The prospect of buying and renovating property to sell filled me with a mix of both excitement and trepidation when I first started investing in real estate. Even after I successfully bought and rehabbed my first house, then sold it for decent returns, I wondered if I could realistically keep my real estate portfolio growing—and at what cost. Worries aside, I was motivated to make a good business from flipping houses. But, I’m not going to fib and tell you it was easy. I took a couple of risks and some hard knocks along the way that could have stopped me in my tracks. They certainly made me rethink my direction.
At one point, I decided that there’s got to be a way to more efficiently grow a portfolio and build a long-term career than just going for broke. If you’re a new investor, you’re probably thinking the same thing—and, if you aren’t, you should be.
How to Grow Your Real Estate Portfolio and Sustain Your Investing Career
You could spend a nickel to make a dime on one deal, and many real estate investors end up doing just that. But, to build a successful career in real estate investing, all of your investments should have the potential to generate good returns that, ultimately, enable you to buy more properties. Buying low to sell high is only part of the equation. There are other elements in the formula that can help you grow your portfolio, sustain your investing career, and plan for a profitable future. To reduce your learning curve, I’ve included them here.
- Research the Market. There are certain trends, like job and population growth, that contribute to what makes a hot real estate investment market. Sometimes these trends vary by region, but they can vary from neighborhood-to-neighborhood too. A little research will go a long way in pointing you toward up-and-coming areas where the rate of return looks to be on the upswing.
- Locate the Deals. Finding a distressed property that you can purchase at a discount, then renovate at a price that makes both dollars and sense, is critical to your bottom line every time you invest. There are a number of real estate investor lead generation systems at your disposal. You can pound the pavement, attend auctions, visit bank or government websites, even advertise on social media. But, a strategy that consistently finds motivated sellers and drives them to you is always going to be a better deal.
- Evaluate the Property. Evaluating the purchase price of the property, the cost of repairs, and your potential ROI have to be done quickly and accurately, especially when you’re competing with other investors. I use HomeVestors® proprietary software, ValueChek™, right from my phone so that I can crunch the numbers on the spot. But, not only do the numbers have to make sense, the value-add proposition should fall in line with your investment goals, skill set, budget, and timeline. Building an addition onto an existing home or taking on a major renovation could potentially enlarge your profit margin, but it could also stall your ability to take on another project by tying up your cash.
- Know the Exit Strategy. Some markets lend themselves to a buy-and-hold strategy, while others are ripe for buying, renovating, and selling houses for profit. The ideal exit strategy might even shift from block-to-block or deal-to-deal. But, generally speaking, the investors who choose to specialize are those who tend to win the investment game in any market. So, drilling down your expertise should be a part of your overall investment strategy, even as you evaluate shifting market conditions and the potential of individual properties.
- Insure the Asset. One of the biggest mistakes you can make when building your real estate portfolio is choosing not to protect your investment properties. The length of time a house remains in your portfolio, whether it’s only a few months or a decade or more, should have no bearing on whether or not you insure it. All of your investments are at risk of fire, theft, vandalism, bad weather, and flooding—just to name a few potential dangers. And, if you’re not covered when disaster strikes, you could watch your profits go up in smoke.
Growing a real estate portfolio takes a plan of action that can help to reduce your learning curve and also positions you to get ahead. And, in my experience, every plan that includes working with a great team has the potential to get you there faster.
Get Ahead of the Curve With a Real Estate Investment Franchise
Personally, I struggled most with generating leads when I started out. I followed the advice of members from a local real estate investor club and ended up paying through the nose on lead lists that usually led nowhere. Even when I found what I thought were a couple of great deals, I blew it when it came to calculating rehab costs and my ROI. I lost one of the properties to a competitor. On the other one, I almost lost my shirt.
I’m an old hat at this stuff now and have learned from my mistakes. But, it’s when I became an independently owned and operated HomeVestors® franchisee that things really turned around. Not only did I gain access to the distressed homeowner leads generated by the nationally-known and trusted “We Buy Ugly Houses®” ad campaign, I received something else pretty valuable too. I got one-on-one mentoring from a seasoned Development Agent who helped me strategize and succeed when things didn’t go as planned. So, as long as I continued to work hard, I was still able to get ahead—and I have.
Plan ahead for a valuable real estate investing career by joining a team that can help. Give HomeVestors a call about becoming a franchisee today!
Each franchise office is independently owned and operated.
I first became a Homevestors Franchisee in October of 1999 when my cousin and I bought a Franchise in Dallas in the great state of Texas. We did well and were ‘Rookies of the Year.
In 2003 Homevestors opened up in the Chicago market and along with my daughter, son and wife moved back ‘home’ to open the first Franchise in the greatest city on earth.
In 2010 I became a Development Agent to help mentor and teach new franchisees this incredible business and to this day I still love the career path I chose and the opportunities that continue to be available.