A study commissioned three years ago showed that over 60 percent of most landlords owned only one rental property. When you consider that rental homes can provide cash flow, appreciation, diversification, equity growth, leverage, it seems like settling for one rental property isn’t very smart. With multiple investments, all of those benefits compound and owners can see real wealth developing now and for the future.
There are many reasons that growing a real estate portfolio may seem like a challenge. However, if you approach the idea of growth with the same mindset as an entrepreneur or a small business owner, you’ll quickly find creative solutions for any challenge that stands in your way.
Establish investment goals and criteria. Implement some systems that will help you move successfully through the process of growing with little stress and hassle. Most importantly, surround yourself with experts.
Here are the five tips we have for growing a Pocatello real estate portfolio.
1. Establish a Network of Real Estate Experts
Building a profitable investment portfolio of rental real estate is a lot easier when you’re talking about goals, challenges, and opportunities with a set of like-minded professionals who have different levels of experience with real estate investing. Get in touch with Pocatello property managers, real estate agents, brokers, lenders, and vendors who work with the properties that you’re hoping to acquire. You’ll have a well-rounded network of people who can provide advice and strategies based on their own experience. These contacts can even help you identify potential opportunities that are right for you. You’ll get more resources and better access when you have a strong network.
2. Diversify Your Pocatello Investment Portfolio
A growing and successful real estate investment portfolio isn’t only large – it’s also diverse. We see a lot of ups and downs in the housing market and multi-family investments have proven to manage the fluctuations in economic shifts better than any other investment type. If you’ve only purchased single-family homes as rental properties, consider looking at multi-family investments. There’s less risk, more income streams, and an economy of scale that keeps expenses down when it comes to maintenance, landscaping, and pest control.
3. Consider the Snowball Method of Real Estate Growth
The snowball method is a popular method of growing a portfolio, and one that many successful real estate investors swear by. It works like a snowball. You start slow and steady – with one property or one small building – and then you leverage what you earn from that one property to acquire additional properties. Just like a snowball, the portfolio gets larger and stronger as it gains momentum.
Let’s say you’re making some steady profit off that first investment. When you find yourself with enough cash to make a down payment on the next investment, your snowball starts to grow. Soon you’ll easily buy the third investment, and along you go. You’re also gaining experience as you continue to acquire properties. You’ll know what to look for and what works when you’re actually renting out those units.
4. Find a Pocatello Property Management Partner Focused on Investment Growth
If you’re renting out one home and you plan to stop there, a property manager who simply finds tenants, collects rent, and attends to maintenance is maybe all you need. However, if you want to grow your investment portfolio, you’ll need a property management partner who specializes in rental real estate investments. Look for someone who has built a business on helping investors grow their portfolios. You’ll find that you make better decisions thanks to the expertise and resources a good property manager can provide.
5. Avoid Costly Mistakes
Mistakes are easy to make, even for experienced investors. As you grow, you should expect some growing pains and some unintentional missteps. Avoid the biggest mistakes and financial setbacks by learning from people who have already made those mistakes. Some of the most common errors we see with investors who are trying to grow include:
- Failing to diversify
- Grabbing any available property instead of making strategic choices
- Underestimating the cost of maintenance and repairs
- Lacking a property management plan
Growth doesn’t happen overnight. Take the time you need to do it right.
Growing your Pocatello real estate investment portfolio will provide many benefits in the long term. Make sure you’re invested in smart growth. We can help. Contact us at Jacob Grant Property Management.