How to Make Real Estate Your Living and Not Just Your Side-Gig

It’s every investor’s dream to ditch their boring 9-to-5 job and instead live (and retire) off passive income generated from their real estate holdings. But that dream may not be as far off as you might think.It has never been a better time to invest in real estate. But if you want to make a living off your investments, keeping it as a side hustle just won’t cut it. For years, self-made millionaire real estate investors have curated processes for building wealth by investing all throughout southwestern Ontario.One thing they all have in common is that they dove in with both feet and committed all their time, energy, and focus to make real estate investing their livelihood. Nevertheless, you can’t just expect to quit your day job without having a serious action plan in place.Let’s jump in and look at a few considerations you should know when creating your investment plan that will empower you to transition your career path to real estate investing full-time.

DECIDING BETWEEN LOW-END OR HIGH-END RENTALS

One of the first steps to your action plan should be deciding what types of properties will impact your portfolio the most and get you the most bang for your buck. It will be up to you to determine the right balance of risk and reward.Lots of investors start out building their portfolio with cheaper, low-end rental properties. There are many advantages to going this route. For one, low-end properties tend to offer greater cash flows than more expensive units. That money can be used to scale your holdings at an accelerated rate.Another reason low-end rentals are attractive is because lower rent prices often attract a wider pool of potential tenants compared to high-end properties which are too often limited to higher-income households.A recent study shows that nearly half of all renting households in Ontario have a total annual income less than $39,000, making low-end units an attractive option for those who are growth oriented.1In contrast, newer high-end properties tend to have worse cash flow than low-end properties. The upside is that high-end units tend to appreciate far better than properties at a lower price point. While they often have higher vacancy rates, they also often have lower maintenance and repair costs.

CHOOSING SINGLE-FAMILY OR MULTIFAMILY PROPERTIES

One of the first steps to your action plan should be deciding what types of properties will impact your portfolio the most and get you the most bang for your buck. It will be up to you to determine the right balance of risk and reward.Lots of investors start out building their portfolio with cheaper, low-end rental properties. There are many advantages to going this route. For one, low-end properties tend to offer greater cash flows than more expensive units. That money can be used to scale your holdings at an accelerated rate.Another reason low-end rentals are attractive is because lower rent prices often attract a wider pool of potential tenants compared to high-end properties which are too often limited to higher-income households.A recent study shows that nearly half of all renting households in Ontario have a total annual income less than $39,000, making low-end units an attractive option for those who are growth oriented.1In contrast, newer high-end properties tend to have worse cash flow than low-end properties. The upside is that high-end units tend to appreciate far better than properties at a lower price point. While they often have higher vacancy rates, they also often have lower maintenance and repair costs.

MAKING SURE YOU HAVE THE RIGHT TOOLS IN PLACE

Shifting your livelihood and going all in on rental properties is a big endeavour. It’s important that you have the right tools in place to make sure nothing falls through the cracks and that everything runs smoothly. If you don’t, it can mean more money out of your pocket.

In order to live off your investments, you will need enough money flowing inward that allows you to stop working your day job. This often means you need to acquire a lot of properties. But managing all those properties is a full-time job all on its own.

One of the best tools you can invest in is a property management company that can help run the back-end processes on a daily basis.

Marda Management helps hundreds of property owners just like you streamline their day-to-day duties from rent collection to maintenance requests, allowing you to focus on acquiring more properties and living off your hard work.

As expansion becomes your key focus, Marda Management can also help supplement key processes to help grow your portfolio. Marda Management makes it easy to complete initial due diligence on new investment opportunities through pre-rental analysis, crunching the numbers so you don’t waste your time figuring out whether a deal is a dud or worth pursuing.

The best part is that Marda Management works with investors at all stages of their action plan. Whether you are a newcomer just starting to ramp up or a seasoned investor looking to retire in the not-so-distant future, Marda Management is the perfect tool to help make real estate investing your living and not just your side-gig.

Sources

1 Urbanation Inc. (2018, September). Ontario Rental Market Study: The Changing Demographic Profile of Renters (Rep.). Retrieved January 16, 2022, from Federation of Rental-Housing Provider of Ontario website: https://www.frpo.org/wp-content/uploads/2018/10/FINAL-Urbanation-Renter-Demographics-Report-for-FRPO.pdf