You’re ready to grow your real estate investment portfolio—but not sure where to begin. For some people, property investment is a full-time job—they are relying on that income to support them. Other people may be delving into property investment as a way to bring in a few extra dollars. No matter what the reasons are for growing your real estate portfolio, it’s essential to do it right! Check out these tips below:
1. Start with Research
Before you jump into your investing in your real estate portfolio, it’s critical to start with research. In other words, do your homework. Here are a few first steps:
Select an Ideal Location
Make sure you find ideally located properties. Location is key to keeping those investment properties filled. If you aren’t careful about the placement of your properties, you may get stuck with properties that stay empty!
Investigate the Competition
It’s also essential to scope out the properties with which you are competing. What are their prices? When you understand your competition, you will have an idea of how much to charge for your rentals. If you’re charging too much, you may lose out to your competition. On the other hand, if you charge too little, you undercut your revenue. Once you know what others are doing, then you have an opportunity to price your homes competitively.
2. Establish a Legal Entity
Another critical step in launching your real estate investment business is to make it a legal entity. There are two ways to establish your business and make it legal:
- Incorporate your business
- Obtain an LLC.
There are different positives or negatives to each choice, though most property investors tend to choose an LLC. The main differences are how you handle business taxes. One or two individuals own an LLC and get taxed based on their adjusted gross income. Shareholders own the incorporated business: they are taxed as a corporation or a separate entity. Selecting which one is right for property investing is unique to each investor.
3. Select a Property That Isn’t a Money Pit
You don’t want to sink all of your money into a property that will drain you financially: you can find a decent home that isn’t going to cost a lot in repairs or updates. You don’t want to start your portfolio with a bad investment experience. It’s not just the upfront costs that you need to consider but the ongoing issues that may arise if you get stuck with a bad property. For example, tenants will be calling with maintenance problems if you buy a house that has considerable issues up front.
4. Hire an Expert Property Management Company
With all the many tasks involved in owning investment properties, it can be challenging to keep up with all of them! You may miss opportunities because of being so overwhelmed with the responsibilities of property management. Hiring a professional property manager will make your business run more smoothly and provide your tenants with a seamless experience.
Property managers will do a market analysis for your property, so you know what to charge for your home. They will walk through the entire lease signing with the tenant and attend the move-out inspection to ensure everything is in proper order. When it comes to those “middle-of-the-night” maintenance calls, you won’t have to worry about it—because a property management company will be on the job night and day.
5. Add Little by Little
Start with just one property that brings in a steady and reliable income. This will get you acclimated to owning property. As your cash starts to flow more consistently and your homes become profitable, you can start adding on to your portfolio. Building up your investment portfolio is something you can do little by little as your rentals prove to be profitable.
Also, if you’re working with a property manager, you’ll have plenty of time to seek out various properties to purchase. An expert property management company may be able to point you in the right direction for available properties as well: they often work with real estate agents and know what is available in the Sarasota and Manatee area.
It’s critical to market your homes with the tools that will give you the most exposure. You can post your house on several online venues such as Zillow, Realtor.com, Craiglist, RentalHouses.com, your website, and so on.
Also, you can make sure your home gets attention by posting professional-quality pictures. If you can get a virtual tour or upload a video of the property, then your house will get even more attention! Working with a property management company may be able to help you get pictures and videos posted on your site. Also, their aggressive marketing tools are a sure way to gain needed exposure in the Sarasota and Manatee area.
As you take that first step into real estate investment, remember to build upon your portfolio—and watch it grow! Each time you add another property to your portfolio, you are getting one step closer to financial independence and freedom. At Real Property Management of Sarasota & Manatee, that kind of long-term wealth building is what we seek to help nurture for all of our clients! It’s why we offer a FREE rental analysis for our incoming owner-partners. Let us walk you through how much your rental property is really worth, and help you start developing a comprehensive investment portfolio today!
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