Steps to Build a Real Estate Portfolio That Provides Cash Flow

Up to 90 percent of all millionaires reach their status by owning real estate. In fact, more money has been accrued from the real estate industry than in all other types of investments combined.

The above is paraphrased from a quote by Andrew Carnegie. It is several decades old, but it remains true today. While certain trends are all the rage today on television, the information here isn’t about flipping houses or wholesaling. Indeed, there is often quite a bit of money to be made from these activities, but profits are typically short-term. If you opt to reinvest in long-term rental property, however, then flipping can also be lucrative.

Here you can learn more about building and growing a real estate portfolio that, over time, will help to fund a wealthy lifestyle during retirement by providing a generous cash flow. When you invest in several rental properties, with each one generating a positive flow of cash, you will be able to easily fund your retirement and not have to worry about issues that plague investors who have chosen stocks and bonds.

Also, what many people don’t realize is that it isn’t too late to get started. If you are still young, you will be able to secure the down payment necessary to purchase that initial rental property and then start to grow your own real estate portfolio. If you’re in the “homestretch,” with just five to 10 years until you retire, then you can easily convert your lower-yielding assets and use them to secure your rental real estate and increase your monthly income when you require.

What Makes a Smart Residential Rental Property Investment?

You need to consider several factors before investing in rental property. These include:

  • Location matters.
  • Rentability: If there is stiff rental competition nearby the property, it may not be the best investment.
  • Expenses: Figure out if you can offset the monthly expenses with the cash flow.
  • Appreciation: Invest in something that is going to appreciate over time.

The Process of Finding and Acquiring Your Rental Property

If you are ready to move forward and invest in your first rental property, take the following steps:

  • Get to know the market area to find properties in your price range and to see what other investors are buying.
  • Find out how to properly value potential rental properties to ensure the investment you make will be profitable.
  • Analyze the available rentals the competition is offering.
  • Nail down all expenses so you know what you will have to pay out, and compare it to what you will have coming in.
  • Negotiate your deal.

Finding Smart Properties to Invest in as Rental Properties

Some properties are going to offer much better deals than others. Try to find pre-foreclosures, locate properties that have owners in some type of financial distress, or work with fix-flip investors or good wholesalers.

Once you get started and purchase your first rental property, the process will become easier. Keep this information in mind to ensure that you get the right property, one that will provide the desired income to help make your retirement more comfortable and – in the long run- more profitable. The tips here should help you be on your way to achieving that goal.

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