered your options and believe that hiring a property manager aligns with your goals, then you should opt for professionals who have your best interests at heart. With Ten20 Property Management at your corner, your rental property will get the treatment it deserves.
You don't even have to commit right away. You can schedule a free consultation to see if we're the right fit!
