Owning a rental property has long been one of the most favored ways to earn a passive income. People hear about all the great ways a rental property can generate a profit. And they think it can all be done without ever having to lift a finger.
Wouldn’t that be great?
While passive income is a surefire way to help fund retirement, pay for a vacation, or even replace a nine-to-five job, the truth is, nothing is ever truly passive. However, owning a rental property in Las Vegas and having a local property management company take care of everything for you will get you pretty close.
If you’ve been dreaming of earning a (nearly) passive income with a rental property, keep reading. We've got the best ways to take a load off your shoulders so you can enjoy the money that comes in each month.
What is Passive Income?
True passive income is money that you earn without having to do anything. You can even earn money while sleeping if it’s truly passive. You never have to put in any effort, do any work, or worry about a thing. The money just lands in your bank account each month.
The problem with passive income is that it doesn’t really exist. At least not in its true form. Though it is possible to earn a lot of money without having to do too much work, the truth is, everything worth having takes work – even if just a small amount.
That said, passive income is better than active income. Active income is money you earn while you work. In other words, with active income if you don’t work, you don’t make any money.
The best part about passive income, especially when you use rental properties to earn it, is that while it does require some work on your part, after the tough part is done, the income is quite passive. Even more so when you use an experienced property management company to handle the day-to-day operations for you.
How to Earn Passive Income with Rental Properties
Having a rental property does not guarantee passive income. You have to put in the work to buy the rental, find tenants to lease from you, and from there a whole lot more. From lease drafting to rent collection, maintenance and repairs to property inspections, you can expect to put in a lot of time and effort as a landlord.
That said, there are things you can do to lessen the workload and make earning a passive income with a rental property in Las Vegas more of a reality.
1. Nab the Cash Flow
The first thing you need to do as a landlord seeking passive income is buy the right investment property in Las Vegas. The key to doing this is buying a rental property that has a strong cash flow.
A rental with a high cash flow will allow you to do two things:
- Pay for everything rental property related. For example, you’ll be responsible for the mortgage, HOA fees, insurance premiums, maintenance and repairs, and much more. The more cash flow you have in hand, the easier it will be to cover these costs.
- Hire a property management company to do everything. When you hire a property manager in Las Vegas, you won’t have to do a thing besides make sure everything is being well-cared for to your liking. Your property manager will take care of your property and your tenants. You, on the other hand, will take care of figuring out how to spend the money that’s deposited into your bank each month.
Without enough monthly cash flow, you’ll find yourself putting in a lot of work when it comes to your rental. So, do your due diligence and invest in a property that comes with a high ROI.
2. Consider a Real Estate Investment Trust (REIT)
If investing in a rental property seems like too much work for you, there is an alternative. A real estate investment trust (REIT) lets you earn income on a rental property without having to be the one to buy, maintain, or manage it. This streamlined way of earning passive income is perfect for those that don’t have the time to self-manage a rental or don’t want to deal with hiring a property manager to do it either.
Although this type of investment mimics stock investments rather than rental property investments, it does give landlords more opportunities. Some landlords even invest in REITs in addition to the actual rentals they own to increase their income that much more.
3. Pay Attention to Location
Besides investing in a Las Vegas rental that is appealing to tenants looking to lease from you, the location of your property matters too when it comes to how much time will need to be invested in it.
Think about it. If you buy a rental in a low-end housing area, you’re likely to attract low-end tenants. This means late rent payments, more damage to the property, and not enough cash flow to make being a landlord a career that earns passive income.
Of course, there are always going to be exceptions to this. However, if your priority is to turn your Las Vegas rental into passive income, put some thought into where you buy. The better the location, the better the opportunity to generate a profit without having to put a lot of work in.
4. Real Estate Notes
Still not convinced that being a traditional landlord is going to earn you the passive income you’re looking for? Then consider real estate notes instead. A real estate note is a loan you hold against a rental property so that when the mortgage is paid, you get paid too.
When you invest in real estate notes, you essentially become the bank. You do not own the property. Instead, you just profit from the mortgage payments being made by others.
5. Look for Long-Term Leases
Turning over a vacant property and leasing it to new tenants is where landlords put in the most work.
When self-managing a rental property that needs a tenant, you can expect to do the following:
- Maintenance, repairs, and upgrades to make the property move-in ready
- Property advertising using many channels
- Property showing to interested tenants
- Tenant screening and application processing
- Lease drafting and signing
- Move-in inspections that include paperwork, photos, and even video
If you can decrease your property’s turnover rate, you’ll cut your workload down significantly. This means you need to seek out tenants that are going to pay their rent each month, care for your property, follow the rules, and want to stay for more than one lease term.
Looking for long-term leases is something all landlords want to do. If you do it right, you could set yourself up to have a nearly passive income. This is especially true if you stop self-managing the property and let a property management property do everything for you instead.
6. Purchase a Turn-Key Property
Another great way to get closer to earning passive income with a rental property is to buy a turn-key property. With a turn-key property, you don’t have to do much besides buy the property.
It will already be repaired and renovated, meaning you won’t have to deal with any of that. The property will also already be assigned to a property management company that specializes in turn-key properties. Lastly, the rental will likely already have tenants living in it. With this type of rental, you purchase the property and immediately begin accepting rent payments.
Before investing in this type of rental, make sure to follow these tips and tricks:
- Never assume the property is move-in ready. Check for yourself that everything is ready to go and in good condition.
- Get to know the property management company that’s managing it. They will be the key to your success.
- Make sure you read the ownership agreement when you buy it. You often lose some control when you buy turn-key properties.
Are you ready to hand over the workload of your rental to an experienced property management company here in Las Vegas? If so, contact us today and see how we can get you started on the path to regular passive income and more financial freedom.
At Robinson Realty & Management, we know that managing a rental property is a lot of work that most landlords just don’t want to deal with. Offering full-service property management services for an affordable price, we can take the load off your shoulders so you can enjoy the income you’re earning without all the headaches.