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Andy Chilton
Turning a Rental House into Completely Passive Income
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A rental house is a great way of earning some passive income and, if luck should have it, a great way to increase your net wealth too.
I have mentioned before what passive income is and why you need it, but I thought I'd just let you know my latest development in this area - specifically my rental house.
It's not a big development mind you, but I'll tell you anyway.
Having no Time
Recently, as most of you already know, I have been working far too much. It's not something I'm going to make a habit of mind you but it did make me think about some things. More specifically my tenants required some attention to a couple of issues in and around the house.
For one of them, it was as easy as getting an electrician in and eventually just receiving a bill in the post and paying it. Pretty easy stuff.
However, one of the other items that still needs doing is something which I (or someone else) needs to look at first.
I then realised that I just didn't have time to actually go up to the house. It's about 50km away and not having much time through the week or even the recent weekends has meant that it was pretty difficult to get over there.
Then it hit me, that even if I wasn't busy, would I really want to go up there anyway on my days off. Not really no, so I decided to make the rental property almost completely passive. It hadn't taken up too much time in the past but it was always a worry on my mind.
Getting a Property Manager
Deciding to get a property manager was at first a difficult step. I'd thought of it long ago but didn't really want to pay anyone to do it. As I said, I hadn't had to do too much before but my view of some things have been changing recently.
You guys know that time is more important to me than money so I decided to maximise my available time. By hiring a property manager I now get even more of my time to myself and I get less worries too.
That can't be bad.
The Costs
Of course, a property manager doesn't come for free. He takes a snap at every single week's rent and of course when things needs to be done, he charges. He's providing a service to me and it's one I'll ultimately benefit from so that's okay with me. I also think it's pretty good value for money too.
These costs however are also counteracted by a couple of things.
Firstly, he will be reviewing the property, the house, the garden, the rent and various other things for me. He'll also advise me on how much properties like mine are going for in that particular location. I suspect the first thing he'll do is put up the rent. In fact, if he puts it up by 10% and I'm paying him about 7.5% then I'll still come out better off.
Secondly, his costs are therefore my expenses, which are claimable back at the end of the year against any income the property has generated.
The non-Monetary Paybacks
Finally, I get paid back in having extra time, more freedom and more peace of mind.
Which you all know is pretty high on my list of simplifying life and enjoying more of my own time.
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Inserted: 2009-02-16 19:38 (3 years ago)
1 Comment
1. Kate Kashman
Andy, I think that you're going to be delighted by this decision. Getting a good property manager has been one of the smartest decisions my husband & I have ever made.
Be forewarned, we did have bad luck with our first few property managers but we finally found a really good one and we've had him for about 10 years now. He is well worth the money we pay him!
Enjoy your new lower-stress lifestyle!
Inserted: 2009-02-23 13:54 (2 years, 12 months ago)