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5 Realities of Making Passive Income Through Your Property

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When it comes to making money, especially via passive income, all eyes of always on the realm of real estate.

After all, investing gurus such as Robert Kiyosaki have pushed the concept of real estate investing as the ultimate cash cow; however, is it really that easy for newbies to make passive income from their property?

There’s plenty of misinformation out there when it comes to making money off of your property; likewise, how much of your income is truly passive is often misleading. Although there’s certainly plenty of money to be made via real estate investing and owning property, it’s crucial that newbies inform themselves sooner rather than later to avoid putting themselves in potential financial ruin.

So, where are some of the realities surrounding passive income via real estate?

Being a Landlord Isn’t Very Passive at All

Generally speaking, becoming a landlord and renting out your property is much more than simply paying a mortgage.

For starters, there are numerous steps to being a responsible landlord including the upkeep of your property, drawing up documents for tenants and having the right property insurance in place. These initial and ongoing costs not only require your attention, but also a long-term financial investment.

In other words, successfully making money as a landlord doesn’t mean sitting on the couch and watching the cash roll in. If you don’t take an active role in the upkeep of your property, you’ll quickly find yourself in hot water.

Not All Properties Will Appreciate in Value

If you lived through the recent property market crash, you understand the volatile nature of the real estate market. Sure, we want to go into property investment thinking that our purchases will appreciate in value; however, history tells us that this isn’t always the case. While you can certainly make money via real estate by renting our your property, don’t assume the value of that same property will double over time.

You Aren’t Immune to Nightmare Tenants

Even if you do everything right as a landlord, the fact remains that you can’t control the actions of your tenants. From skipping out on rent payments which force you to foot the bill to failing to report necessary repairs, it’s crucial that landlords stay on top of their tenants to protect the long-term value of their property.

You Will Run into Repairs

Speaking of repairs, normal wear and tear should be expected over time and can get quite costly when you’re dealing with electrical systems or plumbing. In many cases, you are responsible for repairs on behalf of your tenants: in fact, sometimes renters can cease payment until the proper repairs are made. For this reason, upkeep of your property should yet again be a top priority.

Profits Won’t Happen Overnight

Between all of the aforementioned instances and the fact that it simply takes time to build up your nest egg from real estate, don’t expect profits overnight. It may take a good few months or years before you really reach the level of passive income that you initially bargained for.

Landlords need to maintain realistic expectations when it comes to what passive income really is. The more realistic expectations you have, the more likely you are to avoid tenant headaches and real estate snafus in the future.