How to Earn a Living with Rental Properties

Mastering the art of rental properties takes capital, diligence, and ambition. Once mastered, the life of a full-time rental property owner can be extremely rewarding. But where do you begin? What are the first steps you need to take to build the pillars for success? What decisions can you make early on that will benefit your business? 

Your answers await you below.

Run the Numbers

In order to make a living off your rental property, you’re going to need to make enough to support your general overhead. Let’s run some quick math: 

• How much money do you need to live comfortably?
• How much money do you currently make at your job? 
• Either create an X salary, or add the difference to your current salary to reach X. 
• Now, divide that number by 52 (52 weeks in a year).

Whatever that number is, that’s how much money you need to make weekly through your rental income. 

Save Money, Evaluate Your Capital

You’re going to need to purchase a property. This means you’ll work for the initial capital in order to purchase your rental property. Typically, you’re going to have to put 20% down on the mortgage in order to secure a loan, however, this can vary. 

In which case, you either need to start saving for your first property, or it’s time to figure out your budget to see if you have the cash on hand.

Note: Depending on the amount you need to make per month to sustain your life expenses, you might need to own multiple homes before you can reach you can become a full-time landlord. 

Make Your First Purchase

Once you have your money in order, it’s time to purchase your property. It’s often recommended that you purchase your PPOI (principal place of residency) first, being that you’ll be eligible for a first-time buyer program. 

Should you choose to move in, you’re no longer going to pay rent to someone else, which means you aren’t burning money just to have a roof over your head. Every month your payment goes toward an asset you own. 

While you don’t have to live in the house at first, it can be a good opportunity to save on rent and take the time to do some upgrades or repairs.

List Your Rental, Screen Your Tenants

Once you’ve purchased the house and ensured it’s in habitable condition (and appealing to live in), it’s time to list it. Depending on your budget, you might consider hiring a professional photographer or videographer to capture stunning imagery of the property. You can also employ a property management company to handle everything for you. 

With your beautiful home on the market, tenant applications will start rolling in. Filter your candidates by the requirements you set for tenancy. If this is your first time, you need to be stringent about your screening process. Get a tenant credit report, run a background check, and see if they have an eviction history. 

You want your first tenant to be spectacular, not one that forces you to rethink being a rental owner. 

Manage Your Expenses & Scale

Now it’s time to minimize expenses and find pockets that’ll help you expand your assets. Being that rent is coming in, you could consider taking out an interest loan so you don’t have to pay off the principal of the mortgage. It will lower your general overhead, meaning you’ll create a better income opportunity. 

From property tax and your mortgage, to your own overhead, do everything you can to reduce your expenses. From there, it’s time to create growth opportunities. For instance, you can now borrow money against the property, or you could do a renovation to increase the property’s value. 

The general idea is that, once you’ve reduced your expenses and generated income, you can leverage your existing home to purchase another. Then you spruce it up, list it, and rent it out. This creates a second stream of income, and so on, with more properties.

Done Right, Life Is Bliss

If you’re a successful rental owner, the passive income is incredible. It’s not always a hands-off job, but should you reach a point where you can hire a property management company, then you might find yourself spending more time on vacation than at work. 

The reality is that, in order to achieve the income you need to sustain your life (and lifestyle), you’re going to have to focus primarily on scaling your investments. This means staying lean, driven, and goal oriented. Afterwards, you’ll reap the rewards of passive income and asset collection. 

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