Expanding your real estate portfolio

REAL ESTATE as an investment has been on the increase this past decade as more and more people see the long-term benefits. Many of these investors entered the rental market by accident when they inherited a home from an aging relative. Others moved away and were unable to sell their home, so they opted to rent it for a while. After seeing the benefits of long-term rentals, and finding the security of a good Property Manager, they have decided to stick with it for the long haul.

But where do you go from here? If you are truly interested in rental property as a long-term investment, you need to understand the benefits of expansion. One method is to cash out the equity of one property, split it, and purchase two or more properties to increase your cash flow and rate of growth. Here's an example:

Dave inherited a modest single-family home when his mother passed away. The sales market was slow so he decided to rent it for a while. He found a Property Manager that quickly rented it out for $1,000 a month. Dave was pretty happy with the additional income but wondered if he couldn't be doing more. He approached the Property Manager to see about a more aggressive approach to building wealth. 

After developing a plan, the Property Manager sells Dave's home for $180,000. Dave splits the equity and purchases three apartment complexes with four units each. He now owns 12 apartments that rent for $550 a piece or a combined total of $6,600 monthly. His combined mortgage payment is $3,600 so he is making $3,000 a month instead of $1,000 a month with the single-family home. 

Not only does he bring more home but the value of his property is growing at three times the rate of the market (three properties instead of just one) and he is earning/growing based on the full value of the properties, not just the money he invested.

This is a very simplistic explanation. If you dig into the details, Dave could be getting a 60% return or better on his investment, which beats the stock market any day! If you are interested in growing your portfolio and building long-term wealth, we would love to sit down with you and show you how leveraging your money can generate a better return. We have a full-service real estate office with real estate agents ready to help you buy and sell real estate to expand your portfolio and our Property Management is ready to protect that investment. Contact us today!