Make Money From A Rental Property

RichardBy Richard
| 3 minutes read

This is so tried and true it’s not funny.

If you buy at the right price, at the right time, structure the deal so it’s good for your personal taxes and achieve full occupancy – and most importantly, then do this again and again – then just pour yourself a freaking Pina Colada son, because you’ll be retiring by 50.

Problem is most people don’t have the capital to get started or if they do, often end up over leveraging by going after one too many properties.

And oh yeah, I made the assumption that you could get full occupancy and that rental income would be greater than interest payments (or if less, that your personal income was high enough to make interest expense a valuable tax deduction).

Oh, and hang on, there’s also the fact that so many property investors assume capital growth of 7% plus a year – despite the market having ‘over’ risen so much since the 1990s (relative to long term property yields) – and thus justify why it’s okay for them to get less rent than interest (even whilst taking into account associated tax benefits).

Let’s not even mention the fact that a 5-10% chunk of the rent will also vanish once you have a property manager in place…you do want this be passive after all don’t you?

Bottom-line, is this game has a lot more return potential than the ideas above and below, but also a lot more risk.

But for some of you, this idea may just resonate so much more strongly than the traditional online passive income opportunity of starting a website and selling stuff, whether that be information or product.

PS one specific idea I like is to buy a cheapish but well located family-sized holiday house somewhere semi-popular, then create an SEO optimized site on it along with a blog about stuff to do in the area – here you get your accommodation to the top of the search engines for so many relevant keywords, you automate the marketing, you charge a solid price for it, you don’t have to pay a 10% management fee to some dude for getting it occupied (or some online directory website), and well you hit a occupancy rate well above anyone else in the hood.  Nice!

But like with most real world passive income opportunities you need to be a real expert at the specific game of property investment and management.

And unlike most of the other passive income opportunities in this list, this idea brings the possibility of a large downside if interest rates increase, occupancy rates decrease, your personal income decreases etc etc.