If you’re thinking about dipping your toe into the real estate investment waters, you’re probably thinking a lot about how much time you’ll have to spend working on this business.
People often talk about how it can be a great way to earn passive income, but you can’t forget that there’s also some work and time commitments involved.
Will you have the time you need to grow this business? We break down some of the factors that can help you decide.
Naturally, the number of properties you own plays a big role in how much time you’ll need to spend to be an active real estate investor.
In general, the more you own, the more time you’ll spend managing your real estate. However, some investors choose to hire a property management company, freeing up the time they’d have to spend.
You’ll spend more time working when a tenant decides to leave your property. You will be subject to cleaning, making repairs, advertising for new tenants, showings and screening new potential tenant applications. You will most likely also have to tend to some yard work as well.
Once you place a tenant, though, there’s generally a dramatic decrease in your time involvement. At this point, you’re usually in a maintenance mode responding to any tenant inquiries or issues.
Just because you have a tenant in place does not mean it’s time to just sit back and count your rental income.
A quick response time to any tenant inquiry will set the tone for a great tenant/landlord relationship. This is also the time to be proactive with seasonal and/or any upcoming maintenance items to ensure your property is operating safe and efficient for you and your tenants.
It’s a great idea to conduct a walkthrough of your properties twice a year – once in the fall and once in the spring. These walkthroughs shouldn’t take more than 30 minutes but will give you an opportunity to peak in on the property, record any maintenance issues, and most importantly maintain a healthy relationship with your tenant, which could make it an easy decision for them to continue renting your property long term.
Finally, the condition of the property can be a major factor. If you’re thinking about buying an older home or a fixer-upper, you may need to spend some time fixing the place up before it’s even rentable.
Once you have a tenancy in place, things tend to need attention more frequently in older homes. This could mean that you’re fielding more calls from the tenants, and then either fixing the problems yourself or calling out to other professionals who will take care of the work.
On the other hand, if you purchase a brand-new property, there’s a good chance you can spend your time on activities you enjoy versus having to spend time on maintenance and repairs.
Your Investment Style
Ultimately, what’s going to make the biggest difference in how much time it takes to be an active real estate investor is your style of investing. Do you plan to DIY and self-manage your real estate or do you prefer to a passive and more hands off investor by hiring a property management firm? Are you looking to own a few properties or build an empire? You can see how the answers to those questions are going to affect the answer to the question at hand.
This type of investor wants - or needs - to have a hand in everything. By cutting out the middlemen, you’re able to maximize your profits. Some people are able to take the DIY approach to the next level: they have some type of contracting or construction experience, so they’re able to take on any property maintenance in addition to the customer service demands of being a real estate investor.
Most DIY investors, though, are interested in finding tenants and managing the relationships with the tenants but will hire professionals to take care of repairs. Taking a DIY approach can save you money on management fees but it can also soon become a full-time job, especially when you have multiple properties. How much time do you have to put towards your real estate portfolio?
Passive and More Hands-Off Investors
These investors aren’t interested in the daily grunt work of managing their properties nor do they have the time. These individuals are typically busy professionals and/or business owners that have enough cash on hand to purchase the properties and hire a professional property manager to take care of the associated activities.
If this is the type of investor you want to be, you won’t have to spend a lot of time managing the properties at all. Your management company will take care of the work. However, you’ll still be required to manage the financial side with items like renewing mortgages and maintaining building insurance to name a few things.
It’s a small amount of work upfront, with big financial rewards down the line.
Finally, the more properties you want to have, the more time you’re going to spend. If you’re simply managing a basement suite in your own home, you can easily be a DIY investor. Even passive investors will find themselves putting in more time once they build a larger portfolio of real estate assets, especially if they like to keep an eye on the properties.
As you can see, there are several factors that will affect how much time you have to spend to be an active real estate investor. That’s great news. You’re able to think about how much money and time you have to spend on your investment properties, then choose the style of investing that’s right for you. If you have any questions about the process, we can help put you on the right track.