Passive Income Ideas: Become A Landlord Ready For The Highs and Lows

By
Real Estate Broker/Owner with Ivy Vine Investments

passive income idea becoming a landlord

 

Passive Income Ideas: Become A Landlord Ready For The Highs & Lows

 

What is passive income?  Some people may not have heard of this term but it is something that everyone should familiarize themselves with.  Passive income in a nutshell is the process of being able to make money while you're sleep.  That's right, when you're getting those Zzzz's your bank account should be collecting those G's.  With a normal job, in order to earn money you have to work long 8+ hour shifts, 5 days a week to collect a paycheck.  Sometimes that work can be back breaking, time consuming or just something that you don't enjoy doing.  One goal that all of us should strive to accomplish is finding a way to make additional income.  One of those ways is to become a Landlord.  With there being an influx of young entrepreneurs looking for ways to make money let's discuss what being a landlord means and some of the things that come along with it.  

 

What Is A Landlord?

Becoming a landlord involves purchasing a residential property such as a home or duplex, getting the home in a livable and safe condition and renting it out to a tenant for a monthly fee.  Along with the title of being a landlord also comes a lot of responsibilities.  You now have an investment to protect and you also are providing a service for people in your community looking for a place to live.  

 

Pro's Of Being A Landlord

  •  Monthly income: When you are renting out a property to a tenant, each month you will be collecting a rental payment.
  • Equitable Asset: The home or property you purchased hopefully has equity that will continue to grow over the many years that you own the property.  Equity is the difference of what you owe on your mortgage and what your home is worth on the current market.  For example, if you buy your first rental property in 2020 for $60K and the market value for that home is $100K you now have $40K of equity in that home minus any repairs you may have had to do in the beginning.  If you were to sell that home you just put $40K in your pocket.  You didn't have to work any overtime or weekend shifts.  You just had to negotiate a great deal on that first buy.

 

  • Can Be Passed Down To Your Kids: Not only will you see and reap the benefits of being a landlord you can also build up a portfolio that you can pass along to your children.  I work hard now and started my own real estate investment business so one day I could pass it to my kids to run.  A goal for every parent should be to make the path for your kids a little easier than you had it.  You also want to teach them and instill what the benefits are of being an entrepreneur.

 

Ok, so we've gone over a couple pro's of being a landlord but now its time to dive into the nitty gritty...aka..... Con's of being a landlord.

 

picture of man with empty pockets not able to pay rent

 

  •  Tenants Not Being Able To Pay Rent At The End Of The Month: Unfortunately, if you are a landlord you are going to have tenants who may not be able to pay their rent every month.  It sucks but it will probably happen.  A good example would be the times we are currently facing now with the coronavirus epidemic.  A lot of people and families have been effected and many have lost their jobs.  Lost income means many who won't be able to pay rent at the end of the month.   When you purchased that property it probably came with a mortgage that you are still obligated to pay each month if the tenant pays or not.

 

  • Maintenance Calls:  Over time, things are going to break down and need replaced at your property.  A clogged toilet, malfunctioning air conditioner or broken faucet like the title picture is going to happen. As a landlord you need to be prepared to receive those calls at 1pm or 1am.  You also will need to have a plan or process in place to fix those issues when they arrive.

 

picture of tired landlord

 

  • Being A Landlord Wasn't What You Thought It Would Be: Sometimes when deciding to become a landlord you don't factor in all of the things that you will have to deal with.  You will have to deal with tenants who may destroy your property, late or no monthly rental payments, evictions, late night maintenance calls, taxes and unexpected repairs that cost money.  These things can become overwhelming to some people and you may realize that you don't want to deal with the russle and bussle of being a landlord.  When this happens you have officially become a tired landlord and should start to look at options to get out of the market.

 

Well there you have it.  I hope this post helps everyone who may be looking for ideas on earning passive income.  Becoming a landlord is definitely a great option to pursue just make sure you educate yourself on the good and bad of becoming one.

 

Until next time I'm Out............

Chris Ivy

 

 

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Rainer
592,446
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Get some education & networking from a local real estate investors group which might save you a lot of headache later on.  These are people who are doing it and more than willing shre their experiences

Aug 09, 2020 12:53 PM #1
Rainmaker
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Carol Culkin, ReeceNichols
ReeceNichols Real Estate - Overland Park, KS
Overland Park Residential Real Estate

The title of landlord comes with headaches and expenses, so one must weigh the pros and cons. The investment can be more than worth it for some.

Aug 09, 2020 12:57 PM #2
Rainmaker
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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Chris, making the decision of becoming a landlord comes with lots of research to be SURE you are ready for it!  

Aug 09, 2020 02:26 PM #3
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Anna Banana Kruchten Arizona's Top Banana!
HomeSmart Real Estate BR030809000 - Phoenix, AZ
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Hi Chris Ivy You've done a great job of outlining the pro's and con's of becomming a landlord. I learned that very early while still in college.  I few hits along the way but far more gains, not to mention the incredible education I gained along the way.  It's a great way for parents to have extra equity and income to put kids through college. We used to call it mailbox money.  Of course now nobody mails check.  Money just shows up in ones accounts!!  I like that!

 

Aug 09, 2020 02:45 PM #4
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Chris- rental property can be a great way to have passive income as well as build equity in an asset. You just have to know and be prepared for the ups as well as the downs. 

Aug 09, 2020 03:11 PM #5
Rainmaker
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Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

That is always an option for a lot of us. It’ll be telling to see what this pandemic creates as far as innovation goes

Aug 09, 2020 07:53 PM #6
Rainmaker
684,358
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

Rentals are their own set of reality  I mean realty.... 

You can always hire a good property manger and never have to answer the midnight toilet call!!

Aug 10, 2020 12:34 AM #7
Rainmaker
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Linda D. Pufford
Stage with Divine Style - Home Staging - Novato, CA
ASPM, Marin/Sonoma Home Stager

Great post!
I too want to leave something for my children to make it easier on them.
When I think about what the cost of my first home was and how much homes are now it’s hard to imagine how they will make it.

Aug 10, 2020 01:32 AM #8
Rainmaker
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James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Chris.

I would not make a good landlord. I know what people can do in a short amount of time.  

Aug 10, 2020 02:18 AM #9
Rainmaker
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Matthew Klinowski, PA
Downing-Frye - Naples, FL
Golf Community Real Estate Specialist

Good morning Chris, some great tips on the pros and cons of being a landlord. The photos alone do an excellent job of conveying your points. Have a great week!

Aug 10, 2020 05:49 AM #10
Rainmaker
1,593,592
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

I became a landlord by default in the late 1990s and it didn't work well - I lived too far away to take care of the property (and had to drag my two small boys there every time there was a problem), the tenants stopped paying rent and left in the middle of the night, leaving a mess...   But that was a long time ago, and I'd be better prepared if I chose to do that again!

Aug 10, 2020 05:56 AM #11
Rainmaker
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Shirley Coomer
Keller Williams Realty Sonoran Living - Phoenix, AZ
Realtor, Keller Williams Realty, Phoenix Az

Great review of the pros and cons.  Being a landlord is not for the faint of hearts.

Aug 10, 2020 06:20 AM #12
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Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Chris Ivy - it is important as you have done to show the pros and cons of being a landlord.

Aug 10, 2020 10:42 AM #13
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Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
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Chris Ivy 
Love to read your content!
Take care - Lynn

Aug 10, 2020 10:46 AM #14
Rainmaker
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Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Chris Ivy, rental income is great but being a landlord is not for everyone for sure. I would highly recommend hiring a good, reputable property manager, they certainly deserve the $$$ they earn. 

Aug 11, 2020 08:05 AM #18
Rainer
417,109
Jerry Lucas
ABC Legal Docs LLC - Colorado Springs, CO
Mobile Notary Colorado Springs, CO Notary Training

For passive income, invest in tax lien certificates. No tenants, no vacancies, no maintenance, no property manager.  Earns high interest, secured by real estate.

Aug 11, 2020 06:55 PM #19
Rainmaker
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Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Chris,

What a wonderful job you did in clarifying the pros and cons.  Happy Wednesday. A

Aug 12, 2020 10:19 AM #21
Rainmaker
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Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

I have wanted to buy a small property to rent out for years--knowing that my kids would always have a place to live if they decided to come back and live in their hometown.  But hubby is too afraid there would be issues--the very issues you mentioned. I feel it's worth it.

Aug 13, 2020 08:39 AM #22
Rainmaker
493,501
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Chris, I am a landlord! I have commercial property! I much prefer that to residential! I love it because all of my leases are triple net, and I rarely get calls! I also have expensive buildings with well heeled tenants

Aug 14, 2020 07:11 AM #23
Rainmaker
31,894
Chris Ivy
Ivy Vine Investments - Memphis, TN
Sell Your House Fast For Cash In Memphis Tennessee

Good morning Tom....nice to meet you!  Owning commercial property is definitely less of a headache than residential properties.  How did you acquire your first commercial property.

Aug 14, 2020 08:19 AM #24
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