How To Run Multiple Rental Properties as a Business and Not a Passive Income Stream

It’s no secret that investing in a rental property is an effective way to generate passive income. However, you can build more wealth and diversify your portfolio even further by running multiple rental properties through your own business. This will generate active income that you can keep counting on and allow you to develop new skills and knowledge along the way. Let’s take a closer look at how to run multiple rental properties as a business and not a passive income stream, including the benefits you can look forward to and ideas to get your new rental acquisitions started.

Key Takeaways

• Running multiple rental properties as a business can increase your cash flow by creating multiple income streams and reduce the financial risk you take with your investment portfolio.
• The government offers several tax benefits to owners of rental properties, including deductions for mortgage payments, operational and business expenses, repairs, and utilities.
• You can fund the acquisition of multiple rental properties with various types of financing, including conventional loans that offer low interest rates and special programs for property owners with more than five properties.
• By thoroughly researching different locations and real estate markets and hiring professionals to manage your rental properties, you can grow your real estate investment business and spend time acquiring more rentals that will be profitable.

Why You Should Run Rental Properties as a Business

When you run multiple rental properties as a business endeavor, there are countless benefits you can take advantage of. Here are a few of the most common benefits of overseeing a rental property management business.

Increases Cash Flow Immediately

One of the clearest benefits of owning a rental property business that includes multiple properties is the increase in cash flow. Most rental owners charge more in rent than their mortgage payments cost, meaning you’ll see immediate cash flow from the rental payments you receive. When you add more properties to your portfolio, you’ll boost your income even more, as you’ll have multiple revenue streams to offset any expenses that one property might incur, such as the need to hire contractors for repairs.

Saves Money on Taxes

Another key benefit to generating income through rental properties is the opportunity to take advantage of rental property tax deductions. The IRS designates a number of tax write-offs that apply directly to rental properties. This means you can deduct the cost of expenses such as the depreciation of property, management fees, and insurance. You can also deduct any payments you make toward a mortgage on a rental property from your taxes, as this qualifies as a business expense. 

Utilities are another expense that’s tax-deductible, so you can deduct the cost of your heat, electricity, water, and gas. The same is true for maintenance and repair costs, which are common expenses rental property owners face. For instance, if you need to replace a property’s roof, add storm windows, upgrade the plumbing, or fix the heat and air conditioning, you can deduct any money you pay for contractors and supplies from your taxes.

Reduces Financial Risk

By investing in multiple rental properties, you can diversify your investment portfolio. This is a huge benefit that reduces the risk you take as an investor. One way this happens is by providing more income streams and opportunities for returns that can supplement your finances in cases when other investments lose value. Since the real estate market is constantly changing, you can reduce your risk in real estate investing specifically by acquiring properties in different states. 

How To Run Multiple Rental Properties

If you already own a rental property, you know about the level of financial commitment it takes to secure one. This doesn’t have to be an obstacle when expanding your rental property business, however, as there are many ways to acquire more rental properties without increasing your financial risk too much. For example, many banks offer conventional loans that provide financing options with low interest rates and flexible loan terms. While some conventional loans require high down payments, you can sometimes find institutions that ask for lower down payments. 

If you own at least five properties, you can take advantage of programs that help real estate investors who qualify to access even more financing options. Here are the qualifications for these special financing deals:

• Five or more properties.
• Minimum credit score of 720 for borrowers with more than seven properties.
• Maximum debt-to-income ratio of 45%.
• Six months of cash reserves for each property.
• No relation to the developers, seller, or builder.
• Maximum of 10 properties that have one to four units.

Ways To Grow Your Rental Property Business

Whether you’re ready to launch your real estate investment business or want to expand your current business operations, there are a few steps you can take to increase your chances of success. For example, researching the neighborhoods you plan to buy property in can be a great way to start the process. This will give you insight into the conditions of different real estate markets to ensure you choose an area with opportunities for good returns and high potential for tenants.

Another step you can take to help your business succeed is hiring someone to maintain your rental properties. By hiring a trusted professional for day-to-day management operations, you can ensure impeccable work for your tenants and save yourself time and energy that you can put toward acquiring more properties.

Networking can also be a huge contributor to the success of a rental business. Connecting with other experienced property owners will give you the chance to learn from experts in the industry and gain insight into the markets you want to enter. For example, by joining associations for rental owners, you’ll be able to get referrals for contractors and building managers, as well as recommendations for the best markets to purchase property in for rental purposes.

How Infinity Can Help You Expand Your Rental Business

If you’re ready to start expanding your real estate portfolio to include more rental properties, Infinity Investing can help. Try one of our paid memberships that provide exclusive access to valuable resources that will guide your wealth-building to new heights. With our Starter Membership, you’ll be able to attend strategy sessions with Infinity Advisors, on-demand training sessions with our team of expert financial advisors and industry professionals, and online weekly real estate investing rooms that involve a live deal analysis, making it easier than ever to find the perfect rental properties and get the best deal.

If you’re looking for even more exciting perks and insider info on investing, the 360 Pro Membership has everything you need. It includes countless educational resources, such as monthly spotlight coaching events, advanced stock trading rooms, and a comprehensive library of on-demand real estate training sessions. You’ll also get special access to turnkey rental properties, specialized mentorship through group coaching, and unlimited attendance at the Cash Flow Summit. We even offer a free membership that you can try at no risk in case you want to get acquainted with our services before purchasing a higher-level one.

Investors have been using real estate investing to gain wealth and diversify their portfolios for years, and you can do the same by operating a rental business. Adding more rental properties to your portfolio and managing them as a business will help you earn income from multiple revenue streams and give you access to exclusive tax benefits for rental owners. When it’s time to start expanding your rental business and acquiring more properties, consider working with a trusted financial expert, such as Infinity Investing. Our advisors will guide you through market analysis and finding the perfect acquisitions.