I recently joined the Bigger Pockets community and came across this questions on the forum, “I'm wondering how does one become a legitimate "full-time landlord.”
(BiggerPockets is an online forum specifically designed for real estate professionals and is a great tool to network and learn for anyone interested in real estate, whether it be as an agent, manager, or investor. )
Here is the response I posted to the above question.
I own a property management company that has 750 residential units under management and am a value add / buy and hold investor.
Owning real estate is absolutely the best path to financial freedom, but I think it's important to define what that means to you. The way I keep score of my "financial freedom," is based on how close the net income of my passive investments is to the profit I earn from my management company. My goal is for my passive income to outpace the earnings from my company, and at that point I'll feel I'll have "earned," that freedom. This definitely varies for everyone and depends entirely on the goals you set for yourself. For me I intend to always have my company in addition to growing my portfolio.
As far as becoming a "full time landlord," I think the best way, and quickest way to do this is to go out and start your own property management company. It's much easier to finance properties with conventional loans if you have a strong source of income. If you're only managing your own properties it will take you much longer for your income from real estate to replace your current salary/wage, and it's much harder to scale.
Here are the bullet points I followed to start my management company:
Learn the trade.
1.Get a job with a management company, learn as much as you can about their showing, application, lease process. Learn everything you can about how their accounting is set up. Buy "Every Landlord's Legal Guide," put out by NOLO, they have a great collection of resources.
2.Take every opportunity to learn skilled trades (electrical, carpentry, plumbing, etc.) I worked construction for a year out of college and held many maintenance positions throughout college to gain these skills. Youtube is an amazing resource to learn these skills.
3. READ. You will be amazed by how much you can learn from a good book, I have learned many creative strategies that have lead me to incredibly valuable deals just from reading.
Time to start your own company.
1. Once I was confident I could do the job for other people I reached out to every property owner I could to let them know I could provide better service at a better rate. Researched all of the apartment complexes in your city, found out who the owners of the property are and ask them for a meeting. Rates depend on the property, for my largest clients I manage for 5% of gross, for my smallest clients its 10%. Target properties with 50-100 units to start.
2. Hire a team. With 50-100 units you can afford to hire help. I usually hire one maintenance technician for every 50-75 units. Do as much as you can yourself, but hire your weaknesses. For our 750 units we have 12 employees. Two office staff, 8 maintenance techs, and 2 part time cleaners.
3. Property Management Software. We spend 10s of thousands on software and its worth every penny.
4. Network - Build relationships with the best contractors, this is vital.
Buy you own investments.
Some of my best investments have been off market deals I've purchased from my clients directly.
Hope this helps!
