Wednesday, May 21, 2008

Are Rental Properties Passive Income?

Anyone out there that think being an owner of rental properties is a good way to make some passive income should head over to moneykings blog. I have been reading it for quite some time. I especially enjoy reading the Real Estate Profits And Losses series. As a business owner that provides workers to repair properties that are in between tenants, I get to see first hand how not passive the rental business really is. I actually had one property that my crew nicknamed the Hell House due to the extent of damage the previous tenant had left the house in. Don't get me wrong though, I love each and every one of these tenants the property owner has come to despise and as I watch my bank balance rise, I appreciate them even more.


David Tamayo said...

I agree that rental properties are far from passive income. My family has rental properties in both the US and the Philippines. Between repairs, chasing some people for rent, and the occasional constant complainer, there is usually some matter on the calender waiting to be handled. Does it ever get bad enough that my family would want to throw in the towel and sell the properties? NO! =)

The Minimalist said...

We have had good luck with high end rentals that are single family housing. We were flipping, but have had to rent out several properties that haven't sold. We're now remodeling for other people under a new LLC.

Gaida said...

Oh yes... the tenants from hell. You certainly do hear some horror stories. It's amazing how some people live.

My boss only mentioned today he'd spent his weekend fixing up his rental property that tenants had just moved out of & commented how disgusting they had left the place.

I think I might just stick to the share market at the moment.... some bargains waiting to be picked....though that's another good way to get the fingers burnt if you're not careful.

Brenda said...

From personal experience I can say that even with good renters, this is not a passive business! At best one needs to ensure the proper maintenance of the property and grounds and make periodic upgrades.