Finding ways to earn passive income is a big dream for many people. Being able to bring in extra cash with minimal effort can be a transformative financial tool, and help you achieve and even surpass your financial goals. There are many avenues you can pursue to earn a passive income, including real estate. We wanted to talk to an expert about the secrets of earning passive income from real estate. Michael Andrew Lauchlan is a Las Vegas rental property investor who knows the tricks of the trade, and he’s sharing some of his secrets.
Michael, why do you think rental properties are a worthwhile investment?
In general, buying rental properties is an excellent way to get into real estate investing. If you choose your property wisely, it shouldn’t be long before it generates a positive cash flow for you. After that, you have a reliable source of passive income, which can give you the financial freedom you’ve been looking for. And the great thing is, almost anyone can jump into the world of rental property ownership, which I think is amazing. But before you do jump in, there are definitely some things you want to be aware of.
What are some of your tricks when it comes to buying rental properties?
You want to make sure you have a good idea of your budget before you begin this process. Make sure your finances are in order, and you can afford unforeseen circumstances, such as long-term vacancies or big repair jobs. Aside from finances, when you’re picking a property, you want to make sure it doesn’t need too much work. Cosmetic work and minor repairs are fine undertakings, but any more than that, and you may be getting in over your head.
What should people specifically look for when picking a rental property?
Aside from the property itself, you want to take a look at the neighborhood as a whole. How long are rental units sitting on the market, what is the average rental unit price? That will give you a good idea of how to price your own property, and if you’ll be able to even fill your space at all. Other indicators of success include the job market in the area, what the school system is like, and neighborhood features, like if there’s a community center or a park nearby. All of those things can be big selling points for your rental unit.
Related: Top 25 Tips for Selling a Rental Property From the Pros
What are some things to watch out for when it comes to rental properties?
If you have an easy tenant, and your rental property is in great shape, it can mostly be a passive way to earn money. The trouble can come when you have a difficult tenant, or if your space needs a constant flow of repairs. Also, it can be really helpful to have a few extra skills in your toolset. What I mean is, if you’re able to fix that leaky faucet yourself, you’ll really help offset your costs.
Any advice for first-time rental property investors?
Pick a property that won’t financially drain you. It’s better to pick a safer option, which will end up yielding you slim yet positive results, than to pick a bigger project which ends up just costing you money. If you find success with your first project, then you’ll have a better idea of how to work on more complicated properties.