Building a semi-passive income can be as simple as owning your home, living in it for a few years, then renting it out when you move to a better place. If you’re looking to retire early, you could build up a portfolio of 3-5 rental properties over a 20-year career. This strategy has been a key part of my early retirement plan since 1999. It’s a great way to generate income and climb the property ladder, but it’s important to do it responsibly.
When I transitioned from buying a new home to renting out my old one, I usually found tenants within a month. But this time, it took four months due to bad timing, poor planning, and indifference. If you’re interested in owning rental properties, I can share some insights on the best and worst times to find renters, based on my experience as a landlord since 2005.
The Worst Time to Find Renters: October, November, December
The last quarter of the year is the toughest time to find tenants, especially if you’re renting out a single-family house to families with kids. Most people don’t want to move unless they have to. School usually starts in August or September, so parents and students try to secure housing before then. Graduations typically happen in May or June, with job offers coming in July or August. By the time the last quarter rolls around, most potential renters have already found a place. If you’re looking for renters during this time, you might have to wait longer or lower your asking price.
The Best Time to Find Renters: April, May, June
The second quarter of the year is the best time to find tenants. This is when the school year ends and summer vacation begins, so families with kids are looking to move. They want to find a place and sign a lease that starts when school ends, so they can use the summer to move and get settled before the new school year starts.
The Second Best Time to Find Renters: January, February, March
The first quarter of the year is the second best time to find tenants. The start of a new year often brings new beginnings, and people might be looking to move for a new job, to save money, or because of changes in their relationships.
The Challenges of Owning Rental Properties
Every month that a rental property is vacant is a month of lost income. Even if the property is paid off, there are still property taxes to pay. It’s in the landlord’s best interest to find good tenants as quickly as possible. But it’s also important to screen tenants carefully to avoid problems down the line.
The Benefits of Having an Empty Rental Property
While it was hard to find tenants in October, November, and December, I enjoyed having an empty rental house. It gave me time to make improvements and focus on moving into my new home.
Renting the Property for Income and Wealth Creation
I decided to rent out the property instead of selling it because I expect real estate prices in San Francisco to rise due to the growth of artificial intelligence. Renting also has non-income benefits. If you plan to leave the property to your kids, having renters can help keep an eye on the property and make it last longer.
Minimizing Disruption for Kids During a Move
Even though October, November, and December are the worst months to find renters, we decided to move in October. Our new house is only half a mile away from the old one, so the kids’ commute to school didn’t change. We moved on a Friday after dropping the kids off at school, and by the time they came home, all our stuff was in the new house.
Returning to the Optimal Rental Cycle
If you have trouble finding tenants in the worst months but succeed in February, you’re now on a February-to-February cycle. Your tenants might not move out exactly a year later. They might choose to move in April, May, or June, which is the best time to find new tenants.
Planning Better to Get Tenants
I didn’t expect it to take four months to find new renters. My timing was off, and I wasn’t as proactive as I should have been. The more expensive the house, the harder it can be to find tenants who can afford the rent.
No More Physical Rental Properties After This
At this point in my life, I want to invest in more private real estate funds. But I ended up managing another rental property because I couldn’t resist buying the nicest property I could afford while my kids were still living at home. Owning rental properties is a great way to achieve financial independence, but it takes careful planning and effort.
Reader Questions and Recommendations
When do you think is the best time to find tenants? Have you ever given up rental income in hopes of finding better tenants? If so, how did you decide when to take action?
If you want to own rental properties without the hassle of being a landlord, check out Fundrise. They invest in residential and industrial properties in the Sunbelt region, where yields are higher and valuations are lower. They manage over $3.5 billion in equity for over 500,000 investors.
For more personal finance content, sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. I’m a six-figure investor in Fundrise, and they’re a long-time sponsor of Financial Samurai. Our views on real estate are highly aligned.
