Did you know 23 percent of Americans believe real estate is the best way to build personal wealth? The stock market comes in second.
If you have the decision to start investing in real estate, or you already have a real estate portfolio, thumbs up! However, while most real estate investments have a record of yielding good returns, it’s your responsibility to find ways to maximize those returns.
If you need professional help making the most of your real estate investments, you’ve come to the right place. Read on for a couple of strategies you can implement.
1. Keep Diversifying Your Real Estate Portfolio
As a beginner real estate investor, your focus is likely on rental property – and with good reason. Investing in rental property is the most straightforward way to make money in real estate. Just find a good location, buy a unit rent it out, and start collecting your money.
However, to increase your chances of being a successful investment, it’s essential to keep diversifying your real estate portfolio. There are other assets you can to the portfolio, including commercial real estate, vacation rentals, and multifamily properties. Buying farmland is also a great move.
2. Hire a Property Management Service
Close to 80 percent of rental properties with individual landlords are owner-managed. Chances are high you’ve also taken the same path. After all, if you have a few rental units and plenty of time on your hands, it does make sense to oversee the properties.
Unfortunately, you aren’t doing your investment any big favors. You might be saving on the cost of hiring property management services, sure, but you could be losing a lot more.
For example, without tenant screening experience, it’s easy to end up with problematic tenants who don’t pay rent on time or even at all. Evicting a tenant, as you might already know, isn’t as easy as showing up on their door and forcing them out.
With a property manager, rest assured that you’ll have high-quality tenants and your properties will be managed professionally.
3. Don’t Use High-Interest Capital to Finance Your Investments
Real property investment is capital intensive. Like most investors, you’ll explore various ways to finance your investments. Mortgages and hard money loans are the most commonly available credit facilities.
While there’s nothing wrong with using debt to invest in property, high-interest debt will eat into your returns and prolong the amount of time it will take to break even. Whenever you’re taking out a new loan, ensure you’re getting rates that aren’t higher than the market average.
Maximize Your Investment Returns
Your real estate portfolio is a big part of your life as an investor. You want to increase its year-over-year performance by a couple of points. That’ll only happen if you know how to maximize the profits of each asset in your portfolio.
With this guide, you now have some helpful information and strategies. Browse our blog for more real estate and home advice.