Take a step back and look at why own real estate in the first place. Sure Real Estate Ownership is a key to wealth building not just because of the stable cash flow, the ability to leverage … but most importantly for the tax shelter.
Hire a property manager
Manage the property yourself
You could hire someone directly who manages the property…
Hold the deed and sell the property on an installment sale but still have the tax benefit but not the responsibilities of land lording
Question: Should you hire a property manager?
Answer: Absolutely not.
There is specialized knowledge that goes in real estate management. It’s important to get that knowledge. Nothing is prohibiting you from acquiring that knowledge.
Downsides to hiring a property manager:
Loss of 10% of Income
Loss of control – manager may own other properties, so guess whose vacancies get filled first, who gets the best tenants.
Loss of intangible benefits and income – such as tenant paid improvements
Question: Should you manage it yourself?
Answer: It depends.
Your real estate investment portfolio, look at it as a Garden, not an ATM. You do have to maintain it, you have to tend to it. You also enjoy all the benefits of it. I absolutely love our real estate portfolio, especially during tough times, its income we can rely on.
But if land lording is a little too much, I’d say hire someone who reports directly to you, who’s going to do it your way. You get the Income, all of the benefits, and you have that control. But if you absolutely want to retire to an island somewhere and not have to fool with it or fool with it in a minimal way, rent to own or installment sale is ideal.
Essentially it’s a wonderful tool because you as the owner get to keep tax benefit, enjoy all the income, tenant pays taxes, insurance, and does maintenance. You do have to set up the paperwork very carefully, it’s not enough just to have a contract. You need to also have a lease. You need to have a set of inspections at regular milestones where you can make sure that the property’s being kept up.
Hopefully I’ve shared enough information for you to make an intelligent decision that’s best for you.
– Ian Parrish.