What to Consider When Building Your Portfolio Real Estate Investment

Are you considering getting into real estate investing? If so, you need to think long and hard about what kind of portfolio you are going to build.

Don’t go blind into real estate investment, thinking that there is only one way to do it. Think about the different investment strategies and what kind of portfolio will work for you.

Keep reading to learn more about building a portfolio real estate investment and what you need to consider.

Set Your Investment Goals and Strategy

Many investors opt to focus their real estate investments on properties close to home or in certain markets. Consider your risk tolerance when selecting the types of properties and markets you want to invest in. 

Decide if you prefer to acquire existing properties or build new ones. Create a plan for financing your investments and consider the tax benefits and other potential returns of each real estate investment.

Consider Diversifying Your Real Estate Investments

You should move beyond the single asset class mentality. Start looking into spreading your investments across different property types. Consider investing in residential properties, such as:

  • single-family homes
  • duplexes units
  • multi-family units

Additionally, you may want to look into commercial real estate investments such as:

  • apartment buildings
  • office buildings
  • retail stores

You can also diversify your portfolio by region or locale, investing in different areas with varying tenancy, growth potential, and economic outlooks. By diversifying your investments, you reduce your overall risk, allowing you to both protect the capital invested and generate good returns.

Thoroughly Research Potential Markets and Locations

Take the time to research data on historical appreciation trends in the area. Know the expected future progressions to maximize returns. Your research should be comprehensive and cover everything, such as:

  • price
  • cost of living
  • population trends
  • zoning laws
  • rental restrictions
  • local market conditions

It is also important to investigate local public infrastructure and amenities, neighborhood demographics, schools, and other key factors that have an impact on rental prices. Research investment regulations such as taxes and lending rules. All of these pieces of research can help investors make informed decisions while building out their property portfolio.

Decide Whether You Will Manage the Properties or Hire

When deciding on managing yourself or hiring a property manager, it is important to consider the amount of time and money that will be saved. A professional third-party, experienced in the field can be invaluable in assisting you in overseeing the operation of your properties. They can do this for you while you continue with your daily responsibilities.

Property management companies can provide the following:

  • marketing
  • tenant screening
  • maintenance
  • rent collection services

It is also beneficial to research the management fees associated with various companies to ensure you are making a cost-effective decision that provides the service you need. If you have decided to outsource property management, start by looking into quotes or look into Appfolio pricing.

Start Your Portfolio Real Estate Investment Right

Portfolio real estate investing can be a lucrative business but it is important to do your due diligence! Not all investments are created equal and it is important to consider your risk tolerance, investment timeline, and market conditions before investing.

Seek guidance from a qualified professional to help you build a portfolio that is in line with your long-term investment goals. The sooner you start, the sooner you can begin to reap the rewards of real estate investing!

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