If you’re a real estate investor starting out, this guide will be for you. If you’re already an investor looking to diversify, this will also apply. Regardless, you’re about to learn the seven expert strategies on how you can build a real estate portfolio from scratch.
Real estate is an asset that can provide you with an excellent return on investment. However, there are plenty of factors that come into play. We’ll discuss what they are in a moment. If you are in the Austin, Texas area, you’re in one of the hottest real estate markets in the country.
Let’s take a look now at the following strategies below according to real estate experts.
Table of Contents
Finding the right real estate agent
If you are looking for a realtor that will help you get started, find one you can trust. An Austin realtor like Teifke Real Estate will be someone you can connect with. They’ll help you find a property that will be great for your portfolio.
You’ll find one based on your preferences, needs, and financial goals. You might be investing in real estate that is rising in value. After all, lots of people are moving to Austin and looking for a place to live for the long-term.
Whether it’s apartment buildings or single-family homes, these will produce monthly rental income. And you can use that money to expand your portfolio. Yes, it can take money but also time and a lot of patience.
Start out small
For most real estate investors, it’s best to start out small. This includes learning how to increase the value of your property. You’ll also need to learn how to manage tenants, hire property managers, and other things that will apply to owning a residential property.
You’ll need to understand the ins and outs of real estate. No one with a lack of understanding of real estate won’t succeed in their efforts. Don’t rush and trust the process.
Learn everything you need to know and follow the steps. Don’t take shortcuts to get to the rewards faster. This is why we mean that it takes time and patience to reach your goals.
Know your market
A real estate investor will need to know the local market backwards and forwards. This will put you at an advantage over many aspiring real estate investors starting out. The knowledge will help you get an edge on what’s going on in the area.
Is it a seller or buyer’s market? Are there any opportunities in the area? Do your research on the area including the neighborhoods where you are interested in investing in.
The local market trends will change over time. And it’s important that you stay ahead of the curve. This will help you out in the long run when you’re planning on investing in properties in your local area and beyond.
Do your due diligence
This is a task that you’re going to do with every acquisition. Whether you buy the property or not, doing your due diligence will be key. It will help you determine whether purchasing the property is worth it or not.
The deeper you go, the more data you’ll get. You can use that to make a decision. For example, if the property you’re looking at is close to the downtown area and a good school, those are green flags.
You now have a property where you can be able to invest in. From there, you can turn around and rent it out to a tenant. You may find a property where it may be in a bad location, which can hurt your return on investment rather than help.
Do not skip due diligence. It would be the riskiest thing you’ll ever do. Learn how to perform it every time you approach an acquisition and you’ll build that sixth sense of ‘buy the property’ or ‘leave it be’.
Know your financing options
If you’re starting out as a real estate investor, this is key. Knowing your financial options is important. You’ll learn about the kind of loans that are available and how the process works. You’ll learn terms like conventional loans, hard money loans, and more.
You’ll be diligent in making sure that you meet the requirements of certain loans. Is your credit score good enough? Do you have a good overall financial standing?
It’s always a good idea to check your financial status at the moment. If you do not have great credit, your options may be reduced. But not all is lost.
You can be able to build your credit up over time. It’s also important to clear off any personal debts you may have. This will help improve your credit score and increase your chances of being approved for conventional loans.
Know the benefits and disadvantages of investing in real estate
There are plenty of benefits of investing in real estate. And there are common disadvantages. Know what they are so you know what to expect.
If you run into a snag, you’ll know that it’s common for many real estate investors like yourself. Benefits such as tax breaks are common. A common disadvantage is dealing with bad tenants that won’t pay or damage the property.
Real estate investing may not be for everyone. But if you are willing to take on the ongoing challenges, you might be cut out for it.
Familiarize yourself with BRRRR
One method that is popular with real estate investors is BRRRR (Buy, Rehab, Rent, Refinance, and Repeat). This is where you buy properties that are distressed, renovate them, rent them out, refinance them, and repeat the process.
Once you learn this strategy, it might become your go-to for as long as you’re in the game. You might pay off mortgages faster than usual. It will also provide you with enough room to grow your real estate property.
It may be important to know the difference between this method and conventional loans. Conventional loans is another method that is used to acquire one or multiple properties.