Did you know that around 34% of people consider purchasing real estate to be a better long-term investment than gold or stocks? Many investors don't stop at buying one property to rent out. Building their real estate portfolio is a great way to increase their passive income.
Making your success as a property investor last is key. Learning about real estate portfolio management will result in increasing your profits. This blog will discuss the ways you can achieve long-term stability with your real estate portfolio.
Setting Achievable Goals for Your Real Estate Portfolio
Developing a successful investment property portfolio requires achievable and clear goals. Property owners need to define the objectives of why they're investing. Some goals may include:
- Generating steady income
- Achieving capital appreciation
- A mix of both
We recommend creating a financial plan that outlines your project returns, funding sources, and budget. You should be realistic about the timeline you create for accomplishing those goals. A well-developed plan will better guide your decisions and give you a clear roadmap for building your portfolio.
Learn About the 1% Rule
The 1% rule in the real estate investment world refers to measuring the price of a property against the gross income it can make. The monthly rent of the unit needs to be at least 1% of the purchase price to pass this rule. For example, you need to earn at least $3,000 a month for a property that costs $300,000.
This guideline is helpful when selecting an investment property that will help you reach your financial goals. It helps you determine if the property has the potential to generate enough income to cover expenses while generating a positive return.
Research Your Market
You need to understand your local market when pursuing real estate portfolio optimization. Market dynamics can differ from one region to the next. We recommend you perform thorough research on some of the following things:
- Employment rates
- Economic trends
- Local developer projects
- Supply and demand
Check out neighborhoods in the Phoenix area to determine which spots have stable property value. Doing your homework can help you mitigate risks while identifying opportunities for real estate investing.
Begin Small
For first-time real estate investors, it's best practice to start with a modest property. Smaller properties are great for learning how to become a property owner without putting yourself at major financial risk. Some types of rental properties you may want to start with include:
- Single-family homes
- Condos
- Small multifamily properties
Starting small also presents you with a more manageable financial commitment. This lowers the barrier of entry. This is perfect for those who are just getting started with real estate investment or who don't have a large amount of capital.
Long-Term Stability Through Real Estate Portfolio Management
Ensuring your investments continue to grow takes a comprehensive real estate portfolio management strategy. Managing your portfolio is more than purchasing properties. You want to make informed decisions to learn how to make your investments work for you.
At Real Property Management Phoenix Valley, our team is well-versed in investment strategies for rental units. We offer a wide range of services for property owners that'll save you time and money. Reach out to us to schedule a consultation.
