3 things I learned about being a landlord from an investor who owned nearly 30 rental homes
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- My ex-girlfriend's dad owned 28 rental properties, and watching him manage those investments showed me how real estate can lead to financial freedom and generational wealth.
- I'd like to become a landlord and include real estate in my retirement investment plan, and observing my ex's dad taught me a few lessons.
- For one thing, I learned that it's important to keep a separate phone number and PO box for business. Also, it's essential to have maintenance workers you can call on when needed.
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One of the best examples of smart, long-term investing I ever saw was an ex-girlfriend's dad (let's call him Mark for the purposes of this story) who had a large portfolio of rental homes; he owned about 20 investment properties when I knew him, and later made a big purchase of eight additional houses at once.
He showed me the power of real estate for building wealth, and observing him taught me some lessons about being a landlord that I've held onto for years.
While I don't yet own my own rental properties, I've started investing in real estate through REITs and Fundrise. In the future, I hope to become a landlord myself and earn passive income — and I'll be applying the lessons I learned from my ex's dad.
Real estate can lead to financial freedom and generational wealth
If each property is self-sufficient, as investment properties should be, they may start out with a mortgage that is eventually paid off. Once you've paid off the mortgages, each property has the ability to generate cash flow every month. That cash flow can be saved, reinvested, or used to buy new properties.
With a buy-and-hold approach, a portfolio of properties can eventually lead to financial freedom. If you do well enough to live off the proceeds, you may not need any other retirement savings, though it's a good idea to diversify your retirement investment plan.
When Mark eventually dies, he wants his properties to be split up between his kids. If all the mortgages are paid off, those are free-and-clear assets that my ex and her siblings can count on for their own long-term income into retirement. That's something I would love to do for my kids as well.
It is worth noting that passing along a property with a mortgage doesn't provide the same wealth transfer — you're passing along debt your heirs may not want to inherit.
It's best to keep your personal information private
If a pipe bursts or another emergency repair is needed, it's important for renters to have a number to call. When the rent is due, tenants need a place to mail a check if that's how they choose to pay. But landlords don't have to give out their personal phone numbers or home addresses.
To avoid having an angry tenant show up at your home and any unwanted calls, it's a good idea to keep a business PO box and a separate phone for your real estate business. That could be as simple as a second cell phone or as complex as an answering service.
Landlords need a team of trusted maintenance staff
If there was an electrical problem, Mark had a repair person for that. If there was a plumbing issue, he had a number to call. From the roof to the lawn, Mark had a trusted maintenance person just a call away.
Hopefully, your properties don't need frequent repairs. But anyone who has ever lived in a home knows that things do break from time to time. Instead of scrambling to find someone every time, the owner of a portfolio of properties should have good relationships with an expert or two so any problem can be quickly remedied.
I don't own any rental properties yet, but I do have investments in real estate through Fundrise and REITs. These have allowed me to start small while I build up enough cash to buy a property as an investment.
Over time, I would like to do what my ex-girlfriend's dad did and build a portfolio of rental properties that can support my family. Thanks to these valuable lessons, I will hopefully avoid some missteps and get on track for real estate success.
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