Your real estate investment portfolio, whether it’s growing or stalled, has the potential to continue earning wealth, as long as you make the moves that are necessary to keep it profitable. Smart investors in the greater Williamsburg area work with our team to continue growing their portfolios.
Typically, they will grow by adding assets or increasing the value of what they currently own. There are also opportunities to grow by diversifying what you currently have.
Here are five tips we have for investors at any level who would like to maximize the power and the potential of their growing real estate portfolio.
1. Leverage Your Current Equity
If you already own a profitable rental property, you can leverage the equity in that property to acquire another. Use the wealth you’ve already created to buy more property and increase the value of your combined assets. When you borrow against the equity in the home you already own, you don’t have to spend the cash you have available to buy the next property. Your down payment is the equity you already own.
Don’t waste time acquiring properties that won’t increase in value. The faster you can earn on the real estate investments you already own, the faster you can continue growing your portfolio.
2. Increase the Value of Existing Properties
There’s another way to grow your real estate investment portfolio with the Williamsburg rental properties you already own. Consider increasing the value of those homes.
This might mean doing a total renovation to add some bedrooms or finish a basement. It might mean making smaller, cost-effective upgrades that will increase rental value. These updates and improvements will increase both the value of your property and the rent you are able to earn.
3. Consider a 1031 Exchange
When you sell a Williamsburg investment property, you need to pay taxes on the money that you earn from the sale. Or, you can defer those taxes and buy a new investment property – or several properties – that are similar to the one you’re selling.
This makes sense when you are trying to grow your portfolio. It also saves you money by deferring those taxes. If you own a rental property that’s older and needing more maintenance than you can keep up with, consider selling it and buying something newer or in better condition.
You can use a 1031 exchange to sell one single-family home and buy a duplex, which gives you two income streams. The 1031 exchange program gives investors a lot of options and comes with a number of benefits. It’s also a good way to achieve growth in your real estate portfolio quickly.
4. Diversify Your Investment Portfolio
When you’re growing a portfolio, it doesn’t hurt to think outside the box. If your entire portfolio is comprised of small apartment buildings, consider investing in a few single-family homes in good neighborhoods. If you only invest in residential real estate, explore the options for investing in commercial real estate. You can diversify with the way you fund your purchases as well.
Look for ways to try something different. Maybe it’s a new market or transitioning some of your properties to short-term rentals instead of long-term leases.
5. Work with a Williamsburg Property Manager
As your investment portfolio grows, you will find that you lean on the expertise and resources of your Williamsburg property management partner more and more. If you’re not already working with a great management team, don’t try to grow your portfolio without talking to a great local expert in rental
management. We can help you identify appropriate opportunities and make sure every new move aligns with your overall investment goals and strategies.
For additional tips and advice on real estate investing, please contact our team at Berkeley Realty Property Management.