Rental Income Is NOT A Passive Investment

As the economy continues to recover and people are thinking of ways to build their net worth, owning rental real estate always comes up in the discussion.  Having participated in this investment type there are a few thoughts I would like to share.

Don't do this thinking this is a passive investment! Rental Income is EARNED!  You earn it in a variety of ways:

1. Finding the right house.  Looking at houses takes TIME.  Robert Kiyosaki mentions the numbers of houses he would look at to be able to purchase an investment property in his book "Rich Dad, Poor Dad".  Working with a realtor is very important as they can give you insight into property values, and assist you in finding the right house, at the right price, in the right neighborhood.
2. Preparing the house to rent.  Even if you hire contractors to do all the work, you still have to determine what is needed, set a budget and then manage the work.  
3. Finding tenants.  This can be time consuming and frustrating as you ultimately do not know who to trust.  A good source for learning how to do this is Gary Keller's book  "The Millionare Real Estate Investor."
4. Continued management.  Lastly, you have to make sure you collect the rent from the tenants, pay to keep the property up and continue the cycle of finding new tenants when your current tenants move out.  

All of this is WORK at some level, but when done correctly you can build a steady stream of income that can become your nest egg for retirement.

Happy Investing,
Chris