Investing in real estate can be a lucrative way to earn passive income, especially through rental properties. The idea of money coming in every month without having to work for it is appealing to many. However, being a landlord comes with its own set of challenges and responsibilities that can turn what seems like a passive income stream into a lot of work.
Matt Morgan, a commercial real estate broker, initially thought that becoming a landlord would provide easy passive income. However, he quickly realized that successful landlording requires far more involvement than expected. Managing day-to-day responsibilities and addressing tenants’ needs proved to be overwhelming and cut into his time spent on his primary business. To alleviate some of the workload, Morgan partnered with a property manager who now handles tasks like marketing vacancies, screening tenants, collecting rent, and overseeing repairs. While the management fees decrease profits, the saved time and reduced hassle are well worth the investment.
Jordan Grumet, author of The Purpose Code, also found that being a landlord was more time- and energy-consuming than he initially thought. Over a five-year period, he and his wife managed four rental condos themselves, dealing with various issues like cockroach and rat problems. Eventually, they sold three of the properties and cashed out, realizing that they would have done better investing in the stock market with less hassle.
Dave Roebel, founder and CEO of Northeast Mechanical Services, Inc., highlighted the importance of tenant screening in successful landlording. He initially undervalued the significance of carefully screening prospective tenants, which led to issues like late payments and property damage. By contacting a tenant screening agency that performed extensive background investigations, rental history checks, in-person interviews, and credit checks, he was able to increase the quality of his tenants and make managing problematic tenants less stressful.
While not everyone regrets becoming a landlord, it’s essential to do thorough research and consider all factors before diving into real estate investment. Each person’s experience may vary, and luck can also play a part in the success of rental properties. It’s crucial to go in with realistic expectations, be prepared for the time and effort required, and consider hiring help if needed to make landlording a sustainable and profitable venture.
