Hold and Rent
Another money-making strategy for real-estate investors buying foreclosure properties is to hold on to and rent them. Each month the renter sends you a rent check. A part of that monthly payment is profit for you.
As a working real-estate investor and landlord, you can quickly acquire multiple rental units. One Midwest investor used this strategy and grew his investing business to a total of 1,400 rental units on hundreds of properties.
He started with a two-unit property that was foreclosed.
Being a landlord has its own unique problems that you must manage. From keeping the property maintained to managing tenants, the work never ends. Yet many people have become self-made millionaires by acquiring property and renting it to others.
As a property owner, you must comply with federal, state, and local laws. You must maintain files, be well organized, and pay attention to details. You must have a current and legally binding lease with your tenants. You must also be ruthless in your collection of the rent.
Depending on your jurisdiction, you might not be able to commence eviction proceedings until the tenth day after the rent is due. On the eleventh day you must start evicting your nonpaying tenant. While you will hear all kinds of excuses as to why your tenant cannot pay, you must collect. If you allow a tenant to be late, he will of course be late.
Some people are not cut out to handle this rigid policy of collecting rent. If you are one of these types, you can always employ the services of a property management company to do this work for you. For a monthly percentage of the rent, your rent will be collected, your tenants selected and managed, and the property maintained. All you need to do is cash the checks you receive. Of course, paying for this service cuts directly into your profit. However, some real-estate investors find it a worthwhile expense. It allows the investor more time to search for and acquire additional foreclosure properties.
While you can rent any property you own, some are more conducive as rental units than others. Some properties offer many expensive amenities. Rental units usually are less plush. Accordingly, some properties might be more appropriate as rental units than others.
Multifamily properties are always intended to be rental properties. With separate living units on the property, multiple tenants can live on the property. For the real-estate investor seeking to build long-term growth and a steady monthly income, multifamily units are smart investment properties.
Collecting the rent on time is paramount to your success as a landlord. Give no margin and permit no excuses.
One advantage of holding and renting properties is that you can get to a point where you can stop acquiring new properties if you want and continue receiving income. As a real-estate investor that flips properties, you must always continue to flip if you want to maintain your income.
