When thinking about investing, real estate is the first asset that comes to mind. Thus, starting a real estate portfolio has historically been an attractive idea to new (or aspiring) investors.
What is a real estate portfolio, exactly?
This portfolio is a collection of properties, but you shouldn't wing this process. There is a reason some portfolios are more profitable than others. It comes down to strategy.
If you're serious about generating income, you need to get serious about portfolio management. You need properties that deliver a high ROI. A higher ROI means you've covered your expenses but you have enough left over to claim a decent profit.
Here are a few things to remember when starting a portfolio.
Choose a Real Estate Income Model
Understand that you need capital to kick-start your portfolio. Thus, you need a portfolio income model that generates enough money to keep growing.
One idea is to buy and sell properties quickly.
However, you need to look for properties in high-demand areas with high homeownership rates. You also have to understand when you're working in a buyer's and seller's market. If you're faced with a buyer's market, you may be forced to price your properties lower, resulting in a lower ROI.
The other option is a rental portfolio. This model is lower risk than a buy-and-sell framework. It works particularly well in areas with high rental activity, like financial districts, college towns, and suburban areas with proximity to amenities.
Price Your Properties Accordingly
You must learn how to price your properties properly if you want to make money. Every pricing strategy should start with a property valuation. You can also get a rental analysis for free from PMI Summit.
When pricing your rental properties, consider the following data points:
- The number of bedrooms in the property
- How many bathrooms
- Square footage of the rental
- Backyard amenities
- Home appliances
- The location
- Property type (house, condo, etc.)
You should also evaluate the values of surrounding properties. Researching the Cedar Hills market in Utah will also yield data for your pricing strategy.
Implement a Successful Marketing Strategy
Pricing strategy is also part of your overall marketing strategy.
Price is often the first thing renters look for when searching for rentals online. Many rental search features provide filtering by price, with lowest to highest being a popular option.
Many renters set a rent price range in their mind, like $1,500 to $2,500 a month. Your rental must also match the price. Look at other rentals within a specified price range to view their amenities, square footage, and condition. This is important to remember when taking real estate photos.
If you think property maintenance isn't a marketing strategy, think again!
You need a professional and reliable maintenance service that can fix up properties for rent. Prospective tenants expect open houses and walkthroughs. A property manager can handle that for you. they also work with local vendors to address repairs and upgrades.
Portfolio Management Starts With a Goal
Don't jump into this venture without a sound plan of action. Remember the importance of choosing a smart income model, price strategy, and marketing plan.
PMI Summit offers the above services and even more. We have a full suite of portfolio management services to grow your real estate portfolio.
Contact us today to learn more!
