So, you’ve decided to purchase a second property? Congratulations, you’re already on your way to financial freedom by stepping into the exciting world of real estate. Gaining assets and increasing your cash flow through rental income is one of the best
ways to become wealthy and live a more fulfilling life. However, it’s no secret that having multiple properties under your belt is expensive and hard to manage. That is, if you go about the process blind without any guidance. That’s why here at Brian
Burds, we’ll provide you with the inside knowledge on what you need to know before you purchase a second home. Before you know it, you’ll be an expert on real estate with your multiple investment properties.
Things You Should Know Before Purchasing More Properties
Before you dive headfirst into purchasing numerous properties, you should consider several factors so that you can start off on the right foot. Let’s take a quick look:
Unless you completely own your first property, you’ll have to budget for two mortgage payments and take into consideration the idea that you’ll have to make room for a higher down payment, mortgage interest rate, and homeowners’ insurance.
While the house may be great itself, you’ll have to consider if the location is attractive enough in the first place to bring in your renters. Look into the surrounding neighborhood and make a note of all the amenities that exist. Don’t forget about the
overall climate as well!
If you’re trying to find a home with a price on the lower side, you’ll have to factor in how much you want to spend on maintenance so that the home will be ready for showing.
Ideas on How to Buy Multiple Properties in Real Estate
It can no doubt be hard to grow a large real estate investment portfolio. However, the real estate agents that successfully manage multiple properties are the ones who find themselves better off in terms of financial freedom and lifestyle. To achieve
your goals in real estate, here are some expert tips that you should pay attention to:
Buy Below Market Value
What’s important to remember in real estate is the idea that you make money when you buy, not sell. Though it might be hard to wrap your mind around, it becomes especially true when you follow the principle of buying below market value. It’s all about
using your knowledge to find the potential in properties where others might not see it. Take a moment to look at some foreclosed homes or properties that have spent a long time on the market. Strike up a conversation with sellers who are desperate to
find buyers quickly and willing to negotiate. These opportunities are plentiful when you take the time to look for them, so keep your eyes peeled.
Learn How to Research the Market
As the popular saying goes, don’t put all your eggs into one basket. It’s a good idea for any real estate agent in general to diversify their portfolio and find properties in different areas to ensure that they’re maximizing their returns. As a result
of that, it becomes crucial to learn how to research the market. What you need to conduct is some good real estate market analysis. This process includes data-driven insights that can help you decide whether to add a property to your portfolio. Take a
look at this investment property calculator to help you get started on a home you’re considering.
Find Opportunities to Create Positive Cash Flow
The holy jackpot of all great real estate investing is positive cash flow. What this means is that the rental income you’re taking in is greater than all the expenses you’re putting out. It’s the green light for you to press on the gas and increasingly
expand your property portfolio with equity loans. On the flip side, if you’ve got a negative cash flow going, then you’ll quickly find that you’ll no longer have the money to finance your mortgages and expenses.
Resist Making Emotional Decisions
Just like the stock market, the majority of investors who don’t know what they’re doing tend to make decisions based on their emotions. What might feel right at the moment ends up costing them dearly later on when they’ve lost out on an opportunity of
a lifetime. In the world of real estate, keep your emotions in check and don’t forget to rely on what the numbers tell you. Conduct some market analysis and follow the principles consistently. In no time, you’ll be managing your multiple properties with
Sell to Scale
As a beginner real estate investor, you might be hungry to acquire as many homes as possible. However, the best of the bunch understand that selling can help them expand their portfolio as well. For instance, if you have a property that’s severely underperforming,
you don’t want to keep wasting your money and energy to keep it going. The smart decision there is to sell off that property so that you can reinvest that money into another opportunity that will likely do better. Because time is money, don’t wait to
act. If you find that the rate of return is good, then move right away.
Focus on Interest-Only Loans
There are tons of options out there when it comes to loans. If you want to lower your monthly expenses and accumulate your cash flow to put to use for more properties, then focusing on interest-only mortgages is the way to go.
No matter what you do, you can never forgo the importance of paying attention to sound analysis and using a clear head to make decisions. Managing multiple investment properties can be hard, but you never have to go about it completely alone. Here at
Brian Burds, we’re a team of real estate experts that can help you along in your journey to achieve financial freedom.