Rental Property Management for the Digital Generation
You’re ready to get started in the rental property management world but feel like you lack the knowledge you need. Check out this post to read all you need to know!
It’s no secret that the current economic environment has not made it financially viable for many people to own homes or property.
And over the last decade, the demand for apartments has increased in the United States.
It’s a renter nation. And rental property management is the place to be.
Rental property management is an increasingly lucrative business
Yes. In the past, investing in a portfolio of rental properties was typically reserved for those with high net-worth. But if you’re a millennial and this perception is the reason you’re holding back, take pause.
With youth on their side, investing in an apartment or other rental real estate can work out really well for millennials.
For example, Travis Killian is a 27-year-old renter who owns nine single-family rental properties in various cities around the country. He’s in the process of buying eight more.
Killian took the profits from his lead generation business out of the stock market to pay for the properties.
“I’m interested in real estate investment because of all the ways you can make money — from appreciation, leverage, cash flow, tax benefits,” Mr. Killian said. “I’m not looking to get rich quick. I’m just looking to have long-term income I can rely on.”
With some research, gumption and a little bit of support, millennials can get into the rental property management sector by considering the following methods:
1. Real Estate Investment Trusts (REITs)
REITs are ideal for millennials that have an interest in real estate investing but do not want to be involved in the actual day-to-day management of rental properties.
So what’s a REIT?
Well, it’s essentially a company that invests in properties that produce income – places such as shopping malls, office spaces, hospitals and apartment buildings.
Since REIT shares are traded on stock exchanges, investors can instantly become invested in a diverse portfolio of properties by simply placing an order.
Shareholders benefit from economies of scale here since these securities typically own thousands of rental units. And REITs are required by law to distribute at least 90% of their income to shareholders.
This can translate as a great passive income source for millennials.
2. Coming Together with Friends and Family
The reality is that many millennials simply don’t have the means to acquire rental properties. Or even make a down payment on one.
A cool way to work around this is to pool money from friends and family to create an entity that would be treated as a limited partnership.
A general partner would then be chosen and paid a salary for performing the purchasing and managing of properties. Investors would become limited partners who would receive a regular share of rental income and a percentage of the capital gains from the disposal of any properties.
Done and done.
3. Get the Landlord Hook Up
Not everyone is at ease doing business with friends and family. Also, not everyone has friends and family with spare money lying around that they can invest.
We get it.
In this case, millennials may be able to get “sweat equity” in rental properties by investing their time.
It’s not difficult to find aging landlords who are willing to offer equity in their properties in exchange for maintenance, rent collection and other general management tasks of a property.
Whatever route is chosen, it’s clear that investing in rental real estate is a great way for millennials to start saving some serious cash. If you have other ideas, let us know!