Can Landlords Become Millionaire? Here’s How You Can Earn a Fortune
You’ve probably seen those articles online. You know, the ones with the headlines that are designed to get clicks like, “How to Become a Millionaire by Investing in Real Estate.” Well, the answer is complicated, as it depends on several factors.
But as a property management company in Detroit, we’ve come to learn the ins and outs of the business. So, instead of learning the hard way and doing it all yourself, we wanted to share our own insider tips to help you hit the ground running.
Here’s the truth: It is entirely possible to become a millionaire by investing in rental properties. However, it’s difficult and takes a lot of hard work, time, and dedication. There are no guarantees in real estate investing, but if you do things right—you have a much better chance of success.
Becoming a Millionaire Through Rental Property Investments
To be successful through real estate investing, there are a few key steps. You need to invest in the right markets, buy suitable properties, and once you have them—manage your properties well. If you do all these things, you’ll be well on your way to achieving your goal.
So, let’s take a detailed look at these factors.
1. Invest in the Right Markets
There are endless real estate markets around the country, and they all have unique characteristics. Of course, some markets are far better for investors than others, so you’ll sift through your options. Otherwise, you’ll end up in debt before you know it.
When you’re looking for a market to invest in, consider:
- The availability of properties: You want to invest in a market with plenty of properties available for sale. That way, you have a broad selection of properties to choose the best deals that fit your investment needs and goals.
- The strength of the economy: Always invest in a market with a robust economy. This will help ensure that there is a demand for rental properties, so you won’t have to spend too much on marketing your rental to keep vacancies low.
- The population: Focus on markets with a growing population, so there is a constant stream of potential tenants for your properties. The larger your tenant pool, the more you can keep your units occupied with quality renters.
- The job market: Invest in a market with a strong job market. This will help ensure that locals can secure well-paying, stable jobs to afford to rent their properties. You’ll also have an easier time increasing rent with little resistance, should the need arise.
- The cost of living: Finally, you want to invest in a market where the cost of living is relatively low. This will help attract tenants looking for affordable housing options, especially if you plan on investing in different-class properties and neighborhoods.
Suppose you want to learn more about Metro Detroit markets. In that case, we have an ongoing Deep Dive series that evaluates the rental investment potential of every city and neighborhood in the tri-county area. Go ahead and use it to discover all the hotspots in Metro Detroit!
2. Buy the Right Properties
Not all properties are created equal. Some properties will appreciate in value more than others, and some will be far easier to rent than others. When you’re looking for a property to invest in, be sure to consider every aspect.
Here are a few to start with:
- The property location: Focus on properties that are in desirable areas. This will make it easier to find tenants and charge higher rents. Plus, investing in the right location can help you avoid problematic tenants and neighborhoods.
- The property condition: Next up, always look for a property that is in good condition. This will make it easier to find tenants and keep your costs low. You can purchase a fixer-upper or aged home, but you’d have to ensure that you have the experience and knowledge to bring it up to rental standards without depleting your funds.
- The property type: You want to invest in a property that is easy to rent. Popular properties in the area will vary from market to market, just like how Metro Detroit is primarily single-family residences. In other words, don’t buy something that nobody wants to rent.
- The property size: Lastly, try to invest in a property in demand in the market you choose. If you buy a too-small property, you may have trouble finding tenants if that area is full of families, for example.
This list is only the tip of the iceberg, as you’d have to dive deep into conducting financial evaluations to identify the right properties. If you need more help running real estate analysis to sift through your options, check out our other article on all the necessary calculations you need to make wise financial decisions.
3. Manage Your Properties Well
The third step when it comes to real estate investing is to manage your properties well, which includes property maintenance and tenant management. After all, your rental property is the cash-generating asset to serve the bloodline of your business—your tenants.
Here are some things you’ll have to do to manage your properties well:
- Screen your tenants: You want to make sure that you find quality tenants who will pay their rent on time and take care of your property. If you don’t, you’ll end up with irresponsible tenants who are a headache to deal with.
- Collect the rent: Always be diligent in collecting the rent so that you can keep your cash flow positive. You don’t want to be in a situation where you’re struggling to make ends meet because your tenants are delinquent on their rent payments.
- Keep your costs low: Next, keep your operational costs low so that you can maximize your profits. You shouldn’t skimp on quality for your tenants, but you should stray away from spending on non-value-adding features and amenities.
- Respond to repairs quickly: Make sure that you respond to repair requests quickly so that your tenant will be happy and your property will be well-maintained. Plus, keeping your property in good condition will ensure that it’s attractive to potential tenants and reduce turnovers.
- Have a good relationship with your tenants: You want to have a good relationship with your tenants so that they will be happy and willing to renew their leases. You’ll lessen expensive turnovers and indirectly encourage the tenants to take care of the property.
- Know when to hire third-party help: The truth is, not everyone can handle the responsibilities and obligations that come with being a landlord. If managing properties becomes too much for you, know when to hire a property management company. They can do everything on this list on your behalf, giving you more time and peace of mind.
The Path To Millionaire-Dollar Returns
Becoming a millionaire through real estate investing is not easy. But it is possible if you invest in the right markets, buy the right properties, and manage your properties well.
Follow these key steps we’ve shared above, and you’ll be well on your way to becoming a millionaire. Especially if you work with experienced property managers like our team in Logical Property Management.
Ready to hire our team of expert property managers for your real estate business? Get in touch with us today!