Successful real estate investors are thinking about both the long term and the short term. When you’re working to scale your residential real estate portfolio, you need to focus on smart growth that you’re your financial goals. With established investment goals and a clear strategy for achieving those goals, growing your portfolio does not have to be difficult.
We have two important pieces of advice when it comes to scaling your portfolio:
- Know how to look for the right opportunities in your desired market.
- Surround yourself with professionals who can help you make smart decisions.
We have been helping investors manage their assets in the Phoenix rental market for years, and we have found that real wealth is created when you grow your investment portfolio. It doesn’t matter if you have one property or 10; consistently adding assets will give you an opportunity to earn more.
You just have to do it correctly.
Real Estate Investing: Grow Your Portfolio with Acquisitions
Investors want to know when they should buy, and you should actually be prepared to buy any time you find the right opportunity. The market’s strength will play into how you structure and negotiate your deal, but it’s always a good time to invest in Phoenix real estate.
We recommend you buy whenever you have the opportunity and when you find a property that meets all of your investment criteria. Leverage your buying power to acquire as many properties as you can.
Remember You’re Running a Business
You have to buy the right properties, and the right properties will make financial sense.
One mistake that a lot of investors typically make when they’re growing their portfolio is to buy anything and everything. That’s not a good strategy. You want to find an investment that will bring in some great short term cash and long term returns. You want a home that tenants will be interested in renting.
Look at every potential acquisition from the standpoint of a potential renter. Make sure you’ll be able to charge the amount of rent you need to ensure the investment makes sense. Consider your expenses; will a lot of work be needed?
Consider your expenses, remembering to include any homeowners association (HOA) fees in the budget. Will a lot of work be needed? Buy a home that is in good repair - unless there is room in the budget to afford the repairs. Also, look for properties in desirable areas where the demand will keep increasing.
It’s about quality, not quantity when you’re building your portfolio. Keep the emotions out of it, and focus on smart business decisions. Don’t buy high priced homes or properties that need a lot of work.
Real Estate Investing: Grow with a 1031 Exchange
A great way to leverage the investment properties you already have is with a 1031 exchange. Under this program, you can sell one property and then defer the capital gains taxes on it by investing the proceeds into another property (or several properties) that are similar. The word similar in this case only means that it has to be another income producing property.
This is a great way to scale because you have the opportunity to increase the size and strength of your rental portfolio. For example, you can sell one single-family home and buy a couple of others or invest in a fourplex instead. There are a lot of options.
Buy and Hold Strategies are Sound with Phoenix Investment Properties
The best strategy for earning as much as you can on your Phoenix real estate investments is to hold onto them for as long as possible. There’s not a lot of money to be made in buying and flipping houses anymore. We recommend you settle in for the long game. Buy some great, high-quality properties with excellent earning potential and hold onto them. You’ll earn more cash flow and you’ll increase the returns you earn in the long term.
Our team understands real estate and Phoenix property management, and we help investors like you scale their portfolios all the time. If you’d like to talk about your personal investments and how to grow, please contact us at Service Star Realty.
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