One way to build wealth in a practical yet safe manner is to invest in real estate. Though the real estate market is unpredictable, there will always be home buyers, so you can continue to earn a passive income.
It’s important to remember that there’s no single correct approach to investing in real estate. There are certain factors you need to consider as you invest. Generally, these include the condition of the economy, your access to capital, real estate taxes in your state, and how fierce the competition may be.
Since there’s still a certain amount of risk involved in investing, you may want to consider expanding your portfolio. By diversifying, you will be spreading out your risk. Whether you’re just considering investing in the market or whether you’ve already begun, here are several ways you can expand your real estate portfolio.
Buy Your First Property
When selecting your first property, it’s important not to rush or make hasty decisions. On the other hand, it’s equally important not to take too long to decide either. Most investors will tell you that, no matter how this first property turns out, it’s going to be a challenging experience. This is actually a good thing. You will be able to learn a lot from your first property. Subsequent properties should turn out to be more manageable in comparison.
For a start, you may want to look for a property with features you feel could be easily improved on. This should allow you to flip the house easily. Affordable wholesale properties are your best bet, considering that it’s your first investment in the market. Afterward, you’ll be more aware of how real estate investment works. From here, you’ll be able to take bigger risks and go for bigger deals.
Use Tools to Find Properties
If you’re hoping to grow your real estate portfolio, you should be constantly checking the market for properties. You can do this on the websites of real estate investment companies and on certain applications. There are also tools that could help you in your search.
Some of them may have better filters and criteria for their search results. By using these tools, you could end up discovering undervalued properties that are worth investing in. Not only that, but you may also find sellers who might be willing to negotiate a reasonable price.
Using all the tools and resources available to you, whether they are real estate investment companies or apps and online sites, will help you expand your real estate portfolio.
Boost The Property Value
By making renovations, you can easily increase your property’s value and thus add to your rental income. Simple changes such as applying a fresh layer of paint or installing a new carpet could go a long way in improving the appearance and value of the place.
For this reason, when you’re looking for properties, you should pay close attention to those that may require improvements or repairs. More often than not, these are sold for a discounted rate. Once you purchase the property, you can make the necessary improvements and easily boost its value. This then adds to your equity, which can help you buy more property.
Leverage Your Equity
After acquiring property, you can hasten growth by leveraging the equity of your portfolio. To give you a clearer picture, consider this example. If your first property has a price of $100,000 and appreciates to $200,000 after improvements, that gives you $100,000 in equity. To get this equity, you could sell the property and reinvest the profit. You could also opt to borrow money against the equity with a home equity loan.
With your equity, you can buy property without having to use your own money or having to opt for other methods. Since your equity grows more quickly the more properties you invest in, you can continue to purchase more over time. Just remember not to get in over your head when it comes to equity loans. Always be sure you can make your payments.
Work With A Property Management Team
Another way to expand your real estate portfolio is by working with a property management team. As your portfolio grows, property management will become a more time-consuming task. Managing one property by yourself is one thing, but having several more under your belt is bound to tire you out. At this point, it would be best to outsource some of your management tasks.
This isn’t uncommon among real estate investors. You could hire a team of property managers, accountants, or lawyers to handle the day-to-day operations. This will allow you to focus on other tasks, such as doing research and sealing more deals.
Monitor Your Portfolio
If your portfolio is in its early stages, you need to monitor it and take care of it to help it improve. After all, investing in property and leaving it alone is certainly not going to help you buy more in the future.
You need to accurately record and track the finances of your property. You should check on its condition regularly and see if there are things you can do to improve it and increase its value. In addition, be careful about the tenants you choose. It would be ideal for you to have tenants who make payments on time and who take care of the property.
Know When To Cut Your Losses
In some cases, you help grow your real estate portfolio by knowing when to walk away. If you’ve got a property that isn’t making enough profit or that’s taking up more of your time than it’s worth, you might need to let it go. Some investors hold on to disappointing properties to save face or because they’re afraid letting it go will mean they’re losing money. Try not to be one of these types of investors. It would be better to cut your losses and focus your energy on better properties.
Tips to Expand Your Real Estate Portfolio – Summary
Diving into real estate can be intimidating, especially if it’s your first time. However it is a great way to earn passive income. If you’ve already invested in a property, don’t stop there. Grow your real estate portfolio and spread the risk across several areas to increase your income.
With the tips above, you can get a good start and make investments that will benefit you for the long term.