Over on the podcast, Natali and I detailed the inner workings of a deal we purchased. Upon closing, I was able to meet with the seller of these properties. He was a retired millionaire landlord, who had created a successful real estate career for himself. However, I couldn’t help but notice a few key mistakes he made that cut his career short (instead of following the “buy until you die” strategy).
Mistake 1: Not working with a property management team.
Self-managing your rental properties is the number one way to take your passive income idea and turn it into a full-time job. Sure, you might be successful when you start out, but hopefully your intent is to grow a sizable portfolio. Trust me when I say this: put your rental business on autopilot with an experienced property management company. Not only will this reduce your work load, but it’s also a business expense (hello, tax deduction!) Here are five tips for finding the right team for the job.
Mistake 2: Not investing in an LLC.
Our tax and legal teams agree: it’s crucial to purchase your rental properties under a legal entity like an LLC. Doing so provides legal protection to your personal assets. This is an incredibly important step that ensures you don’t get burned if something goes wrong. Need help setting up your LLC? Check out our friends at Corporate Direct.
Mistake 3: Not putting trust in your team.
Once you’ve done all the hard work of selecting the best team, it’s time to let go of control. You hired this specific team because they’re qualified to screen the tenants, and collect rent. Don’t micromanage them or present them with a list of additional demands. They know what to do, and how to do it!
Mistake 4: Being hesitant to outsource.