Tuesday, March 2, 2010

Earning passive income is easy with Memphis investment properties - just stay involved!

Although many will be amazed at this statement, when it comes to real estate investing, there is no such thing as "passive income". For the new investor attracted to promises of huge wealth in Tennessee real estate like moths to a flame, the words passive income have become all too common as the main attractor when looking at Memphis real estate.

Memphis property management
companies, as in most cities, are often hired to do all of the leg work of promoting, showing, renting and managing an investment property which leads investors to believe all the hard jobs are done and the income in passive. Either way, the passive part comes in to play because the investor does not have to actively market or actively manage the property. This is where the breakdown in terminology occurs.

Being involved in the day to day operations of your property is the responsibility of your property management company. But you are still responsible for keeping them accountable to the management of your portfolio. Investors set out their goals for number of investment properties that they want to purchase, the style, location, desired number of bedrooms and baths and most importantly a minimum monthly cash flow. These are clear cut criteria for purchasing properties and building a portfolio. After purchasing your property, do not simply assume that your property management is operating your property and sending you a monthly passive income check.

Carefully maintaining your properties, including monthly drive-byes, quarterly interior inspections from your management company, review monthly maintenance records and work being performed are all actions that a successful investor will implement to watch over his "passive investment". Monitoring your monthly costs and statements for incidental charges is an often over-looked, but very necessary task that an owner must perform each month. Those include the interest rate, opportunity buy-downs (where you can pay additional principle early), monthly insurance premiums and keeping an eye out for lower cost property management. Each of these can lead to lower monthly notes and higher positive cash flow.

Just because it is called passive income, doesn't mean you have to be passive about it. Actively working on your portfolio each month does not mean having to actively work "in" your portfolio each month. If you want to keep your monthly cash flow high and your stress low, then doing a small list of minimum tasks will go a long way.

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