You have decided to become a real estate investor and may have even bought your first investment property. However, owning just a single investment property is not going to make you wealthy in real estate. To become a millionaire in real estate, you should aim to expand, acquire even more properties, and grow our real estate investment portfolio. With a good portfolio, you will be able to be your own boss, earn passive income, and be financially secure. Even without much money, it is possible to start with one income property and build your portfolio from there. However, going past income property number one will require you to be fearless and plan wisely.
Here are 5 tips to help you grow your real estate investment portfolio in 2020:
1. Educate Yourself More on Real Estate Investing
Real estate education is the first step towards a successful real estate career. To successfully grow your real estate investment portfolio, you will need to have the right knowledge. You should constantly expand your knowledge in real estate investing to become a better investor. Study the different aspects of real estate investing. The housing market is typically dynamic and the US real estate market 2020 is no exception. To remain relevant, you should always keep up to date with what is happening in the market.
You can acquire real estate education from a number of sources such as real estate blogs, real estate books, magazines, webinars, online courses, mentors, etc. You can improve your knowledge of real estate investing by reading Mashvisor’s blogs for free.
2. Use Mashvisor’s Real Estate Investment Tools
Searching for an income property is not the same as searching for a home. To grow your real estate investment portfolio in 2020, you have to make sure that you are buying investment properties with positive cash flow and a good return on investment. Positive cash flow properties will allow you to keep growing your real estate investment portfolio. So, how do you select the best-performing investment properties? Well, you have to do the math. Just because an investment property is cheap, that doesn’t mean it’s a good deal. You have to do a thorough analysis.
Analyzing investment properties manually can be challenging and time-consuming. However, you can easily find the best investment properties in your market and grow your real estate portfolio by using the right real estate investment tools. Be sure to use the following tools from Mashvisor for your real estate portfolio analysis in 2020:
- The Heatmap Tool: This tool helps investors select the best-performing neighborhood using visual cues.
- The Property Finder: Our Property Finder Tool will help you search for investment properties with a good return on investment based on your criteria and preferences.
- Real Estate Investment Calculator: Our real estate investment calculator is a must-have tool for all real estate investors. It calculates real estate metrics for neighborhood analysis and investment property analysis to help you select the best-performing location and investment property. The tool will also enable you to choose the best investment property financing method.
3. Acquire Multiple Rental Properties (Use the Snowball, BRRRR, or 1031 Exchange Method)
Building a real estate investment portfolio entails gradually adding more investment properties over time. Therefore, to grow your real estate investment portfolio, you need to learn how to buy multiple rental properties. To buy multiple rental properties, you will need access to investment property financing. This way, you will be able to act quickly when you see a new investment opportunity.
Even without cash, you can use leverage to acquire more income properties. You can get cash from your first investment property to acquire more income properties in a number of ways such as the snowball method, the BRRRR method, and the 1031 exchange method.
With the Snowball method, you can save the cash flow from your current investment properties and use it to acquire more income properties. Just repeat the process and your cash flow will increase over time. With more cash flow, it will be possible to invest in even larger projects and grow your real estate investment portfolio even further.
When using the BRRRR strategy (Buy, Rehab, Rent, Refinance, and Repeat), you pay your mortgage and build equity over time and then refinance the property to purchase another property. You can then repeat the process to buy multiple rental properties and grow your real estate investment portfolio over time.
You can learn more about the 1031 exchange by reading Leverage the 1031 Exchange to Grow Your Wealth.
4. Build a Team
You may have been managing your first few income-generating assets on your own. However, as your real estate investment portfolio grows, you may not be able to give each income property the attention and time it needs. This can limit your profits. You may also not have enough time to take advantage of other opportunities. Therefore, you will need to scale your business and build a team of real estate professionals to help you manage your portfolio.
First, you will need to hire real estate portfolio management to take care of the daily operational tasks. This includes marketing, leasing, rent collection, tenant management, property maintenance, etc. You may also need a licensed contractor to fix the small or big issues with your income properties. Adding an accountant to your team may be necessary to keep an eye on your finances as well as an attorney to ensure all operations comply with the local laws and regulations.
5. Diversify Your Real Estate Investment Portfolio
You should never put all your eggs in one basket. This also applies when it comes to investing in real estate. A successful real estate investment portfolio is not only large but also diverse. The housing market often fluctuates but does not always move as a whole. If you have invested in only one type of property and the market drops, you risk losing money. However, diversifying your real estate investment portfolio will help to cover you in the event that the housing market crashes. You can diversify your real estate investment portfolio by investing in different locations and in different investment property types. This helps to alleviate risk.
The Bottom Line
Whether you are planning to venture into real estate investing or already own an investment property, you shouldn’t settle for rental income from a single investment property. Growing your real estate investment portfolio will serve you for the long term. You will also benefit from constant capital gains. However, growing a real estate portfolio requires a lot of effort, the right knowledge, the right tools, and patience. The above strategies will help you to gradually increase your asset base and achieve your investment goals in 2020.
To learn more about how to grow your real estate investment portfolio, continue reading our blog.