Growing Your Property Investment Portfolio: Ways to Build a Passive Income

Ways-to-Build-a-Passive-Income“Real estate is an imperishable asset, ever-increasing in value. It is the most solid security that human ingenuity had devised. It is the basis of all security and about the only indestructible security.” – Russell Sage

Part of being a responsible adult is to ensure that you have an income when you reach retirement age. Additionally, the amount you need to save is ever-increasing in value because of the rising median age of the elderly.

Retirement funds are traditionally saved through a variety of investment vehicles such as retirement annuity funds, growing a stocks and bonds investment portfolio tradable on one or more of the global stock exchanges, as well as the purchase of investment properties.

Your property investment portfolio: Purchasing and managing rental properties

While all of the investment vehicles mentioned above are valid and useful, the judicious purchase of residential property as an investment can, and must, be considered a wise choice. As the quotation mentioned above by Russel Sage notes, “real estate is an imperishable asset.

In other words, a purchased property gains value as time goes by; therefore, it makes sense to include the purchase of residential properties as a fundamental part of your overall retirement investment portfolio.

At this juncture, it is vital to note the following caveat:

Real estate does not lose value over time if it is well-maintained and cared for continuously.  Therefore, the question that must be asked and answered is: “How do you, as the investment property portfolio owner, ensure that the properties included in this portfolio not only retain their original value, but they increase in value?”

The succinct answer is to this question is to hire a service focused HOA management company to manage your entire portfolio.

The advantages of contracting a property management company

By way of expanding on this short answer, it is vital to note that there are several benefits to hiring a professional, highly-skilled, and knowledgeable third-party to ensure that your investment portfolio increases rather than shrinks in value.

Here are some of the more important benefits of hiring a professional property manager:

The timelous collection of rental payments

According to Shelly Hagan, in her article titled “Almost 40% of U.S. homes are ‘Free and Clear’ of a mortgage”, less than 40% of all properties are purchased without the need for a successful mortgage application.

This figure translates into the fact that over 60% of all properties are purchased via the mortgage vehicle. And, these mortgages need to be repaid every month using the rental income. If the tenant does not pay the rent on time, the mortgage repayment cannot be met for a particular month; resulting in a default on the property owner’s part.

Source suitable tenants

Additionally, along a similar vein, it is vital to ensure that the tenants that sign the rental contract not only pay the rent on time but that they do not destroy the property during their tenure.

A professional property management company is skilled at, and well-versed in, ensuring that suitable renters are procured to let one of your properties. They run background checks, credit checks, and do whatever else is needed to make sure that only high-quality, responsible tenants move in.

Final thoughts

As the quotation by Russel Sage mentioned at the outset of this article highlights: Investing in real estate “is the most solid security that human ingenuity had devised.” Consequently, it is well worth considering and prioritizing.

 
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