For real estate investors and property owners that have already accomplished the purchase of aproperty, the next step is understanding how to continue growing and successfully managing yourreal estate portfolio.Use these tips as a guide to increase cashflow, as well as your ability to invest in more properties over time.
Study your market
Make sure you understand and analyze the market you are in or are planning to invest in. Market criteria can include location, renter or buyer demographic information, and more. Understanding the details of your market and its needs will help you make smarter investments, choices about those investments, and gives you the knowledge you need to compare potential properties.
What properties are selling well in your market? What types of homes are selling for cash? Fortunately, this kind of information is typically available to the public at a local courthouse. Most cash offers come from investors – not the general public. Analyzing the properties that are selling for cash will help you understand the strategies other experienced investors are using.
The information is at your fingertips, so use it to your real estate portfolio’s advantage!
Know how to value properties
With the right education and information, a property investor can learn to think like a real estate agent (when needed). One of the main responsibilities of a real estate agent is to run Comparative Market Analysis, or CMAs, to determine the market value of properties.
For example, buying below market value will give you – the investor – a better chance of receiving profits at closing. When mortgage payments are lower, it also gives you more cash flow to continue growing and maintaining your portfolio. This valuable information is how real estate agents set and change the list price of properties.Knowing how to calculate those numbers can be a huge advantage to reducing costs and making smart investment decisions.
Check the competition
Make it a priority to stay up to date on local rental advertisements, both print and online. This will help you understand trends in average rental amounts by location, rent specials, and other successful incentives.
The real estate market is a popular one, and it is important to differentiate your properties from the rest. Your properties should be competitively priced, while still offering something special that is unique or better than others in the market. Making educated decisions on rental rates, specials, and other incentives will increase the chance that renters or buyers notice and choose your property.
Get a hold on expenses
There are a few different ways of looking at expenses, and it is crucial to look at both. First, pay attention to routine costs such taxes, insurance, and other recurring expenses. Since these costs are expected, build in a budget for them. Without a budget, one unexpected bill could break the bank!
Next, think about your property management expenses. This includes routine maintenance, unexpected issues, rent collection, advertising, and more. It is important to remember that how you spend your money is equally important to how you spend your time.
For example, how do you currently collect rent? If you have more than one or two properties, collecting rent the ‘old-fashioned way’ (by check or money order) may seem cheaper than paying credit card processing fees. However, the time it takes to manually collect rent, calculate accounts, and the risk for human error may not be the best way to spend your time.
As a real estate investor, it may feel like most of your time is spenton property management activities. You may be able to handle the current property management workload but wonder how you can continue to grow your portfolio while managing alone.
With the right cashflow, real estate investors can pay a property management company to cover the day-to-day operations of their properties. Property management services are not free, but the right team can ensure the success of your properties and free up time for you to focus on growing and managing your real estate portfolio.
Whether you manage your properties solo or trust a property manager with day-to-day duties, customer satisfaction is critical. Make sure you provide communication channels, reasonable response times, an easy rent collection process, and other incentives that build a strong brand in the community. This will lead to long-term tenants and properties that come highly recommended.
Once you find your groove and hone your skills, use these strategies over and over again to successfully grow and manage your portfolio. A real estate investor can build large financial rewards long-term, but the process takes time and dedication. Do your homework and stay up to date on market trends to increase your cashflow, purchase more properties, and grow your real estate investment portfolio.