Have you ever wanted to start a side hustle, but you weren’t sure exactly where to start? When considering what you want to do, many people look for something they are passionate about. From there, they’ll work towards opening a business, and what was once a side hustle idea, becomes what surrounds their lives.
Maybe you want to earn an extra income throughout the year, but you just don’t have the time for it. If this sounds like something you’re thinking about, start making passive income through real estate.
No, it doesn’t mean becoming a real estate agent. This could be as simple as renting out a property you already own, or perhaps for this reason you need to look into investing in a new property. Let’s jump into a few ways rental property can earn you some passive income.
What is passive income?
You may have heard this term before, but if not, passive income can be defined as income received on a regular basis, requiring little effort to maintain. In other words, you can make money without trading your time, like you do a day job where you can work 40 or 50 hours per week.
There are many ways to make passive income through real estate, such as acquiring hunters to hunt on your land, investing in a piece of land to turn into a neighborhood, and more. While there are other great options for passive income, we’re going to narrow our focus to rental properties.
Where do you start?
There are many ways you can start your journey of earning passive income through rental properties. You’ll want to start by taking a step back and finding out if you currently have a property that you’re willing to rent out. If you already own a second home that you only use seasonally, this would be a great place to start. If you only have one home that you own and you currently live in, you may want to consider moving out instead of selling it and renting it out.
If none of these are an option for you, start researching where you want to buy a rental home. Look into popular cities or something Best places to visit That brings people. Think more about whether you want to buy a fairly updated home or whether you want to buy a fixer-upper and make it your own.
Difference between long term vs seasonal renters
Once you have an idea of where to start your rental home, start researching the different companies that help you rent out your home. Everyone can be different for rent. If this is your first time renting a home, you may want to choose a home close to your current home to ensure stability and profitability.
An example of how people start passive income is by renting out part of their home where they currently live, to fill a room, to make extra money. This can be a great option for a college student who needs a roommate but isn’t sure where to find one.
If you’re more focused on renting an entire home, you need to familiarize yourself with the difference between a long-term rental versus a seasonal rental. If you have a property that is a bit far from a major city or a tourist location, you may consider renting to long-term tenants. Think about tenants who sign month-to-month or annual contracts to live in your home. This way, you ensure that you don’t end up with an empty house without income for a long time.
If you find a home in an area that will attract more people, such as a popular tourist area or near the beach, then you can start looking. How to become a host on a rental platform. This will allow you to rent according to the price per night. You can take steps to figure out how much to list your home for each night and start hosting different renters each week.
How can you differentiate your property from others?
It is important to make your home one that will bring you the amount of money that will ultimately benefit you. What does it consider? Cost to furnish a houseAs well as the financial investment it will take to clean up curb appeal and make those numbers work in your budget.
When renting to long-term tenants, you’ll likely only stock the home with essentials like a refrigerator or washer and dryer. It’s not something you have to do, but it can help your house stand out against nearby competitors.
Since you don’t have to furnish a home made for long-term renters, pay attention to the exterior of your home. Touch up the paint, install new windows and doors, and clean up the yard to be more presentable. A little TLC can go a long way when it comes to your rental curb appeal.
As far as a seasonal rental goes, it’s common for owners to fully furnish the home. While doing this, consider the area in which the house is located If you’re renting a house near the beach, you don’t want to decorate the house with a Northwoods theme If possible, you can really do everything to decorate your house.
Some rental platforms have different filters for travelers to use to choose a specific vacation spot or home style. Find a theme that best suits your home and the area your home is in and start making it unique.
Put all your focus on this property
Once you’ve decided whether to build, rent-to-own, or buy a fixer-upper and you know who your target market is going to be; Start implementing your plan.
Let’s say you have a house and it is currently full of your personal furniture and belongings. Start by deciding what fits your theme for the home and get rid of other items by selling or bringing them home. Next, start painting the walls and touch up any damage to the house.
Once your home is ready, put it up for rent. Use the next few months to a year to really get a feel for what it’s like to rent out your property. Tenants are likely to encounter some obstacles that damage your space or equipment to repair or replace. You’ll also start experiencing a new cash flow.
Start considering your next investment
After a while, as your new venture continues, you may be interested in expanding your business. Maybe your first rental property was for long-term renters and now you’re interested in building a home for seasonal renters.
Regardless, start planning your next purchase. Calculate the passive income you received from your first home and determine what you plan to change or keep the same. You may find yourself in a position to purchase multiple properties and prepare them using the same steps you used for your first.
Make a plan for your future
If you haven’t already, make sure that the property you acquire is covered by insurance. If you are renting it out to long-term tenants, it is important that they are required to insure the rental in case of any accidents. If you are renting it as a vacation home, the insurance will be on you. Either way, make sure you and the renters are aware of the insurance required. This way, in the event of a natural disaster or fire, your home and everything in it is covered.
As your life moves on, and especially now that you’ve acquired new assets, you should have a plan in place to ensure your assets are taken care of during your passing. Although it is not an exciting thing to plan for, it is necessary to protect all your assets and investments If you’re not sure where to start, take a look Estate planning checklist To make it a little easier and ensure that all your hard work has a concrete plan, whatever the future holds.
Once your property is covered for the unexpected, try to sit back and appreciate the work you put in. If you decide to rent a vacation home, set aside a few days for you and your family to enjoy the home as well.
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