How To Expand Your Real Estate Portfolio
As an investor, growing your real estate portfolio is one of the most effective ways to accelerate your income and survive unexpected periods of vacancy. Owning multiple rental properties makes it possible to create a reliable, steady stream of revenue-- one that can even support a comfortable lifestyle.
That said, finding a profitable investment opportunity that fits your financial circumstances is no small task.
Here Are 3 Critical Steps To Successfully Growing Your Real Estate Portfolio
Step 1: Assess Your Current Financial Situation And Budget Accordingly
Take a closer look at your current income, expenses, and the profits your existing rental homes yield to determine a realistic budget for future investment opportunities. Can you afford to make a cash offer, or will you require financing?
Regardless of whether you plan to purchase a move-in ready property or a fixer-upper, you’ll need an idea of the budget you’re working with before you begin viewing properties for sale. Additionally, you’ll want to review financing options for both buying a property and making improvements if the home isn’t in livable condition or requires cosmetic upgrades.
Keep in mind that, as your portfolio continues to grow, it may become necessary to invest in property management services if you have not done so already. Screening new tenants, collecting rent payments, and keeping up with routine property maintenance (and repairs) can quickly become overwhelming, especially for investors who own more than one rental property.
Step 2: Identify Opportunistic Rental Markets Within Your Budget
Once you have an idea of how much you can spend, you can begin searching for suitable properties within your price range. Remember, if you plan to make a cash offer and can close quickly, sellers may be willing to accept less than their full asking price.
Focus your search on hot rental markets near you, and take the time to view listings in person before you start contemplating how much to offer. To speed up your search, you can even reach out to local Realtors and let them know your budget range for your next income property. This way, agents can reach out to you as the learn about new listings that fit your criteria.
Step 3: Research Current And Historical Average Monthly Rent Prices
Online databases like Zillow’s Local Market Reports and experienced Realtors in your area are excellent resources you can trust to figure out an appropriate monthly rental price for your next income property.
In addition to researching monthly prices themselves, you’ll want to find out the driving factors behind any ebbs and flows in demand for rental homes in the area. Is your neighborhood a college town? Did a new office open nearby and create an influx of job opportunities? Has public transportation recently expanded to the area, allowing for more easy commuting?
Learning more about what attracts renters to your area will help you predict future shifts in demand and understand how your profits will be affected. So, before you even place an offer on a property, estimate roughly how much time it will take you to break even and then turn a profit.
Always make sure you feel confident in your ability to recoup the money you invest.
Grow Your Portfolio With CastleRock
Thinking about investing in a rental property? Start your search with CastleRock today! Our nationwide inventory includes dozens of low-cost single-family homes in up-and-coming neighborhoods.
Additional discounts are also available for cash buyers. Contact us today for more information!