2019 is shaping up to be another solid year for real estate investors because mortgage interest rates still continue to remain low at 4.125%, while demand for rental properties remains high especially in the PDX area.
If you’re planning on growing your portfolio of rental properties in 2019 this article will provide you with effective tips you can use for adding more rentals to your real estate investment portfolio.
Grow Your Portfolio Of Rental Properties Using Warren Buffett’s Snowball Technique
If you’re familiar with Warren Buffet, founder of Berkshire Hathaway (net worth of over $72 billion dollars), you most likely are aware of his 2008 book titled “The Snowball” which detailed his life and how he was able to build his fortune.
“Life is like a snowball, all you need is wet snow and a really long hill” – Warren Buffet
Buffet’s snowball technique is a simple strategy of buying and holding onto an investment over the years, and using profits from that investment to purchase more investments, but the question is will this strategy work for buying rental property?
Breaking Down The Snowball Technique
Let’s say that you are able to buy two Portland Oregon Rental properties and after expenses each rental is going to generate about $500 per month cash flow for you, or $12,000 per year.
If you were going to save this cash flow instead of spending it like most people you would have $24,000 by the end of two years and what’s best of all, you could use this money to buy yourself another Portland Oregon Rental Property.
Digging Deeper
What’s even better about taking the snowball technique to investing in rental property is that: A. You could avoid debt to purchase another rental property and B. It’s entirely possible for you to be able to buy one rental per year in the near future when you follow this approach.
Factors of Great Residential Rental Property Investments
Before you get caught up in thinking every one of these factors must be perfect before you buy a rental property, know that it’s rare for this to be the case. Your goal is to try to maximize each of these as best you can, and sometimes one can be more important than others. Here are the factors that you look for in a great residential rental investment, single family or condominium:
Location: Yes, you can say it three times, as real estate is all about location. You wouldn’t want to rent a home in the middle of a supermarket parking lot, but one near a green belt or park for your children could be just right.
Rentability: Location is a part of this factor. However, if a home is in a great location, but the competition is stiff, it may not be the best investment. When there are many rentals available and owners are offering incentives, it may not be the right time. When there are few rentals available, not only are you able to keep a property occupied better, you can demand higher rents at the same time.
Expenses: This is relative, as property taxes are a major expense, but some areas command high rents because of the area amenities, so taxes are higher as well. If you can offset expenses with monthly cash flow left over, then it’s a positive.
Appreciation: Though cash flow is the primary consideration, appreciation in value over time is important. There are two ways in which you build equity in a rental property, appreciation in value and paying down the mortgage. Intelligent leveraging of your investments can be used to grow your portfolio using the equity in owned properties.
Let Us Be Your Property Management Partner
Besides following the advice in this article, another helpful thing that you should do to grow your portfolio of rental properties is to hire a property manager like Property Management Systems to professionally manage your portfolio of rental properties for.
Some of the services that we can offer you include:
- Setting the correct rental rate – We will do a comparable analysis of other rentals in the area to ensure that your property is renting for the correct rate.
- Property marketing – Our company will take great pictures and video of your property then market it online.
- Tenant selection and placement – We will find the most qualified tenants to live in your rental property.
- Maintenance – When it comes time to maintain your rental, you can count on us for full maintenance so you won’t have to do anything yourself!
- Rent collection – No more hassle collecting rent from tenants! You can count on our team to collect rent on time each month and deposit those funds into your account.
- Customer service – When your tenants have questions, comments or concerns, they will call us instead of you.
- And more!
To learn more about the services we can offer you contact us today for a free consultation at (503) 515-3170 or click here to connect with us online.
