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How to Build a Property Investment Portfolio: The Ultimate Guide

What single factor has the most power to determine your success White, modern style multi level apartment buildlingas a real estate investor by its ability to determine the rate at which your property investments grow? Is it the economy, the location, your chosen real estate investment strategy, or the quality of properties you buy? Maybe it’s the marketing strategy you use to advertise to potential tenants?

Each of these elements is important, but none of them leads to the right answer. The number one factor that holds the key to how far you can go as a property investor and how fast you’ll get there is something you need to do before buying your first investment property or choosing your real estate investment strategy.


What is it?

The most important factors for success as a real estate investor are how much you know about building a robust property investment portfolio and your ability to implement that knowledge in ever-changing investment climates. So, how do you develop this expertise?

These are the steps you must take to become an investor who recognizes real estate investment risks but can nearly entirely mitigate them by research and prompt action. The sooner you take the steps, the smoother your investment experience will be.


The ultimate guide for building a property investment portfolio

1.    Get real estate investing education

View from above of person sitting at a desk on their laptop with a notebook, books, and coffeeFormal training offers benefits you can’t get when learning on the job. Proper training is structured to ensure you receive every bit of necessary information. Conversely, there is no curriculum when learning by practice. Most of your insights are gained after making costly and sometimes irreparable mistakes.

On the other hand, when you take the time to get formal training before buying real estate, you’ll learn what mistakes to avoid before you make them.


2.    Create a real estate investment plan

A written plan helps you clarify your objectives. A goal inside your head does not look the same as on paper. Putting the plan on paper gives you the perspective of a third party.

A business plan makes it easier to detach yourself from your goals and assess your objectives with a clear head. Creating the plan will make you think through every aspect of your vision. You will be able to identify potential challenges and formulate an effective response long before the problems happen.


3.    Build a lead-generation system

View of laptop screen looking at social media and person's hand holding smartphoneWhen buying real estate, time is of the essence; the best properties are taken off the market before most investors even know about them. Most investors don’t have a system that keeps them informed of such deals.

Without a streamlined system for finding motivated sellers, you will be left with scraps after other investors have picked off the best offers. Spending your time at auctions and bank foreclosures is not the best way to find profitable deals. You need a system that saves time but makes you a lot of money.


4.    Define your investment strategy

From the moment you start to consider an investment, you should have a plan for how you will exit it. Your exit strategy is vital to your ability to make money. You need to know the best property investment strategy to use.

You must decide if you will use that strategy across the board, regardless of the market you are operating in, or you can try to vary it to match your location. Should you flip houses or use a buy-and-hold strategy based on your short-term and long-term objectives, capital, time, expertise, and energy?


5.    Find your focus

It makes a lot of sense to start with your local real estate market. Become intimately familiar with the forces that influence the housing market in your area. Gain the ability to predict and preempt trends. Also, you want to define the kind of properties you will invest in.

Finding your focus means choosing your location and type of property, allowing you to concentrate and become skilled at what you do in a relatively short time.


6.    Understand real estate investor insurance

Firefighters battling a fireThe brief window between when you buy a property and when you sell or lease it after renovating it is when many things can go wrong. Typically, during this time, many novice property investors fail to insure their assets.

Failure to insure often occurs when they want to save on cost, don’t know they should insure the property, or underestimate the possibility of things going wrong. Getting real estate investor’s insurance will protect you from vandalism, fire, flood, bad weather, and many other things that can go wrong.


7.    Build a solid team

Despite the quality of the real estate investment training you get, you will only go as far as the quality of people around you allows. Whether they are a mortgage broker, estate agent, attorney, accountant, property manager, professional handyman, or general contractor, they are the giants on whose shoulders you stand.

If you know how to find, retain and reward the best professionals, they will happily share their expertise to accelerate your progress to your desired financial destination.

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