If you want a secure investment option, real estate investment is a tested opportunity. Real estate investment requires experience and skills. Some people prefer investing in properties to collect rent as a monthly income. On the other hand, some investors are interested in flipping homes to earn quick cash.
Most of the investors start with a single property. However, if you want to enjoy a large profit, you need multiple properties. However, many investors hesitate to invest in multiple properties, as it seems very complicated. Here are some tips for investors which make it easier to invest in multiple properties.
Multiple sources of income
The more properties you have, means you have more income sources. Whether you are buying a home to rent out or flip it for a cash return, you can try both with different properties.
If you have multiple properties, flipping them will be easier for you. When one project is under construction, the other will be ready for listing, and another will provide you with a steady source of income. It will be a great backup for you to build your property empire.
Similarly, if you are selling one home, you can invest the profit in paying the down payment of another. You can also use this money to repair another property. It can be a constructive cycle, leading you to make more money.
When you have multiple properties, it means you have more than one income source. If you find it difficult to manage multiple properties, you can get help from different management companies. Multiple properties reduce the chances of risk.
Multiple properties are associated with multiple income sources; however, some risk is involved with every property. But if you have multiple properties, you can reduce the level of risk to a great extent.
If you flip a home and the process takes longer than expected, you will be worried if you have only one property. But if you have multiple, you can wait to complete the process. Sometimes repairing of home can take more time and there can be some other delays. But having your eggs in different baskets saves you from the loss.
If you have rental units, you can easily handle transition periods. You can manage lease dates at different times of the year to ensure a steady income. If a unit is vacant for long, it will not damage your income if you have multiple properties.
Using single property as multiple sources of income
A single property can be a source of multiple income streams. For instance, multifamily units, town homes and apartments are examples of this property type. You get rent from all units but pay a single mortgage. Multifamily units are expensive, and you have to pay more upfront payment, but they increase profit margin. Moreover, you can make more profit from a single property than many single-family houses.
Buying a multifamily house can be expensive, but you can cover the expense with a mortgage. Usually, banks easily approve a mortgage for a multifamily house, as they consider it a secure investment. When the owner has multiple sources of income, They can easily pay the installment. That is the reason foreclosure for multifamily houses is rare.
You will have a better investment portfolio if you own a multifamily unit. Multifamily houses are easy to manage and can easily double your income. It is quick money with minimum risk. Acquire money for multiple properties
When you buy a primary house, most buyers make a down payment and pay the mortgage installments later. Real estate investors can also take a mortgage. However, there can be a limitation on the number of properties you can mortgage. Most money lenders and banks do not grant more than 4 mortgages to a customer. However, if a customer shows a large cash reserve, they can increase the limit and allow them to mortgage more properties.
A common person does not have many sources to finance the house, but real estate investors have different income sources. The mortgage is the only option for a common person when buying his primary house. But investors can apply for private loans as well. However, the interest rate for these loans is higher than a mortgage. It can be an expensive option but useful for well-established investors. New investors should stick to the mortgage only, and if you want to apply for a private loan, consult with an expert before taking any step.
If you have one of two properties, you can easily manage them. But if you have another business or job, it won't be easy to manage properties. Moreover, if you have many rental properties, management will be a problem. A property manager can help you in this situation. Managers take their salaries, but they also take all the workload. Similarly, property agents can help you with a property flipping business. They can list and sell your properties by taking a percentage of the property's price.
Enjoy tax benefits
Being an owner of multiple properties is good in different ways. You can enjoy tax benefits as well. It can be different in different countries. In the United States, it's called 1031 exchange. It means when you sell a property, you can use the money to pay the down payment of two new properties, and in this case, you will get a relaxation in tax. However, you have to get information from a tax lawyer before proceeding.
These are the few advantages of having multiple properties. You can start with buying one investment property and build your empire slowly. All you need is to make the right decisions at the right time. Buy properties that have resell value if you are interested in flipping them. If you want to rent them out, buy those houses which need less repair and are at a good location. If you have a clear purpose for buying a property, you will be able to get maximum benefit.