If you have read my articles in the past, you know I am 100% sold on buying and keeping properties as a business, also known as professional landlording. I won't go over all of the benefits of landlording that have been thoroughly reviewed by others, but I will just say, we landlords don't know how good we have it.
We are in an investment business that requires no formal office or storefront and which, by and large, can be operated with subcontract workers who aren't employees. These two facts alone are great, great, great! To top it off, we are in a field which offers the most
supreme and advantageous tax laws, e.g., low long-term capital gains rates, no social security taxes on rents, and the ability to roll-over into larger properties completely tax free with exchanges. If you live in the property for a while you can even resell it and keep all of the money and not pay any tax at all!
I say all of that just to reassure you I in the buy and hold camp philosophically. Not that I don't do some flipping, but the bulk of my “business” is buy and hold for long-term rental income. I like rents!
As much as I like rental income and being a landlord, I think landlording works great in conjunction with other businesses, especially real estate businesses. Allow me to explain. Real estate, i.e., rents is a longer term business. It doesn't typically happen overnight, although the multiplicity of benefits IS happening whether or not you feel it in your bank account.
For most of us the best course is to work your rental business along with some other cash-flow business. Because real estate as an industry is run primarily by jobbers (sub-contractors, not employees), you have the perfect enviroment to start your own real estate cash-flow service business. Your business will operate in some form or fashion at helping other people buy, repair, manage, organize, market, advise, research, control, acquire, rehab, clean, package or sell real estate. Now I can hear some folks already saying you need a real estate license to do those things. Well, no, yes, or maybe – it depends.
To drive my point home indulge me in being a simple-minded person. I am just making a point–don't take this to mean that you should do this literally: Do you need a license to clean real estate? How about to repair real estate? Do you need a license to help other
investors organize and systemize their home offices for a fee? Do you need a license to be a marketing consultant and only a marketing consultant? Do you need a license to open a door for another investor and show a rental property? Do you need a license to buy a super deal and resell your position to another investor? Do you need a license to be a title searcher? The answer to all of these questions is a resounding NO!
Now, do you need a license to sell somebody else's real estate? YES. No big deal, take a couple of months and go get it. Or, just be a deal finder and flip them out before closing. You don't need a license to be a PRINCIPAL, i.e., owner/buyer.
We will explore in depth the many real estate service business opportunities in future issues of Mr. Landlord. There is a perfect real estate business waiting to be operatedalong side your rental business. As Jeffrey Taylor says, “Why limit your income?” As my dad says, “It is wise to have several sources of money coming in at once–you never know when one will dry up or slow down and then you'll still have plenty of money coming from the other sources.”