Owning a rental property can be beneficial to you in several ways. Of course, the most beneficial and most notable is that it can help you to produce a steady stream of almost passive income. And since homes grow in value with time owning a rental property most often means you can sell at a profit in the right scenario.
But even the savviest of real estate investors know that they need to strike a balance when it comes to the number of rental properties they own and not go overboard or get in over their heads.
Is it possible to Own too many rental properties?
It can be possible to take on ownership of too many rental properties. Some very optimistic real estate investors think about all of the positive sides of owning properties and end up purchasing too many causing a struggle to manage and maintain them all.
John Kinnunen of eXp Realty offers these tips, “Not being able to properly manage your properties could lead to unhappy tenants which then could lead to vacancies or even disgruntled lawsuits. All of this leads to a world of stress for the real estate investor to try and get back on track.”
So how can a real estate investor know what an ideal number of rental properties is for their personal portfolio?
Here are some key questions to ask yourself to keep your real estate investments within a manageable amount.
How much time and attention can I give to rental properties?
If real estate investing is your only full-time job it could be possible to accumulate a fair amount of properties and manage them well. Before purchasing any new rental whether it’s your first or your 10th the question always should be asked about time and the ability to pay the needed attention to items for the property.
Deeley Chester, from Ocean City MD adds, “Even if you have a property manager there will be items that you need to oversee on your own with each rental.”
Will you be hiring or doing it all yourself?
Real estate investors that prefer to have more time for other things hire property managers to help them handle all of the smaller and day-to-day details of rental property care. The big factor here is if a specific property will bring in enough money to make bringing on a property manager worth the expense, or if it will cut too big of a portion out of the profit.
Related: 6 Pitfalls of Real Estate Investing
Will you be willing to hire professional maintenance?
There are many smaller jobs that a person can do themselves, but there are also several that should be done only by a professional. Small maintenance jobs that can be done on your own include shoveling snow or mowing the lawn while bigger jobs like an electrical fix need to be outsourced.
Kris Larson, Cottonwood Heights Real Estate Agent says, “the more properties you take on and expect to maintain on your own, the more time it will take out of your schedule. Not hiring out for landscape maintenance and other small tasks will limit the number of properties that you can own.”
The best rule of thumb with becoming a real estate investor and owning properties yourself is to make sure you do not get in over your head. With the right property in the right area, some landlords have great success in owning just one or two rental properties.
There really is no magic number of how many properties one landlord should own, the answer really is dependent upon your personal lifestyle preferences and what you would like to do as far as investing goes. It is always good to assess what your personal picture of real estate investing looks like and start from there.