As a professional real estate investor, you more than likely have clear business goals that you hope to meet. And even if real estate is a side-project or a second income for you, you can still benefit from scaling your portfolio.
The real estate market today has gone through an interesting shift. And with home prices nearing record highs and rental prices following suit, you can still take advantage of this lucrative market. And some of the solutions that you’ll find can be implemented quickly.
Studies have shown that since the onset of the COVID-19 pandemic, the increased demand for housing along with extremely low-interest rates, have drawn many buyers and investors into the market. But if you hope to truly maximize your profits, you have to grow your portfolio while the timing is right.
If you’re looking to make the most out of your real estate investments, the following will offer a few helpful strategies to consider.
1. Using Private Lenders
While major banks may offer lower interest rates on rental property loans, private lenders usually offer loans much more quickly and often can cover up to 90 percent of the purchase price.
Additionally, private lenders may also offer loans that major banks may not consider, such as with rehab loans. In fact, there are many benefits of using a private lender that can be helpful for growing your real estate portfolio. A few of these benefits are as follows:
- Fewer requirements and less documentation
- Flexible loan options
- Faster loan approval and access to funding
- More control over the process
- Access to “Fix and Flip” loans
Relying on big banks might be the first thing you think about when considering purchasing a rental property. But where big banks fall short, private lenders can become your saving grace.
2. Diversify Your Location
While you may be able to find a few deals in your local area, or even right up the street in your own neighborhood, some of the best deals might be outside of your geographic location. And there are great benefits when it comes to obtaining properties outside of your area.
For example, if all of your rental properties are located in the same area, they’re all exposed to the same risks. And even some of the most seemingly benign risks may affect your rental properties. Some of these risks may include the following:
- Weather disasters
- Large employers going out of business
- Rising property taxes
- Local government policy changes
- Rising insurance rates
When you have investments in other areas of the country, you’re less likely to incur maximum financial losses and you’ll produce a more successful real estate business over time. And with all of the latest developments in technology, it’s much easier today to manage properties in more than one location.
3. Consider Going Commercial
While you might be strictly a single-family home or vacation home investor, and while these markets may be lucrative, entering the commercial real estate market can open up your portfolio like nothing else.
Commercial real estate is usually valued higher. And if you do your homework and find a great property with all the indicators of potential growth, having just one commercial investment can bring in steady revenue.
Commercial property rental requires a huge amount of demographic research. Basically, you not only need to know the area, but you also need to know the history of the area and its potential to draw in new business owners.
As such, it’s a best strategy to avoid older regions that have already seen their prime. But newer, developing parts of a community with foreseeable potential can be extremely lucrative when it comes to commercial investments.
4. Bring in a Partner
It’s often said that ‘two heads are better than one,’ when it comes to solving problems. But when it comes to real estate investments, two pockets often prove deeper.
Basically, with a partner, you have more financial resources to work with. And having a partner also makes it much easier to manage properties and to expand into other markets. In fact, in many ways, bringing in a partner is a sure sign of growth in itself.
You should note that having a single partner may offer the best strategy. But having multiple partners often comes along with a higher risk and less income. And this is because you’ll not only be taking a cut in the income you see from your rentals, but if an investor decides to pull out, you’ll have to restructure your real estate business plan entirely.
Staying in business requires making room for growth to occur. And unless you’re completely happy with just a few small investments, if you want to diversify your portfolio and bring in more revenue, following the steps listed here will prove to be a great starting point.