Even though investing in rental properties is often described as a passive investment, it takes time to invest in rentals. I don’t think any investment is completely passive and the more passive an investment is, the less money you will make. Investing in rental properties is not completely passive, but it is much more passive than a job. The amount of time it takes to invest in rental properties will be dependent on your experience, skill level, goals and property management. Like any business or new venture, it will take much more time when you are first learning and then much less time as you become experienced.
It can take from 3 months to over 2 years just to buy your first property, but the results will be well worth it. It also takes time out of your day and week to learn the business and take care of your rentals, but there are many ways to reduce your time involvement.
How much time should you spend on investing your money?
Investing in rental properties is not something you can do right away like buying a stock. Even though you can buy stocks or mutual funds very quickly, I don’t think it should be done after an hour of research. No matter where you invest your money, you should be spending a lot of time deciding the best way to invest your money. You should be researching the details of how your investment will perform and if it will perform well enough to meet your goals. If you don’t have any goals or know what you need out of your investments, you need to start creating goals right now. You should be spending hours each week tracking your money and planning your investments. If you don’t take the time to research and track where your hard earned money is going, you are not going to get good results.
Is a passive investment really that great?
I hear investors complain about how rental properties are not a passive investment. They are right; it is not a truly passive investment, but that is not a bad thing. Investing your money is important, it may be the most important thing you do financially. If the only thing you want out of an investment is to be able to invest money into it and forget about it; expect to get marginal returns. Don’t pick an investment because it is the most passive, pick the investment because it makes the most money.
How long does is take to start investing in rental properties?
When you start investing in rental properties there is a lot to learn. I have been in real estate most of my life; my dad has been an agent since 1978 and I have been a real estate agent since 2001. Even with all that background I didn’t buy my first rental property until December 2010.
There were many reasons it took me so long to start buying rental properties. It took me time to start thinking about my future, it took me time to save money and it took me time to learn a strategy. Learning the strategy was the easiest part of investing; saving money and getting the right mindset about investing took much longer.
The most important thing to do when learning to invest in rental properties is to learn your market or the market you want to invest in. The great thing about real estate is you can start learning how to invest right away. By reading this article you are starting to learn or perfect your strategy. You can start learning your market; the values, rental rates and economy as soon as you finish reading this article. It may take a few weeks or months to learn about your market; but the time will be well worth it even if you never buy a rental. You can use that knowledge to help buy a personal residence or help your friends and family know if they are getting a good deal or not. Buying a house is the biggest purchase most people make and most people do not research their market thoroughly to know if they are getting a good deal.
How much time does it take to set yourself up to buy a rental property?
You must learn many things when investing in rental properties, besides the market you want to invest in. You must figure out financing, how much money you need, what type of property you want to buy and how much money you want to make.
This seems like a lot to learn, but anything worthwhile will take some time and effort to learn. Once you learn your strategy and how you want to invest; it all gets much easier. In the beginning it will take hours and hours to research, talk to banks, see houses and decide on a strategy. If you move along one step at a time you will learn and become one of the few people who invest in real estate and take control of their future.
For more information on my investing strategy check out my complete guide to purchasing long-term rental properties.
How much time does it take to actually buy a rental property?
When you are ready to buy a rental property it will take time to close on the property. You will have to look at houses, make offers, get a house under contract and then close on the house. The process of closing on the property could take from a couple of weeks if you are paying cash to four to six weeks if you are getting a loan. If you want to get a great deal on your rental property like I do, then you may have to wait weeks or even months for the right property. This timeline assumes you are buying homes from the MLS and using a real estate agent.
How much time does it take to buy an off market rental property?
Off market properties are not for sale on the MLS, but houses that the seller needs to get rid of quickly. Many real estate investors are using direct marketing to buy properties because of competition and higher prices on the MLS. Wholesalers, flippers and long-term buy and hold investors all buy homes off market with direct marketing. Direct marketing involves sending out letters to absentee owners, putting up signs that say you buy houses for cash or even advertising on billboards. It takes time to set up a direct marketing campaign and you may not see results for months or even a year. If you are looking to buy properties using direct marketing, it will take much more time to buy a rental property.
How can you speed up the process of buying off market properties?
If you don’t want to do to all the work of direct marketing, you can speed up the process by using a wholesaler. Wholesalers will use direct marketing or sometimes buy from the MLS and then sell those deals to investors. The wholesaler makes money on the deal and the investor usually gets a great deal as well. The investors usually have to be able to close very quickly on these deals and close with cash. If you are just starting to invest in rental properties it may be very tough finding a wholesaler and buying wholesale properties if you do not have the cash available.
How much time does it take to rent a property after you buy it?
Once you buy a rental property you have more work to do. You must repair the property if it needs work and you must rent the property once it is ready. I like to buy my properties at least 20 percent below market value, which means I usually have to buy homes that need repairs. I have 9 flips right now that are eating up my contractor’s time and it is taking me about two months to repair a rental property once I buy it. I then have to rent the property, which is very easy in my market because of a shortage of rental properties. It takes me less than a week to rent my properties and sometimes only a day or two.
If you are buying properties that need repairs, make sure you line up a contractor before you buy the home. This will save you a lot of time by getting the work completed quickly. Here is a great article on how to find a contractor.
What is the total time it takes to invest in rental properties?
Here are is an example of how much time it will take to invest in rental properties from the beginning:
- Time it takes to learn about investing, develop a strategy, research your market, and get qualified for a loan: 2 to 12 months
- Time it takes to find a great deal on a rental property: 2 weeks to 3 months
- Time it takes to close on the rental property: 2 to 6 weeks
- Time it takes to repair and rent a property: 1 week to 3 months
- Total time: 13 weeks to 2+ years
The total time it takes to start making money on your rental property from the time you first start learning to invest can be from four months to two years or longer depending on how hard you work at it. Many investors get frustrated and give up early in the game, because it takes so long to invest in rentals. You may not see any solid results for months while you are learning to invest and saving money. Even if you never buy a rental property, you are learning extremely valuable information that will help you throughout your life.
How much time will it take to manage your rental properties after you buy them?
Once you buy a rental, fix it up and rent it, there is still more work to do. You will have to collect rent, take care of maintenance issues and rent the home again if your tenants move out. This sounds like a lot of work, but it really does not take much time if you rent to great tenants. I managed my rental properties up until I had 7 and it took a few hours a month, most months. I have my real estate team manage the rentals now, and they do not spend a lot of time on them either, except when they are being rented. If you own rental properties and have great tenants, I would expect to spend about one to two hours per month managing them.
When you are first learning to invest in rental properties, I would expect to spend at least a couple of hours a week learning your market, talking to banks and forming a strategy.
How can you save time when investing in rental properties?
To many people with jobs and a family, investing in rentals will seem like a lot of work and time. So far most of these timelines have assumed you are doing almost all the work yourself. There are many ways to reduce the time it takes to buy and rent properties.
- Hire a property manager: A property manager will take care of the renting, rent collection and maintenance items. Some property managers will even take care of the initial repairs on rental properties.
- Find a mentor to help you learn to invest in rentals: I think local mentors are the best, but there are many mentors out there who will help you get started for varying fees. I would stay away from the mentors that charge $20,000 and make big promises. I offer a program that teaches people how to learn their market and comes with personal coaching here.
- Buy turn-key rental properties: Many investors want to invest their money without doing all the preparation work or their market does not support a good rental investment. Turn-key companies offer rentals that are repaired and rented with management in place. They are usually not great deals because the turn-key companies have done a lot of work to the properties, but that does not mean they are not a good investment.
It can take months or even years to learn to invest in rentals and then start making money on those rental properties. However, the benefits of rental properties will last the rest of your life and can help you retire early. There are ways to drastically cut down on the time it takes to invest in rentals, but those techniques mean a smaller profit. For most of us, our time is our most valuable asset and the sacrifice may be worth it. The income I have made from my rental properties has been an awesome boost to my real estate business.