Most people will never become landlords and oversee tenants; they simply don’t possess the drive to manage another human being.
Being a landlord requires you to separate who you are as a person from what you represent as a landlord. Sometimes these two individuals (you) are at odds.
I own one large house in Arizona, one smaller house in Florida, and another large property in Florida.
TSP vs. Dividends
Owning real estate is one of the surefire ways to ensure you become wealthy and pass this wealth to future generations.
Two things to remember. The more people you serve, the wealthier you become. I see many people trying to get rich by keeping to themselves—it’ll be tough to amass wealth this way.
The more stress you avoid throughout your life, the more pressure you place on your children’s lives. Owning real estate may be draining, but my kids already have a home set aside for their future (excellent).
With those two things said, let’s move to a few things I have learned after ten years of being a landlord.
Super-Charged Savings: Save an Emergency Fund Fast
Raising the rent. Most people will find raising the rent for tenants challenging, but this is where you need to separate yourself from your landlord persona.
Your costs as a homeowner go up every year. The mortgage on my primary residence in Florida went up $100 this year from insurance alone.
You must raise the rent every year, even to condition your tenants for increased rental expenses. You will lose money quickly if you cannot control your rent against inflationary pressures.
I like giving my tenants 3-4 months’ notice and don’t try to get maximum rent as shown on Zillow. However, Zillow is pretty darn accurate when it comes to predicting rents.
Who is a better steward of your resources? When you don’t raise the rent, you are subsidizing someone else’s lifestyle.
Five Takeaways from “The House Hacking Strategy”
I once kept the rent low on my smaller property for too long. The tenants went out and bought a new truck to celebrate their good fortune.
In the next contract, I raised rents to align with the current marketplace value, and the tenants sold their car. Who is a better steward of your resources?
Reading a book will help you. I read “The Book on Managing Rental Properties,” which completely changed my view of being a landlord.
You must be firm and fair. As long as you are consistent, you will keep good tenants and remove or scare away bad ones.
Retirement Plus: Use Dividends to Supplement Your Retirement
You must think like a bank when you are a landlord. I once had a tenant whose wife came down with a medical condition.
He was looking to get a discount on rent, but that wasn’t in the cards. If he owned the property, would the bank give him a discount on his mortgage payment?
Don’t solve people’s problems for them. The easiest answer for your tenants is for you to help them get through life.
However, you will just enable them to continue to make poor choices. For example, say your tenant needs $100 to complete their rent payment.
No Freakin’ Way I Am Working 25 More Years part 2
If you have a bleeding heart, I can promise you they will be short every month. If you are firm, they may decide to drive Uber or contact their mom, who they are estranged.
We once had an elderly roommate who struggled to make his $800 rent payments. After a couple of years, I raised the rent to $900 to cover my higher costs.
He couldn’t afford this new amount but was happy to stop grinding to make his payments. He went somewhere where he could cut the grass to reduce his expenses. It all worked out for everyone.
Don’t worry about your property. You have to remove any feelings toward your property to become a landlord.
Press Record: A Life Worth Living is Worth Recording
Your memories are your sentimental value. Once you install a tenant, you must be utterly neutral to anything that happens—it’s all business.
Expect tenants to destroy your home. Kids and pets are rough on your house, and they may not treat your appliances with care.
It’s all part of the math game of life. The longer you keep your property, the richer you become. Eventually, your rent will play a large part of your passive income plan.
Ten Creative Ways to Beat Inflation
I cannot tell you how many things have gone wrong across my two rental properties and two rental rooms. It’s almost comical.
However, my net worth and passive income rise every single year. I have no problem raising rent and don’t lose any sleep when there are issues—I understand the long-term value and costs of owning real estate.
What sparked this article? I was looking at rent values on my properties and saw my Arizona home jumped up almost $400 in the last two months.
I currently charge $2,250, and the current going rate is almost $2,700. Therefore, I will see a nice increase when we renew the contract.
What is Financial Independence?
For reference, my mortgage is $1,740; we will see a considerable spike in passive income later this year. But it’s been a long road.
I bought my Arizona house in 2008, right before the market tanked. We were underwater for almost ten years, and our cash $60,000 down payment was sucked away from us.
However, in 2020, we could pull out a cash-out refinance of $80,000. We paid off $30,000 in debt and put the other $50,000 into dividend stocks.
The moral of the story. Someone else is paying for this refinance, and we see sound passive income generation. It was a long, treacherous road with that house in particular.
We had so many good memories in that house; now, it is just a structure to build wealth. Perhaps one day, my sons move back into the home to create new memories with their families.
Real Estate Investing in Your 60s
The moral of the story is that owning real estate and becoming a landlord requires you to build a new skill set as a businessperson.
If you take the job lightly, your finances and family will suffer. You must raise rents, handle emergencies quickly, and prepare for the worse.
Conclusion. You won’t see substantial positive numbers at first, but then the power of compounding takes effect. Eventually, You’ll feel a positive shift toward your properties (and income).
Through it all, just enjoy it. Dealing with houses, tenants, banks, maintenance folks, and county appraisers is so random that you just have to laugh.
I wouldn’t change a day of my life as a landlord. I had to undergo massive growth to stay strong along the way, but my family is reaping the benefits. Good Luck!
- PDF of the Month: Don’t Gamble with Retirement 10 (Free 419-Page PDF)
- Free PDF Downloads: Download FREE PDF LIST here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Investing: How We Plan to Retire on Dividends 4 (Free 139-Page PDF)
- Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
- Real Estate: Financial Independence through Real Estate 4 (Free 112-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 4 (Free 149-Page PDF)
- Latest DGWR: Don’t Gamble with Retirement 10 (Free 419-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever 3! (book)(Web Edition)(Art Edition)
- Writer’s Comparison: M1 Macbook Air vs. GalaxyBook3 Pro 360
- Read My Books for Free: Free Kindle Books Schedule
- Book Design: Design Tips on YouTube
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 505 Takeaways from 101 Books (pdf)
- Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
- Best REIT- Fundrise: Fundrise vs. US Treasuries (Join Fundrise)
- Follow us: On our Facebook Page and Join our Facebook Group
- Support the Channel on Cash App: $Kingmarine1981
- For more detailed analysis, join my Youtube:MFI YouTube Channel
Leave a Reply