You have one rental property and it’s working out well for you.
Now, what do you think about expanding on that?
It’s the key to achieving financial independence.
One rental property gets you on the ladder, but climbing the ladder is the only way to make any real passive income.
Once you have the hang of it, you may want to take on more properties because your first property was such a success.
You have a great tenant, the maintenance issues under control, and the income you get is a nice bump each month – maybe not as big as you’d like, but it’s nice to see all the same.
Now you’ve settled into being a landlord you want to climb onto the next rung of the ladder.
Building it’s a challenge at first, but once you’ve settled into a routine, it becomes second nature.
It may feel overwhelming making that leap, but now that you’ve done it once, you can do it again.
Here are the biggest things to think about:
Getting a mortgage is the biggest barrier when it comes to expanding your property portfolio.
Taking out a mortgage is a possibility, but you are likely to get stung with extra fees, payment requirements, and approval process will probably be tougher.
Make sure you research what the rules are.
It’s important to have an accountant on your team that is familiar with property investing, as they will help you with finding the best way to go about it.
Another option is refinancing your first investment property to fund your second, or maybe consider bringing an investor on board.
Someone who doesn’t want the hassle of dealing with the property, but wants a cut of the proceeds.
Dealing with maintenance and repairs on one property is manageable, but once you start expanding your empire, things start to look different.
If you have two properties that are in good shape and don’t have major issues, then you’ll be busy but it’s not out of reach.
However, if your properties are older and need more work, or if you add a third or fourth rental property , then it can be too much.
Employing the services of a property manager to help you is a good idea.
On the other hand, if you’re committed to doing it yourself for a while longer then you need good contractors.
The last thing you want is for a water main to burst and you are not being able to get over there to take care of it.
Ask around for recommendations of contractors; they are worth their weight in gold!
Collecting the rent on time, having the right lease available, organizing open home and house inspections, paying taxes, mortgage payments.
Who’s going to take care of all these tasks?
What about when you have 5+ properties to keep an eye on?
Do you have a watertight system, so nothing falls through the cracks?
Make sure you have a good property management system at this point, or again think about hiring one.
Along with all the above, one of the big ones is finding and keeping tenants.
Without good tenants all the other aspects of managing properties become useless.
You can’t pay the bills without tenants, so this has to be a big focus – especially initially.
Finding good tenants is hard, but once they are in the property, really all it takes is being responsive to them. Follow up on maintenance and repairs, and stay out of their way apart from ‘Thank you’ every so often.
But marketing your properties to find those tenants can take a little bit of getting used to.
Once you know how to present and sell your property and choose great tenants, it becomes fun.
Until that point, it can be a hard slog.
Don’t give up too soon.
Now you know what’s involved in taking on that second rental property it’s an excellent time to consider involving a property management company.
One investment property is easy to manage on your own, but once you start to expand your portfolio it does get more difficult.
You don’t have to use property managers for everything; you can pick and choose what tasks you would like them to do for you – just ask!