One of the best things about investing in property is that if you are bringing in a good amount from tenants or selling, you can quit your day job. After quitting your job, you can focus all your energy on maintaining your properties and building even more avenues for passive income. There are, however, plenty of things you should consider before dropping everything and focusing on your investment income.
Table of Contents - Living the Dream: How to Quit Your Job and Live Off Passive Income
Have a nest egg
No matter how good everything looks, something could always go wrong. It may sound cynical, but it’s the truth. This is why it’s good to have saved a nest egg just in case you need some extra cash. Maybe all your tenants have moved out and it’ll be a while before anyone else moves in. Maybe construction is taking longer than you’d previously anticipated. In these and other situations, you might find yourself without a means to pay your own bills.
The amount of your nest egg should be a number that you’re comfortable with. It’s probably not a good idea to rush into quitting your job if you don’t have a good amount of savings in your bank—at least six months’ worth of expenses, if not more.
Make sure you have no debt
If you have any debts that need to be paid, pay them off before quitting your job. This way, all the profits from your properties will go into your pockets instead of the hands of debt collectors. It can also be quite difficult to purchase a property if you have a lot of debt. Like it or not, debt is something that will probably need to be taken care of before you start living off passive income.
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Purchasing a property
Research local properties in your area and find what’s in your price range. This could be anything from a home outside the city to a downtown condo. You might also choose to invest in a fourplex, through which you will receive rent from four different tenants while only having to invest in one location. No matter what type of property you choose, it’s important to charge enough rent to pay all maintenance and associated costs while supporting yourself.
You should look at several properties before choosing one to invest in. See how many renovations would need to be done versus how much money you could make on each property. It’s usually a good idea to work with a real estate professional, who can help you determine which properties would be most cost-efficient.
Plenty of math will go into determining whether you’ll be able to live off your rental properties. Your own bills as well as how much extra money you want to make should be factored in.
Marketing your property
Now that you’ve gotten your rental property almost ready to move-in, it’s time to start marketing. Great marketing is the best way to fill up your properties and find tenants that will last. It’s a good idea to utilize several avenues when marketing your property. This means creating both digital and print ads.
Be sure to utilize social media when marketing your property. Social media allows you to connect with potential tenants and find out about their needs and wants. Many social media groups target people looking for rentals. Find a popular group, then contact the administrator about getting your property added.
Sometimes, it’s also a good idea to have signs created for your property. You could simply put a “for rent” sign outside of your property, or invest in print ads. You should consider working with a professional graphic designer and printing shop if you choose to have a print ad made.
See how popular listings in your area are being marketed. This will give you a good idea of specific tactics that work in your area.
Maintaining your property
Before tenants move in, you should have the property looking great and take care of any repairs. A good-looking property will entice potential tenants. To do this, you might consider hiring a landscaping professional. They can help you create the perfect yard and offer the best advice on maintaining it. It’s also a good idea to work with a contractor, who can help you take care of all repairs.
Once people move into your property and start paying rent, it’s important to make sure the property stays maintained. You don’t want tenants badmouthing your properties. While some tenants may have ridiculous requests, most should be taken care of as soon as possible. This will keep your tenants happy and ensure that they stay for a long time.
Be sure you’re making enough money
You should charge your tenants enough rent to cover any maintenance costs and other expenses that may arise with your property. A real estate professional can usually help you determine a good monthly rental price. It’s also good to decide on rental fees and calculate your projected income before purchasing a property. This will show if you are truly able to live off passive income alone.
Mistakes to avoid
If this is your first time investing in property, then mistakes are bound to be made. If you avoid any major mistakes, however, you could potentially make a lot of money. One common mistake, for example, is being a bad landlord. While good landlords are usually helpful and friendly, they should be firm as well. Keep up with your tenants and make sure that they are always paying on time.
Another common mistake is developing the wrong kind of strategy for a certain property. If you’ve purchased a property near the beach or another attraction, then you’ll probably want to run it as a vacation rental. Vacation rentals are much different than long-term rentals as they require much more intense scheduling.
Having a team of professionals on your side and the right strategy will usually mean success. It takes a lot of hard work to live off passive income, but it can be done.
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