Have you been enjoying good returns from the two or three small rental properties you have in your portfolio? It might be time to consider scaling up from being a part-time to a full-time landlord.
There are many benefits to scaling up your rental business operation. However, the move to being a full-time landlord cannot be done hastily. You need to carefully plan to account for the financial and management responsibilities that come along with it.
In this article, the team from Draper Realty advises potential landlords on the benefits of choosing to be a full-time landlord and how they can make the transition!
The Benefits of Being a Full-time Landlord
Provided you have invested in the right property market and also selected quality tenants, you are bound to enjoy consistency in rental income. You can then plan your finances around that and meet your obligations on time.
There are also several tax advantages that can be enjoyed as a property owner. When you file your taxes, you are able to deduct depreciation as well as other allowable deductions such as property management costs.
Being a full-time landlord it’s not just about the money. It’s about the flexibility that you are able to attain in life. With the consistency in rental income, you are no longer bound to a 9 to 5 office job. This frees you to enjoy other endeavors.
Making the decision to quit your job and get into being a full-time landlord can be quite nerve-wracking. After all, you no longer have the security that a job assures you. To help you make a smoother transition from part-time to full-time landlord duties in the state of Oklahoma, here are a few tips you can use along the way:
Build Up Your Emergency Fund
Choosing to be a full-time landlord means that you no longer have the security of a 9-5 salary. To prepare yourself for such a scenario, we recommend that you start saving up as much money as possible.
It is typically recommended that you first assess how much you need every month. Sit down and calculate how much you would need to sustain your livelihood as well as your rental properties. You should remove luxuries from the list and only focus on the necessities i.e. transportation, housing-related payments, food, healthcare, etc.
You also want to assess your management expenses to see if you’ve been generating unknown recurring costs. By identifying these, you may be able to cut back on unnecessary expenses and transfer those funds into your savings.
You should have at least 6 to 9 months’ worth of living expenses accessible within short notice. You want this buffer because the property market is constantly fluctuating. At the time that you wish to leave your job, the local market may be in a rut. Your savings should, therefore, give you some much-needed breathing space as you adjust your portfolio.
The Need for Mentors
Property is a very technical asset. In some cases, you may find that you lack some of the technical expertise to handle a delicate matter about your property. Thankfully, you can make use of mentors!
For you to succeed on your real estate journey, you will need some property mentors. These are experienced landlords or property managers who have several years of experience in the industry. Immerse yourself in the local community groups and events. You will be able to make contact with fellow property owners and ask them to mentor you.
They will help you through delicate property issues and offer creative solutions to help you increase income or access once-in-a-lifetime deals.
Create a Portfolio
Before you make the permanent switch to being a full-time landlord, you should consider building your real estate portfolio. Before making the switch to full-time property management, consider adding two or three more properties to your portfolio.
What you should be looking for as you add more properties is diversification. You want to spread your risk among several property types, locations, and sub-markets. Therefore, should the local commercial market fluctuate in terms of demand, you can rely on your residential properties to keep you afloat and vice versa.
Work to Attract Tenants
As you expand your portfolio, you want to ensure that you find tenant to fill all your properties. You also want to develop plans to help convert them into long-term tenants as this will provide more stable income.
To achieve these goal you need to have a solid marketing plan in place. You also have to thoroughly screen tenants to mitigate risks.
Maintain Professional Relationships
No matter how you feel about your current job, make sure you leave on good terms. The property market is a very small and intimate market. As you transition into your new full-time rental business, you might need help to build your portfolio or a new tenant for one of your properties. The connections that you have to your previous job can help you in your current business.
In addition to this, you should inform your colleagues what you are involved in. They can recommend your properties to their friends and family and help share your listings generating buzz for your available rental units. By leaving your job on good terms you’ll be able maintain potentially beneficial professional relationships for years to come.
Investments in real estate have proven their worth over the years and making the switch to being a full-time landlord can be quite fulfilling. Before you make the switch, don’t forget to build up your emergency fund, surround yourself with mentors, and maintain positive relationships with all your previous employers.
If you’d like to expand your investment portfolio but don’t want the responsibilities associated with full-time management, you can rely on the expertise and professionalism of the leading property management service provider in the region.
Draper Realty is a trusted management company with years of experience in the Oklahoma rental property industry. We manage a wide range of properties, implementing cutting-edge solutions to ensure that we meet our customer's needs. Get in touch with Draper Realty today to learn more about our services!