While one rental property may bring in added income, owning and managing multiple investment properties is one of the best ways to grow bigger as a real estate investor. After all, many people enter the real estate investing business because it offers the option to keep growing and making more and more money. If you want to know whether or not you are ready for owning and managing multiple investment properties, then just keep reading.
You Are Ready for Owning and Managing Multiple Investment Properties When:
1. You Have Enough Money
If you’re thinking of owning and managing multiple investment properties, the most important thing you need is money and positive cash flow. You need to have enough financial resources to buy real estate properties, whether by cash or mortgage.
In real estate investing, it is highly recommended to start out with buying one rental property and then add a new one every 2-3 years to grow your real estate investment portfolio. Once you’ve paid off the mortgage on your first investment property, start saving your positive cash flow for a down payment on another rental property. When you buy your next income property, you can use the rental income from both properties to pay out the mortgage on the second one even faster, and this becomes a positive cycle.
2. You Have Enough Experience
Real estate investing is learning by doing; no one was born a ready real estate investor. You need the experience to become a successful real estate investor even if you have all the real estate knowledge and the access to the best real estate investing tools and resources.
In the real estate business, experience is as important as cash for initial capital. Thus, it is best to start with being a landlord to a single rental property, gain experience from buying and managing it, learn how to deal with tenants, and then grow your real estate investment portfolio through owning and managing multiple investment properties.
3. You’re a Full-Time Real Estate Investor
Some people consider real estate investing as a part-time job. However, many others decide to enter real estate investing as a full-time job. Both options have their pros and cons, and which one is the best for you as an investor depends on your goals and skills.
In general, when a real estate investor decides to switch from being a part-time investor to a full-time one, it means that the time is right to start owning and managing multiple investment properties. Having a number of rentals is hard work, thus it is best to be done on a full-time basis. If you’re considering owning and managing multiple investment properties as a part-time job, you might risk performing poorly in your 9-to-5 job. Moreover, you could even start losing money from your real estate investments instead of making money from them.
4. You Form a Real Estate Partnership
As mentioned before, owning and managing multiple investment properties is difficult and hard work. Forming a real estate partnership can make this process a lot smoother. Thus, when you are willing to work with real estate partners and form a real estate partnership, it’s a sign that you are ready to become a multiple properties’ real estate investor.
Networking is an important part of the real estate investing business, and even before you buy your first rental property, you should be seeking potential future real estate partnerships. When you make connections with reliable real estate professionals whom you would like to work with (and who would like to work with you), you should form a real estate partnership and start buying and managing more and more investment properties together.
Investing in a real estate partnership will give you access to more finances, more real estate knowledge, and a platform to share risks. All of these are requirements for owning and managing multiple investment properties.
5. You Work with Professional Property Management Companies
Hiring a professional property management company makes it much easier to invest in multiple investment properties. In addition, it makes it possible to still keep your full-time 9-5 job and be a part-time real estate investor at the same time.
Professional property management companies come with a cost; however, they save you time and effort when you’re owning and managing multiple investment properties. Some of the work that professional property management companies can do for you includes maintaining the rental properties, finding tenants, and retaining good tenants to avoid high vacancy rates.
Tips for Owning and Managing Multiple Investment Properties
1. Get Organized
Being a landlord can be overwhelming. You have to keep track of maintenance, payment schedules, taxes, lease agreements, etc., which gets very complicated very quickly. Therefore, real estate investors owning and managing multiple investment properties have to find a way to organize documents, finances, and schedules so that all information is available when needed.
2. Stay Informed
It’s important to always be in touch with what your potential tenants are looking for in rental properties, as well as to explore new ways to market or improve your investment properties. This becomes especially important when owning and managing multiple investment properties and positive cash flow becomes even more crucial.
3. Keep an Eye on Cash Flow
It can be easy to get lost when keeping track of when payments will be coming in and going out, especially if you are managing payments for multiple investment properties. As promising as your investment properties might be, if your cash runs out, you’ll be struggling. If cash flow becomes too difficult to handle yourself, hiring a bookkeeper or a property management company would be extremely useful.
The Bottom Line
Owning and managing multiple investment properties is one of the best ways to grow your real estate investment portfolio. Of course, it is very different from and more difficult than owning and managing a single rental property, but it will offer you endless benefits such as several sources of rental income and a high positive cash flow. Whether you’re just getting started, expanding your real estate investment portfolio, or just trying to handle the multiple properties you already own, check out Mashvisor for thousands of available properties and for the most important data on them provided by Mashvisor’s investment property calculator, in addition to hundreds of blogs to help you become the best real estate investor.