Creating a passive stream of rental income is only beneficial and substantial when you have a multi-property portfolio. Earning a rental income from one or two properties will not justify the amount you have invested to buy those properties. As a landlord, you will have to spend a substantial sum on seasonal and yearly maintenance and upgrades.
Therefore, you need a strong multi-property portfolio to generate wealth and enjoy a passive stream of income that facilitates an early retirement. How does one create a property portfolio of more than 10 properties? It’s not a difficult goal, as savvy investors manage to build portfolios worth more than $10 million in less than 10 years.
However, this achievement demands a real estate-specific education, market research and know-how, mentor-ship and guidance, and most importantly, a wealth-focused mindset. Turning one property into ten or twenty properties is not an easy goal. However, setting realistically achievable goals and strategizing effectively will make this journey easier and achievable.
Keep reading to explore strategies that will help you achieve the right mindset to build equity and generate wealth.
Setting Realistic Expectations
Most newbie investors assume that property investments are all about buying and selling, and therefore, rely on the buyer’s buying power. That’s not entirely false, but it’s a very simplistic and understated perspective of building property wealth. You see, navigating the real estate industry and finding lucrative investments is sheer hard work.
It requires market research and dedicated efforts to explore and identify profitable investments that offer a high rate on return. Setting realistic expectations is of the utmost significance. As an investor, you need to get comfortable with crunching numbers and using forecasting as a tool to calculate the ROI's and profitability potential.
Experts advise investors to think and make deductions on a macro-level. Always make long-term plans and avoid focusing on the obstacles and short-term costs you will have to manage alongside property ownership.
Rely on Numbers & Calculations
It’s essential to make buying decisions based on the numbers and calculations. Many buyers invest in properties located in hot real estate markets, while others are convinced to invest by media coverage and promotional campaigns led by developers. In certain cases, buyers even rely on their sentiments and intuition that their chosen property will turn out to be a lucrative investment.
These motivators are flawed and will deter you from making profitable investments. It’s crucial to make your decisions based on extensive market research, and get comfortable with crunching numbers. You need to make buying decisions based on the financial growth and forecasts of an asset.
Make a habit of writing all the numbers and financial projections, and observe the growth rate and profitability of the property over the years. Examine the market rates in the neighborhood and nearby areas, and check other metrics, such as economic growth, employment rates, and vacancy and rental rates, amongst other factors.
Analyzing and crunching numbers will help you make profitable investments and generate wealth for a comfortable future.
Networking with Realtors & Agents
Building a robust network of realtors and agents will help you navigate the industry with superior precision and knowledge. It will help you understand the inner workings and dynamics of the industry with insider knowledge. Building relationships with real estate agents will set you up for success as a property investor.
You see, your network of realtors will help you secure lucrative deals off the market. For instance, an agent can send you property details before the listing goes online and other potential buyers get a chance to make offers. An agent can also help you understand the motivations and needs of property owners so you can lead negotiations in your favor.
All savvy investors network with realtors to snap deals before properties are listed online.
Manage your Cash Flows Effectively
Cash flow management is the key to profitability and success in all business models and industries. Naturally, the real estate industry is no different in this regard. You see, savvy cash flow management will allow empower you with the financial stability to make lucrative property investments and grow your portfolio.
Cash flow management is the utmost priority of an investor who wants to generate property wealth, and enjoy a comfortable rental income as a landlord. Here’s a strategy that works wonders: balance your investment portfolio by investing in at least two properties with a high cash flow for every property with a higher growth rate.
You will have to keep a close eye on cash flow management, and prioritize investments that offer higher cash flow and income potential. Growth is an instrumental factor, but cash flow balancing is more crucial to maintain a comfortable income stream. Remember, as a landlord, your income relies entirely on the cash flows your property investments will generate. Therefore, give priority to cash flows instead of value growth.
Avoid Following Trends & Media Hypes
As a property investor, going against the current will always work in your favor. The media and market trends are always hyping up good news and bad news. Truth be told, these news stories and trends hold little significance when it comes to finding and making lucrative investments. News stories and trends depicting economic slowdowns and recessions often scare newbie investors, making them vulnerable and shattering their confidence.
It’s wise to avoid following the crowd, and rely on your intuition and financial calculations. Cash flow projections are essentially the only reliable information you need to evaluate the profitability and viability of a property investment. More importantly, it’s essential to surround yourself with good advice from professionals working within the real estate industry.
Educating yourself in the inner workings and dynamics of the real estate market is the best way to build savvy and smart investment skills. It’s essential to prioritize good advice and find mentor-ship relations to learn and benefit from the guidance of seasoned investors. Remember, everyone has a distinctive opinion and listening to everyone won’t help further your goals.