Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
Story Views
Now:
Last hour:
Last 24 hours:
Total:

From Accidental Landlord to Property Investor: The Money Making Mindset

% of readers think this story is Fact. Add your two cents.


The following is a guest post written by my friend over at CashFlowCop.com

My journey to becoming a property investor began as an accidental landlord.  In this short article, I will explain what it took for me to really start making money in property.  

I’ve previously written about how I have made 100K by having a few roommates live with me.  That’s no small change!

But having some roommates share a house with you is a far cry from being a property investor!  A money-making mindset is needed in order to succeed.  

The Rise of Accidental Landlords

An ‘accidental landlord’ is someone who bought a house or apartment to live in but due to personal circumstances has ended up renting all or part of it out.  

Examples of accidental landlords:

  • Someone inherited a property.
  • A relationship breakup meaning one partner moving out which leaves the person who remains needing to find a roommate to cover the mortgage.
  • Someone struggling to sell their home before buying a new one so they had to rent it out.
  • Trapped in negative equity (house worth less than what they paid for it) so unwilling to sell.  Instead, rent out until the housing market recovers.
  • Job relocation.
  • Moving in with a new partner when someone already has their own place.
  • Someone stuck with a mortgage they can no longer afford due to housing bubble burst or rising interest rates.

During periods of uncertainty and unsettled market conditions are when we see a rise in accidental landlords.  

Reliable statistics are difficult to come by because they seem to be completed by insurance brokers with underlying motives, small sample sizes, low response rates or an unrepresentative sample.  The range is large; between 10-25% of landlords appear to be accidental depending on the study you read.

My Accidental Landlord Experience

When my ex-partner and I separated, we lived in and jointly owned a home together.  I didn’t want to sell the house because we would have made a huge loss. This was during the 2007-2008 financial crisis which saw our home drop 25% in value and we were in negative equity.  

I negotiated with my ex-partner and we signed a declaration of trust with our solicitors.  We agreed that although legally we jointly owned the property, when the time was right, I would pay her a set amount and I would solely own it.  However, until then, I would also be solely responsible for the mortgage. 

For her, this arrangement allowed her to free up cash flow to buy elsewhere.  For me, it allowed me to hold on to a property which I knew would increase in value over time due to its location (South East of England, UK). 

Being a Police Officer on a moderate income, I needed to earn some extra money to afford the mortgage and got myself some roommates.  

This worked out to be a great move. 

The property market recovered, the house is now valued much more than we paid for it and all the while I had others paying the mortgage with money left over from their rent.

We will now be mortgage-free next year at the age of 35!

We now own a small property portfolio which provides us with enough income for us to potentially retire by the time we are 40 if we choose to.  To get there, it involved changing our mindset from simply being a landlord to something more.

I’m an Accidental Landlord.  Now what?

So you’ve become an accidental landlord for whatever reason.  Research has shown most accidental landlords sell up before the year is over.

Why is this?  Quite simply, being a responsible landlord is hard work, time-consuming and can be stressful at times.  

It is NOT passive income.

The keyword here is responsible.  

We’ve all heard of horror stories or have unfortunately experienced a bad landlord.  Those are the ones who don’t care about their tenants, break the law and don’t maintain their properties.  These types of landlords are in the minority but they tarnish the reputation for us all.

Step 1 – It’s a long game

If anyone wants to make proper money after being an accidental landlord, then the first step is to accept that this is a long game.  Yes, there are various property investment strategies that might produce a quicker return, but most of those require a large lump sum investment and experience to execute them properly.

What I am talking about here are people who already have day jobs, but end up in a position where they need to rent out their home when it wasn’t their original intention.

By accepting this could be a long game, you learn to condition your mind to not give up at the first hurdle like the majority of accidental landlords.

You are also less tempted to pay for fancy seminars to listen to speakers who promise you will be a real estate tycoon quickly by following their simple steps; but rarely deliver.  

Step 2 – Not just a landlord, but a business owner

From your very first roommate or tenant, start thinking like a business owner.  This will help you become more strategic and make better decisions which will help increase your cash flow.  

By this I mean things like:

  1. Don’t make home improvements that will not provide a return on investment.  
  2. The property is for your tenants to live in, not for you.  So don’t personalize with your unique tastes. You are aiming for wide appeal.  
  3. Don’t just accept any tenant.  Complete reference and credit checks to reduce the chances of missed rents and tenant problems.  I even video interview all potential tenants after the initial screening by my letting agent.  
  4. Don’t be greedy.  It’s better to price just below market rate to get a tenant in quickly rather than price too high and have longer void periods.
  5. Treat your tenants well; in the same way, you’d like to be treated.  If your tenants feel respected, problems resolved quickly and rent increases are fair then they will likely not only stay longer, but may even do some home improvements themselves.  I tend not to increase rent if the tenant is reliable and treats the property well. My aim is to keep them there as long as possible. Problem-free tenants makes my life so much easier.  Sometimes a small rent rise might just be enough for them to start looking elsewhere. The cost and time of finding a new tenant might not be worth the rent rise. 
  6. Don’t buy a property without making proper calculations and have those numbers checked by someone you trust.  Someone who isn’t afraid to reality-check them for you and call BS if they see it.  

Step 3 – Grow

There will come a point when the extra cash flow from becoming an accidental landlord allows you to start investing in more properties.  As you expand and grow, there is only so much you can do on top of your normal day-job.  

Think about how you can scale-up:

  1. Make use of a letting management company.  They will be up to date with legislation, regulations and do most of the leg work for you in terms of day-to-day management.  The “landlord” stuff. However, my advice would be to treat them like an employee. Make sure they are working as they should to earn that portion of your rental income. 
    – Are they being responsive to the tenants? 
    – Are they checking potential tenants properly? 
    – Are they doing regular inspections of your properties? 
    – Are they providing you with competitive quotes for repairs and maintenance?
    Remember, it is your asset they are supposed to be looking after.  No one cares more about your property than yourself. It’s just a job to them.  Have a vested interest in how they are performing for you.  
  2. Hire an accountant.  They are worth their value in gold.  They not only ensure tax compliance but are up to date with tax exemptions and deductions you may not have thought about to reduce the amount of tax you pay.  
  3. Use a mortgage broker.  Make sure it is a fee-based broker with access to the whole market.  This way, they would not just advise a bank who offers them the highest commission.
    They are also knowledgeable in terms of securing the mortgage you need, especially for not so typical transactions such as joint ventures, commercial properties, unusual properties, and self-builds. 
    They also have relationships with these banks, so if there are any issues with your application, they can help to quickly resolve them.

Final Thoughts

In some circumstances, being an accidental landlord can be bitter-sweet; the loss of a loved one, a divorce and so on.  However, once you’ve come to terms with the situation you find yourself in, this can also be an opportunity to prepare for a better future not only for yourself but for your family.  This can start off as a small side hustle, but with a money-making mindset, it can grow into a money-making machine. This could allow you to score higher in the financial independence test and help you reach financial freedom sooner.  

Like I have said.  It starts in the mind.  Are you going to remain as an accidental landlord or take the next step to be a property investor?

Good luck with your real estate and wealth-creating journey.

___________________________

If you enjoyed this post, you might also enjoy this one: How I Protect and Grow My Wealth With These 8 Simple to Understand Concepts

And this one:  What Net Worth Makes You Rich? The Average Net Worth to Make it Into the Top 1% and How to Get There

You should also consider subscribing to my blog. I publish one article a week on small business and wealth creation.  You can subscribe here.

Also, I published a book during the summer of 2018, “The Kickass Entrepreneur’s Guide to Investing, Three Simple Steps to Create Massive Wealth with Your Business’s Profits.” It was number 1 on Amazon in both the business and non-fiction sections. You can get a free copy here.

The post From Accidental Landlord to Property Investor: The Money Making Mindset appeared first on Launch Your Business, Improve Profits and Create Wealth.



Source: https://www.epiclaunch.com/accidental-landlord/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 888-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 888-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)

Immusist Beverage Concentrate - Proprietary blend, formulated to reduce inflammation while hydrating and oxygenating the cells.

Report abuse
Loading...

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.