Maybe you’re renting out a single property and you’re finding that you enjoy the experience, so you’re thinking about buying more rental homes. Or, perhaps you have a collection of multi-family units and you’re hoping to add a few single-family homes to your portfolio.
Wherever you happen to be as a real estate investor, you should always be thinking about growth. You make money in real estate by acquiring and holding properties. The most successful investors know that it’s not a get-rich-quick scheme. It takes time and patience, and ultimately you’ll reap the rewards.
As experienced property managers in the Tarrant County area, we want to share some of our tips for successfully growing your Texas real estate portfolio.
Identifying the Right Properties
When you’re looking to build your real estate portfolio, it’s sensible to identify new opportunities for investment. Buying another property is a great idea, but if you want it to earn money for you, it has to be the right property.
Run-down homes that need work can be tempting because they’re often cheap. But, when you’re planning to rent the property out, time is of the essence. You don’t want to invest a lot of money and spend three months getting the property ready for the rental market. Not only will you have to spend much of that cash you saved on the purchase; it will also take you longer to begin collecting any rental income. Look for properties that may need a few cosmetic improvements but will otherwise be ready for occupancy in a matter of weeks.
Investors also need to remember it is important to purchase homes that will attract the best quality tenants. A great rule of thumb is that you should never purchase a home that you would not live in. Finding great tenants requires a great home. While many investors gravitate towards the lower price point homes, long term ROI is maximized when you find a solid renter who will stay in the home for a few years.
Don’t be afraid to diversify. Add a multi-family unit or two to your portfolio if you currently own only single-family investments. Consider commercial real estate or short-term rentals.
Identifying the Right Neighborhoods
Location is just as important to tenants as it is to buyers. When you’re looking for your next investment property, make sure it’s in a desirable neighborhood. You want a strong pool of tenants when you’re renting out a home. A property that’s in a good school district and close to shopping and commuter routes will rent much faster than a property that’s more remote.
Think about your target tenants. The millennial generation is quickly becoming the largest pool of potential renters. They want walkable neighborhoods and homes with amenities like smart technology.
Do the Math and Focus on Finance
The numbers need to make sense when you’re growing your real estate portfolio. Make sure you’re getting the cash flow and the ROI that you need before you buy. When you’re borrowing money, think creatively. Banks and traditional lenders are always available, but there might be other ways to finance new investments, such as hard money lenders and owner financing. You might be able to leverage some of the investments you already own to grow your portfolio as well.
Work with a Professional Property Management Company
If you’re hoping to increases the value of your real estate investment portfolio in Fort Worth and the surrounding suburbs, partner with a professional property management company. A good company will do much more than basic property management. You’ll also have access to experts in the local market who understand what kind of properties make money.
We’d be happy to help. Contact us at Trend Property & Management to discuss your investments and your goals.