Property portfolios are key to a successful and prosperous career in real estate, as they house all past and present real estate deals and showcase one’s ability to make sound, profitable investments. For new real estate investors, however, building a portfolio can be a fearsome task. With smart investments and ample research, building a portfolio can be relatively quick and easy. Here are four tips to start maximizing your property portfolio:
In short, the less money spent, the more money earned. Buying properties below market value increases the odds of a higher return. Moreover, buying low doesn’t always mean more money will have to be poured into a property. Properties are often sold below value for fast money due to extenuating circumstances in the seller’s life. Thoroughly research market values to determine what a home is actually worth and then make a decision.
If you’re an investor looking to try something new and make a decent profit, consider building out your portfolio by dipping your toes into property development. With ample research and the right area, investors who purchase lots and improve their worth can see incredible returns on their investment. Property development also yields multiple avenues to earn money back, whether it’s through selling a property post-construction or collecting rental income over time. It’s also a great move for those who have been in the business for a while and want to show all the skills they’ve learned.
One of the biggest mistakes real estate investors make is not investing in properties that are spread out across multiple areas. Many investors think that by keeping their properties local, they are playing it safe, but that’s not the case. If all of your properties reside in a single location and that location never increases in value, you lose your return on all of your properties. However, if the properties are spread out across multiple areas, and only a few of those areas don’t increase in value, you still earn a profit out of the ones that do.
Much like investing in properties that are spread out, investing in different types of properties also protects you in case one area of the market goes sour. Many areas go through phases of expanse, with one area of the market dominating the market for a period of time. Investing in a mixture of single-family development projects, multi-family properties, and commercial and vacant properties ensures that regardless of the current state of the market, money will be coming from somewhere.
Real estate investing seems daunting, but it is one of the most stable and reliable forms of investments. The key to a successful career in real estate investment lies in one’s ability to make smart decisions and prepare for potential risks. A good property portfolio protects an investor from changes in the market and demonstrates their ability to make profitable investments. The four tips outlined above are a good starting point for new investors to begin building their portfolio and maximizing their investments.