Not everyone is cut out for rental property investing.

Some people love it.  Some hate it.  And there are those that cycle between love and hate over time.

I personally love it, despite some challenging times that I’ve gone through:  Evictions.  Flooded yards.  Unauthorized dogs.  Scorpion stings.  Two different tenants who went to jail while living in one of my homes!

I love to bring up those challenges.  But the truth is I learned something from each of them.  They made me a better investor and small business owner going forward.  And the good stories outweigh the bad.

Should you invest in rental property?  Will you be successful at it?  Will you enjoy the journey?

Let’s talk about what makes a successful rental property investor.

1       The mindset of a successful rental property investor

Successful rental property investing takes a certain mindset.  It fits a person who wants to achieve something of their own in the business world.  To serve a basic need in society, and to do it with quality and integrity.

It’s those that treat it as a business who set themselves above the accidental landlords—who are renting their former residence because they moved and renting it seemed like a good idea.

It’s those that treat the tenant as a human being, not just a dollar sign, who set themselves above the big businesses and institutions.

Successful rental property investors run their business ethically.  They want a win-win for themselves and those they’re doing business with.  This makes tenants, realtors, contractors, and other investors happy to continue doing business with them.

They want to do good for the communities they invest in and building something they can be proud of.  Improving a community results in long-term profits, and the most successful investors are in it for decades.  They don’t just “make their profits and run”.

They are prepared to take measured risks.  Every investment comes with risk, and they collect as much information as they can about the investment, accept some risk, reduce it where they can, and move forward.

They have a perseverance mindset: “I know there will be problems.  I’ll work through them, and my business will be even better afterward.”

Successful rental property investors know these 3 things:

Rental property investing isn’t easy.  It isn’t passive.  And it isn’t a way to get rich quick.

They are building wealth over decades rather than a couple of years.

2       The goals of a successful rental property investor

There is no single set of goals that define a successful investor.  Just as there is no single measure for success.  This is something you have to decide for yourself. 

should you invest in rental property? successful rental property investors set goals.

Here are some common themes, though, in the goals that a successful rental property investor has.

2.1       Make money

A successful rental property investor isn’t just in it for the money.  If money is your only goal, then stop right here and find another way to invest.

But let’s be honest; if you won’t make money doing this you would do something else.

There is a huge range of financial goals that successful investors have.  Some want to build a billion-dollar empire.  Some want a house for each kid to pay their way through college.  Others just want a paid off house in 30 years that provides a little extra retirement income.

The important thing here is that their financial goals are aligned with the amount of work they’re willing to put in.  If they’re building an empire, this is a full-time job, not a side hustle!

My financial goal was to provide a base level of income from rental property cash flow.  This has been nice to have during the high stock market volatility and collapse in bond prices of 2022.  I’m now looking for opportunities, where I might pick up another property if market conditions are right and increase that cash flow even more!

2.2       Build a business

As I explained earlier, the most successful investors treat their rental property as a business, not a hobby.  This is true even if they just own one condo.  They take pride in building and owning a profitable business, and this satisfies a goal separately from the pure financial one.

I’m proud to be supporting a property manager, accountant, handymen, and other contractors, and their families through my small business.  And they’re grateful for the business I give them.

2.3       Make real estate a full-time business

Some investors get into real estate because they want to quit their full-time job and run a rental property business instead.  In this case, their financial goal is to replace enough of their full-time income that they can comfortably make that transition.

Rentals can create a great lifestyle business when systems are put in place so that you don’t have to make every decision, deal with every tenant, and fix every problem.  This has allowed many investors to spend more time with family, travel the world, and take significant time away from their business to pursue other things in life.  Chad Carson (aka Coach Carson) is a great example of this.

My real estate business didn’t replace my engineering income.  But it made it much easier for me to leave my engineering career, move to Colorado with my family, and work on things I’m passionate about—like this website!

2.4       Own and control real assets

Another reason that many investors get into rental property is so they can control real assets that they wholly own.  This is a different from stock investing—where they own pieces of publicly traded companies rather than a physical asset, and they have no control over what those companies do.

I’m more interested in diversification than whether or not I fully control the asset.  No matter what the stock market is doing, my paid off rental properties bring me income every month!

2.5       Serve society

One of the more selfless goals that many successful rental property investors have is to provide safe, comfortable, and affordable homes for people.  This can be a great motivation to serve your tenants well rather than always looking for a way to squeeze profits out of them. 

In the end, the landlords who serve their tenants the best have the least vacancy and higher profits than those who are looking to make money short-term at the expense of tenant relationships.

2.6       Improve a community

The other more selfless goal is to make a community more beautiful, safer, and economically healthy.  Real estate developers get into this side of the business more than rental property owners.  But those who are renting homes and apartments at larger scales can truly make the communities better where their renters live by investing in amenities like pools and parks, and by renovating the buildings inside and out.

2.7       Build a skillset

Finally, a goal that most successful rental property investors have is to continually learn and build expertise.  The knowledge and skills acquired over time improve how well the business is run.  Learning and growing brings fulfillment in any area of life, much less real estate.

3       Successful rental property investors are motivated

We’ve discussed the mindset and goals that successful rental property investors have.  But success does not come without action.  So the final characteristic of successful investors is that they are motivated to act.

Motivation can come from anywhere.  It can come from any of the goals above, the feeling they get when they buy a good property at a great price, or the pure challenge of operating this type of business.

What matters is that the motivation is constant enough to get them out of bed in the morning and work on whatever the business needs that day.  Most investors have a full-time job that takes priority, so we’re talking about night and weekend work here. 

Is your motivation strong enough to make you get to work on nights and weekends until your rental business is running itself?

4       Summary: should you invest in rental property?

Successful rental property investors have the right mindset, goals, and motivation to get to work, persevere, and achieve what most people do not: building a great real estate business.

As you read through these characteristics, was I describing you?  Are you motivated enough to push through the challenges?  Excited to do the work?  Ready to get started?

Then set your goals and go for it!

Rental property investing can be very rewarding, both financially and personally.  I’ve made money much more easily through the stock market, but there’s nothing like having the stability of a few rental homes with great tenants and cash flow you can count on.

If you haven’t read the other articles in the Pathway to FI rental property series yet, here they are: 

  The simple ROI calculator discussed in those articles, and available at this link, is my most valuable tool.

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