If residential rental real estate is part of your investment portfolio, you may be wondering if and when is a good time to grow your portfolio.
Of course, since each investor’s goals, risk tolerance, and debt comfort vary, there is no slam dunk answer. But, you’re not the first person to invest in rental property, and there are a few tricks in the trade.
Here are some things to consider when considering how to grow your portfolio.
Long term mortgages
While having the ability to reinvest in new properties on a consistent basis is important to you, longer term mortgages – typically over 30 years – generally help to keep regular payments low and therefore to have more money for other investments.
Invest in yourself!
If you’re serious about growing your portfolio, reinvesting recurring earnings from your existing rentals is critical to success.
It’s a fairly simple calculation. If, for example, you have five properties that generate a combined profit of $2,000 each month, then rather than using that income for a more extravagant life, save until you are ready to invest in a new one. property. It’s advice as old as the world: be thrifty! Even without taking into account the interest earned, if you save that $2,000 a month, it’ll be $48,000 in two years, which is a nice down payment on your next property.
Network Network Network
Networking is essential in all aspects of real estate, but especially for those hoping to grow their real estate portfolio. Having a strong network of real estate agents and lenders will help you find and move quickly to close on properties.
In addition to real estate agents and lenders, it is also important to have a fundraising network. Banks will look at your debt-to-income ratio when considering whether or not to lend you money for another property, so having other sources of funding, like a self-built network of investors, will be essential as your portfolio grows.
Very few real estate investors start out buying a 50-unit multi-family property or ten duplexes all at once. Instead, starting small with one property and slowly acquiring more properties will teach you the ins and outs of successful investing and managing your investment portfolio.
Consider geographic diversification
In today’s modern world, investing and managing rental property remotely is easier than ever. Additionally, having properties in multiple parts of the country will help ensure that your investments are less susceptible to issues beyond your control, such as large employers closing their operations, hurricanes, or other large-scale events. scale greatly affecting a market.
Always look for better financing
The thought of refinancing existing mortgages is a major stressor for many homeowners. But, when considering homeownership as an investment, it is necessary to review your borrowings and consider financing options regularly. After all, the more money you have left in your pocket, the more opportunities you have to invest in other properties.
Be prepared for repairs
Like it or not, investment properties require maintenance, and you don’t want to be caught out in an emergency. You may have a year or more of good fortune and not need to invest a lot of money to maintain your investments. Still, problems will arise sooner or later, whether it’s the need for a new HVAC system, a water heater, flooring, or a complete renovation. So when considering how much to reinvest in your real estate portfolio, be sure to maintain a healthy balance for maintenance and repairs. They are inevitable.
Hire a professional property manager
Using a well-established property management company will allow you to focus on growing your portfolio rather than selecting residents, collecting rent, dealing with maintenance issues, and more.
As a leading property management company in the Cape Fear area, Sweyer Property Management certainly recommends that property owners strongly consider working with a trusted and experienced property management company. Additionally, we want to make sure owners and investors understand the relationship they are entering into when they choose to work with a property management company.
If you own investment property and are not using a professional management company, we hope you will consider doing so. The experts at Sweyer Property Management will be happy to provide you you with a free rental analysis or, if you prefer, call us at 910-239-1338.
Sweyer Property Management is a professional, full-service property management company specializing in all aspects of rental management. If you are a real estate investor or owner who would like to learn more about our services and what a professional property manager can do for you, contact us today at 910.256.3031 or through our website. Sweyer Property Management has shown continued growth in the Wilmington, Leland and Hampstead areas while maintaining excellent Google+ note for customer service.