Building up an effective real estate portfolio is a great way to bring in some serious cash and grow your own personal empire. You don’t have to be a large, multi-million-dollar corporation to start being a landlord. You can instead start with just one property, or, if you have the vision and funds, can even develop that single property into an apartment or condo building for maximum return.
There are so many ways you can build up a real estate portfolio. You can start with your own home by renting it out and then downsizing so you have a net positive return on your initial investment. You can alternatively sell that home and use that capital to start up your own real estate development company that builds new projects from the ground up.
There are so many ways that you can start building up your own real estate portfolio, and with the importance and value of these assets only increasing, it’s one of the most effective markets to get into:
Types of Real Estate Businesses You Can Start
There are several types of real estate portfolio business models that you can start. In fact, you may end up going down multiple pathways. The key is to remain cash-positive, meaning you pay off debt quickly and choose strategies that help you get returns fast and as regularly as possible:
Property Development
In this option you develop a project from the ground up. This will usually come in the form of a series of condos or as an apartment building. So long as you own the land and have at least 10% of the funding to bring the project to life, you can get the rest from private lenders. Private lenders for real estate investments can cover up to 90% of construction and development costs. For best results, see how many units you would have to sell to pay off that loan, and keep the rest to manage as rental properties. You’ll still get a building fee from the apartment owners, and can start enjoying a very healthy monthly income then and there.
Fix and Flip
Fix and flip real estate portfolios may be short lived, but they all work collectively together to help you increase your upstart investment capita. Start with a small project, fix it up as well as you can, as cheaply as you can, and as quickly as you can, and then use the profits for the next project and so on. Upgrading your property efforts and moving into flipping houses closer to city centers is how you’ll get the best return.
Long Term Rentals
One of the fastest and easiest ways to start making an income, though not necessarily a return, is to buy a property specifically to rent out. If you can buy a property for a low price, fix it up yourself, and then rent it out, you should be able to gain a healthy positive rental income. The downside with this option is that you will still have a mortgage to repay. In fact, the mortgage may even be less favorable than if you were renting out your family home.
Short Term Rentals
Airbnb and other short-let options are still popular, and can be a great way to make a positive net income. The key to success here is location. You will only get high returns if your property is in a great location. As a plus, those renting for short periods like on vacation need less space, and less in terms of amenities. You can subdivide your own home, for example, to create a studio apartment for short-term lets, which is more than enough.
On the other hand, you may want to rent out larger properties that appeal to groups rather than, say, couples. So long as the property is in a popular area and is seeing regular bookings, you’re well on your way to enjoying a healthy, positive business.
How to Get Started
Every one of these options requires one small project to kick things off. As stated before, you may find that the best option for you is to use a mix of the above options. You can start by subdividing your family home or building a small cabin on your property to rent out for vacationers. You can then use that income to help save up until you can buy a property to develop. At this point, you can then sell off some units and keep the rest to boost your rental income.