Why buy one property when you can buy five? This is the basic mindset of investors looking to buy multiple investment properties, a mindset you should adopt as well if you are to diversify your portfolio and increase the number of your revenue streams.
However, even though buying multiple properties might double or triple your income, that doesn’t mean that you can get in the game easily, as this particular branch of real estate requires a unique approach, and careful preparation, mostly because of the inherent financial challenges. Here to help you buy multiple investment properties successfully are the six tips the pros swear by.
Research the area for low-cost opportunities
First things first, a good multiple property investor doesn’t buy at market value. At least not if they are just getting into the game. Always keep in mind that there are numerous opportunities just waiting to be discovered, and that you can procure a property at a substantially lower price if you just take the time to research the area with a fine-tooth comb.
You can start by determining the average market value in the neighborhood, and then start looking for properties that are facing foreclosure, or properties that the owners are having trouble selling. Perhaps there is an owner who wants to move and is looking to sell as soon as possible – this is valuable information you need to have. Finding these types of properties will help you save money and reinvest in new ones, so do your research.
Add value to every property and review the value regularly
Procuring properties below market value guarantees a need for some sprucing up and renovation, which is the best way to add value to a property. With that in mind, you will need to remodel and renovate every property to increase its value quickly in order to put on the market as fast as possible. And as any avid investor will tell you, you should invest in renovations that won’t put a dent in your budget.
Another important element to value is revaluing the property regularly. Due to economic shifts in the housing market, you always want to price your properties according to the latest trends in order to ensure a positive ROI. This is especially important to do once you have finished with the renovations.
Increase your borrowing potential
Being able to obtain loans easily is the most important element of successful investing in the modern real estate world, and it might as well be the answer to the age-old question: how to pay your mortgage off in 5 years? As any experienced investor will tell you, you can only achieve this by increasing your borrowing potential with the help of an experienced mortgage broker.
A mortgage broker will work with you to increase your creditworthiness and borrowing capacity, as well as do the necessary work to get your mortgage loans approved faster with reputable lenders. All of this combined will help you obtain the necessary capital to invest in multiple properties and establish multiple revenue streams quickly.
Broaden your horizons and look into other markets
A common mistake among investors looking to procure multiple properties is that they tend to focus on a single market, usually something that is in their immediate vicinity. While there is nothing wrong with buying as many lucrative properties in your area if you find them, you shouldn’t limit yourself either. The potential for diversification here is endless, and you are bound to find amazing opportunities in the next country, or even in the adjacent state.
Instead of limiting yourself to your local market, be sure to expand your horizons and research neighboring markets as well – who knows, maybe a great deal is waiting just beyond the county line. You can use numerous online tools for this purpose, join local online forums, and even pay a visit to the neighborhood you’re interested in for a hands-on assessment.
You should consider not only markets in other areas and states, but also in other countries. There are some amazing opportunities to be found in international property markets. In many countries, there can be restrictions on foreign nationals buying real estate, however freehold areas in countries like the UAE can be a great way to get around this, allowing foreigners to purchase property with few legal hoops to jump through.
Stay on top of market fluctuations
The real estate game is constantly changing and evolving, it’s a fluctuating market with many variables and if you want to succeed you can’t be a passive player, you need to chase the trends and stay on top of the latest developments. Monitoring economic drivers, market value, consumer trends, and socio-political changes will help you discover and snag the best property on the market, and it will also help you keep your properties lucrative in the face of change. Keep in mind that local governing bodies are updating the real estate laws and regulations on a regular basis, information that is invaluable to an investor in your niche.
Focus on optimizing your cash flow from the start
Finance management is another crucial element of successful investing, and one of your priorities is to build a positive cash flow on all of your properties. This means that your rental income is greater than the sum of your expenses, or that you’ve been able to sell a property for a bigger price than the investment. It might seem like simple logic, but keep in mind that selling a property for a marginally higher price is not considered as a very successful sale.
Instead, focus on percentages, and aim to make your properties profitable from the get-go by attracting affluent renters and buyers. Part of your earnings will go towards future investments, another part will go towards paying off your loans, and the last part towards your personal finances. On a last note, don’t be afraid to terminate underperforming properties – selling and reinvesting is a better option than desperately holding on to an unprofitable property.
Becoming a real estate investor is an excellent way to ensure a prosperous career and an affluent future, and the next step would be to invest in multiple properties at the same time. While it is an excellent opportunity for growth, be sure to follow these essential tips in order to avoid common mistakes and pave the road to a successful future in the field.
