Many people confuse the terms “landlord” and “real estate investor.” These titles denote two very different approaches to asset management. Owning property doesn’t make you one or the other—how you manage your property is what earns you one or both titles.
Two sides of the same coin
Landlords are responsible for managing a property, leasing it, performing basic maintenance tasks and maintain tenant relationships. Living life as a landlord is far from easy, and ‘being a landlord,’ is often a full-time job. Landlords do everything from fixing toilets to depositing rent checks at the bank.
Real estate investors focus on the financials. Rather than spreading themselves thin by performing the day-to-day tasks associated with property management, real estate investors instead strategically expand their investment portfolios. They emphasize the fiscal benefits of property ownership.
Which title do you hold?
Investing in real estate is never easy. However, real estate investors are more likely to enjoy the process of earning money through real estate, as compared to people who try to operate their properties as landlords.
It’s easy to fall into the trap of thinking of yourself as a landlord. After all, part of the fun of real estate investing is the feeling of accomplishment and ownership you get when you think of the assets you control, and the value of your property.
Learning how to distance yourself from your individual properties allows you to think bigger about your investing career, providing you with the time, resources and freedom real estate investing affords. Expanding your portfolio and achieving your investment goals should always be your top priority as an investor—rather than caring for individual tenant needs and addressing the daily dilemmas occurring at your investment property.
Benefits of an investor mindset
Redefining your role as a real estate investor, rather than as a landlord comes with a multitude of benefits. Here are some of the ways thinking of yourself as an investor, rather than as a property manager, will improve your investment outlook:
· Investors save time: Many people enter real estate investing for one simple reason—they want to earn a passive income. This is what allows them to live a lifestyle free of career obligations. But when you’re a landlord you’re essentially always on-call. Investors, on the other hand, trust other people to manage their assets on their behalf, freeing up their time to spend pursuing their passions or enjoying their families.
· Investors can focus on growth: If you’re rushing from building to building or unit to unit attempting to collect a late rent payment or let a handyman into the basement, you’re not going to be thinking about where you should purchase your next investment. You’re probably stretched so thin that thought of more real estate to manage sends shivers down your spine. Real estate investors are growth-minded, because they’re free to focus on the positive financial aspects of the business.
· Assets appreciate faster: Professional property managers are able to optimize the way they manage real estate assets, resulting in better returns year-over-year. This makes the asset significantly more attractive to future investors interested in purchasing the property. If you can demonstrate significant income from the property, they’re much likely to pay a higher price. Allowing professionals to take care of your property while you focus on growth can help you elevate your existing capital.
Transforming from landlord to investor
You may be wondering how to divorce yourself from landlord mindset while still investing in real estate. After all, real estate investments represent large, significant—you won’t want to simply hand off your asset to someone else for management.
The key is identifying the right partner. Someone you can trust to manage your investment. Rather than attempting to manage a real estate asset on your own, try to find a trusted company to take care of property management for you. This allows you to focus on what matters as you reap the benefits of letting them handle the day-to-day management of your assets.
For instance, property managers use their industry expertise to optimize the returns coming from your asset. Property managers often have existing contracts with maintenance professionals and handymen, meaning they’re able to provide you with significant discounts.
Property managers are also able to screen tenants more effectively, reducing the likelihood you’ll end up with a resident who’s delinquent on their rent payments. If you’re not fighting with tenants over late rental payments, you’ll have more time available to begin strategizing your next investment.
Shake your landlord mindset with intangible investments
It’s also worth considering other ways you might enter the world of real estate investing, without actually directly acquiring a property. Purchasing shares in a real estate investment trust (REIT), for instance, provides you with many of the benefits of real estate investment without the responsibilities associated with direct ownership and management.
Buying into a REIT or other non-ownership opportunity may be less exciting than directly owning your own investment property… but it can be significantly easier. This is definitely the case if you’re still working full-time and don’t have the capital on-hand to buy an entire multi-family building and contract a management firm.
Recognize the benefits of a hands-off approach
Savvy investors are flexible and creative. While owning and managing your own property is certainly romantic, it’s far better to identify and pursue investment solutions that fit your lifestyle and move you closer to your investment goals.
It’s always important to remember that investing is supposed to provide you with freedom, not tie you down to another career. While real estate investing will always require some amount of time and effort, it should ultimately provide you with a more relaxed lifestyle.
Operating as a real estate investor, rather than as a landlord, will provide you with the time and mental energy necessary to pursue your financial strategies to the fullest. When you switch your mindset to that of an investor instead of a landlord, you’ll be able to fully realize the benefits of developing a full and robust real estate portfolio.